Did I say laugh? I meant to say “analyze.” As in pore over spreadsheets, crunch numbers, make projections, hold meetings, exchange emails, examine market trends and fill out endless time sheets and expense reports. I imagine that TTAC’s Best and Brightest could save the Presidential Task Force on Automobiles (PTFOA) some money; how much does it cost to make up a rubber stamp that says “FUHGEDDABOUTIT”? So, anyway, Bloomberg winkled-out the payment from the PTFOA to The Boston Consulting Group. “‘A very significant portion’ of work will be to analyze GM’s restructuring plan and Chrysler’s proposed alliance with Fiat SpA, according to the notice posted on FedBizOpps.gov. Boston Consulting must work with the Treasury Department and GM to craft a ‘financial plan acceptable to the government.'” Meanwhile, LinkedIn profiles PTFOA chief Steve Rattner’s former employer, Quadrangle Group. And wouldn’t you know it: “Quadrangle Group employees are most connected to:” Lazard (hired by the United Auto Workers to investigate GM’s finances in 2005; and by Chrysler last August to sell the Viper model as a business), JPMorgan (big time Chrysler debt holders and bailout recipients) and The Boston Consulting Group. Click on BCG, and “The Boston Consulting Group employees are most connected to:” McKinsey and Company. Whose clients include GM and Ford. Small word. Big bill. Yours.
Political payoff using money that they steal from all of us…Shocking!
Dumocrazy is for slaves.
Is the outrage in this Bailout Watch directed at the government? Because I don’t see how hiring a firm to evaluate Chrysler’s proposed recovery plan is wrong. If they didn’t do it, this site would be among the first to scream about giving Chrysler more money without accountability. This seems like a damned if they do, damned if they don’t situation.
Seriously, do you want the government to step on the same rake again and hand over more taxpayer cash to GM and Chrysler without finding out whether their proposals are even viable? Yes, 8 million dollars is a ton of cash, but it’s not that much if it saves us from pouring billions into failing businesses.
If you are against the bailouts, join the tea party April 15. I have to try something.
f8
Ostensibly, we’re paying the Presidential Task Force on Autos to analyze Chrysler and GM’s plan. As far as I know, they have 25 members AND staff. AND they can call on the U.S. Treasury Department’s staff.
Hey! Who asked for a PTFOA anyway? And now that they’re here, what’s their remit? Ostensibly: check the automakers’ viability plans and see if they fly. They checked. They don’t. Why does the PTFOA has to OUTSOURCE this?
The government said they’d call the loans if GM and Chrysler viability plans sucked. So call them, already. Shut down the PTFOA. Move on. Next?
As it. Government Motors is here to stay.
So the PTFOA has to OUTSOURCE this?
If they don’t, those who don’t like their conclusions will accuse them of lacking credibility, which in turn will force them to engage a consultant to support their findings.
This happens all the time in private industry. You pay a consultant to validate what you would have said, anyway, because the report will help to support your arguments, silence your opponents and circumvent the delays that would result if the naysayers attempt to derail your efforts when you have no third-party backup.
No matter what the PTFOA does, there’s going to be somebody who doesn’t like it. This is a matter of cutting the obstructionists off at the pass, as it were.
I’ve been on both sides of the table. You pay people, or get paid, to say what the client wants to hear. You can bet that BCG and the task force findings will align closely. It all comes down to who is paying the fee.
Pch101 is right. This is normal operating procedure.
As for the connections between the various firms mentioned, the finance and professional services business is and has always been incestuous. It would be news if these firms didn’t have any obvious connections, then I’d really start to wonder.
$8 million for an objective, third party report that gives the PTFOA the cover they need in order to cut Chrysler loose sounds like good value to me.
Reminds me of a song,
You put your left foot in….etc.
That’s what it’s all about!
Everyone is doing what they do best, and it’s all for nothing.
The headline says it all.
@mfgreen40
My protest is to save $3.33 for every member of my family for every $Billion the government borrows.
I figure $1Billion / 300 Million folks = $3.33
Calling it my Tea Party Fund.
From the stories I see, GM seems to have two types of investors left.
#1 – The uneducated folks that believe/believed GM is/was too large to fail and made smaller type investments buying stock or $50K in bonds and such.
#2 – The big boys like the UAW, the banks and the major bond players. They are well educated and have a plan. I believe that plan is to take as much as they can from Obama and then take as much as they can during the liquidation.
So type #1 doesn’t have a voice. Type #2 has no incentive to negotiate, only to stall.
This whole thing made perfect sense if you assumed that the recision would be over by now and the economy would be growing again.
Opps…
“I figure $1Billion / 300 Million folks = $3.33”
There are about 100 million taxpayers and 50 million taxtakers now…You might want to adjust that.
Next year the Federal Mafia will steal 3.5T dollars from 100M taxpayers…You do the math.
Luther,
Agreed… The numbers aren’t pretty. Gotta start somewhere.
I know $8mm is a drop in the bucket compared to the “other” numbers being thrown around, but what exactly are they doing to “earn” $8mm of our tax dollars?
Who’s holding BCG accountable for a reasonable rate? The economy is in the tank, we taxpayers should expect a deal on the hourly rate we’re being charged. Unless of course it’s yet another no bid contract.
Who’s holding BCG accountable for a reasonable rate? The economy is in the tank, we taxpayers should expect a deal on the hourly rate we’re being charged. Unless of course it’s yet another no bid contract.
This isn’t really the point of the exercise.
The Task Force is going to piss off some folks with its suggestions. To do this, they need the support of the findings of a top flight consulting firm. Not just pretty good, but the best among the best.
For the creme de la creme, that arguably leaves BCG, McKenzie and Bain. There are others, but these three are in the minds of many the prestige brands in the consulting business.
The whole point of this game is to get backup from a credible source. Go to a lesser source, and some yahoo in Congress, at Cerberus or elsewhere is going to demand that yet another consultant be hired, which means more time, more money, more delays, more BS, when what is most precious now is not cash but time.
It would be hard for a critic to reject a BCG finding out of hand because of the power of the brand. Engaging a firm at that tier is a smart move. If Rattner is buddies with them, so much the better — he needs to feel confident that the consultant’s report will back up his own.
They all bill about the same amount and the package will be negotiated, regardless, so the priority on bargain hunting is misplaced.
In any case, anyone who has done business with the federal government outside of the defense industry should know that generally speaking, they don’t pay top dollar. The benefit of working with Uncle Sam is that he is a steady customer who pays reliably and often buys in bulk, but he is not typically known for being exceptionally generous. I would keep my eye on the ball, and worry about effectiveness and expediency, which is what is most important in this case.
Yes it is a small world … there are only a few world class consulting groups and they do have interconnecting relationships with many major corporations, so there are going to be connections like that. You HAVE heard of McKinsey & Co. before, right? Is anyone in the S&P 500 NOT their client at some point?
OTOH, $8 million dollars sure is a lot for that kind of work, and it’s absolutely nothing but human labor and bit of travel expense. Think I’ll send a resume to BCG!
Kevin,
I never realized it, but there is likely some very interesting info to be found analyzing that site. It’s not unusual for a consulting group to be linked to all sorts of people, but who is MOST linked to whom is quite telling.
Hopefully, this will result in people putting less info into that horrid site. I hate the thing.
As someone who works in consulting – at a McK spin-off – I think you really would not want to make the decision of working for any of the big firms so lightly. What they charge and what you will get will be totally unrelated. The model from an employee’s PoW is that 1 in 100 makes it to partner, at which point you start earning more than the work you put in. 99 will not make it – this means being thrown out, rather than staying at the same position and not progressing. For the ones, who do get thrown out, the good ones end up at clients of those consultancies, which is actively encouraged – as they will sing the praises of their ex-employer and hire them in the future. So far, so ordinary. And as stated, rare is the Fortune 1000 company, which does not employ at least one of the big consultancies.
As for quality, it ranges even in the top flight firms from pretty basic, to truly inspired. It takes a bit of luck, good relationships within the consulting firm (so you do not get some junior numbnuts), and a very well-versed client, preferably an ex-consultant themselves, so they at least know what they are getting and how to guide the process to get the most out of it.
8 million might sound a lot and I guess if they do their job right, the margin will be around 70%. On the other hand some of that is eaten up by the enormous expense generated in acquiring projects, and the argument the companies make is how much money they made / saved yo by the project – the advertised ratio usually being 4 times the project expense, not how much you pay upfront.
And in a potential $100 billion investment 8 million is small fry.
Kristjan,
Well said!