Almost 80 million euros in 2020: The federal government was expensive for corona advice

Saturday, February 27, 2021

Almost 80 million euros in 2020
The federal government cost corona advice dearly

By Thomas Steinmann

In the fight against the Corona crisis, the federal government has relied on the expertise of consultants – and it costs significantly more than previously known. Advice and contract processing when buying protective masks were not exactly cheap. There is also criticism of the most important corona advisor, EY.

The federal government spent almost 80 million euros on consultants in the corona crisis last year. This emerges from a list of the Ministry of Health for the left-wing parliamentary group in the Bundestag, which Capital has. The expenses are so-called advisory and support services that the federal ministries have purchased to cope with the corona pandemic.

The orders range from advice on the procurement of protective masks to analyzes for the Corona rescue fund WSF. Overall, in 2020 the federal government concluded contracts with a total volume of 103 million euros with external service providers related to the fight against the pandemic. Of this sum, 78.4 million euros had flowed by December 31.

The federal government has thus spent more than twice as much on corona advice than previously stated: In December, the federal government had put the known expenditure at just 33 million euros. In addition, she had refused for months to publicly name specific contractors and contract values ​​and justified this with the protection of company secrets.

Ministry of Health and Economy in front

At the renewed request of the left-wing financial expert Fabio De Masi, a complete overview of the corona-related consultant expenses is now available for the first time. Accordingly, the Ministry of Economic Affairs and the Ministry of Health accounted for well over half of the total expenditure. The minister of economics Peter Altmaier alone transferred 34 million euros for external support last year. The Ministry of Health spent more than 28 million euros in 2020. In total, Jens Spahn's house concluded contracts with a volume of 41.3 million euros in 2020, which deal with advice on coping with the Corona crisis.

Far behind are the Ministry of the Interior (12.5 million euros commissioned contract volume), the Ministry of Finance (10.3 million euros) and the Foreign Office (2.2 million euros). Five other departments have reported consulting costs of less than 1 million euros each. According to the federal government, contracts that involve the pure creation of software, for example in the case of the Corona warning app, were not taken into account.

As the current list for the left-wing faction also shows, the most expensive individual project relates to advice and contract processing when purchasing protective masks and other protective equipment. To this end, the Ministry of Health has signed several contracts with the testing and consulting company EY for a total of 37.1 million euros. As early as April 2020, Spahn's ministry switched to EY without a tender to get the masks procurement offensive under control. As a result, the consulting company also took over the management and the complete processing of the mask orders by hand. Including legal advice, the contract volume with EY up to November 2020 totaled 24.8 million euros. At the end of 2020, EY was then also awarded the contract for the follow-up contract until November 2021 in the course of a tender.

With a total volume of almost 40 million euros, the testing and consulting giant EY, of all things, is the current one because of its role in the Wirecard scandal is massively criticized, thus the most important corona advisor of the federal government. In addition to the major orders from Spahn's department, EY also won two smaller orders from the Ministry of Economic Affairs in connection with the Economic Stabilization Fund (WSF) for a total of around 140,000 euros. The Ministry of Transport commissioned the company with a study for 110,000 euros that looked at models to compensate for corona-related loss of income in local public transport.

As the second largest recipient of corona consulting expenditure by the federal government, the IT service provider Init received 29.3 million euros from the budget of the Federal Ministry of Economics. It was about the creation and operation of an IT order management system for the corona aid payments from the federal government, which are intended to cushion the consequences of the lockdown in the affected companies. With the software, however, there were massive delays and problems, so that the so-called November aid, for example, was only able to flow completely late. Regardless of this, Altmaier's ministry just signed a new contract with Init worth 60 million euros at the beginning of February.

Left-wing parliamentary group deputy Fabio De Masi expressed sharp criticism of the federal government's contract policy, especially with regard to the Ministry of Health. Minister Spahn had "in the midst of the mask chaos awarded a golden contract to EY without an invitation to tender," he said. EY "failed miserably in the Wirecard scandal and apparently checked balances with blindfolded eyes". De Masi added that while it was legitimate for a ministry to call for help in emergencies. "But it is not legitimate if this happens for long periods of time without a tender and the necessary distance between advisors and ministries is lost. That awakens bad memories of the adviser felt from the Ministry of Defense," he said. In addition, it creates distrust if the federal government initially only answers incomplete questions from MPs and takes a full two months to answer a small question.

83 disputes from the mask proceedings

To date, EY consultants and lawyers are also busy cleaning up the aftermath of a chaotic purchasing process for protective masks from spring 2020. At that time, Spahn's ministry had started what is known as an open-house process, in which suppliers were guaranteed a fixed purchase price of EUR 4.50 net per FFP2 mask. The conditions attracted so many providers that more than 700 contracts with a total volume of 6.4 billion euros were awarded – many times more than budgeted for. However, many suppliers were later unable to meet the delivery conditions. In addition, the ministry resigned from dozens of contracts, mainly because of allegedly poor quality of the masks.

Some suppliers defend themselves against the allegations of poor performance and insist on the fulfillment of the contracts. According to the court documents of the ministry, which are available to Capital, at the end of January there were still 133 "open legal cases", ie contracts that had not been clarified. EY lawyers classify 28 of them as "potential settlement cases". They put the number of "disputes" at 83 with a contract volume of around 240 million euros. This includes 62 pending lawsuits with a value in dispute of around 160 million euros. In the other cases, the lawyers consider lawsuits possible. Overall, EY expects – depending on the outcome of the settlement negotiations and lawsuits – with total expenditure for the open house process of 1.4 to 1.7 billion euros. By the end of January, the federal government had paid out around 1.1 billion euros to open-house suppliers.

Public procurement law expert Harald Nickel also formulated fundamental criticism of the involvement of EY in April 2020 and the follow-up orders. Even at the beginning of the Corona crisis last spring, there was "no objective reason for an external contract," said the Hanau lawyer Capital. The federal administration itself could have taken on the tasks of EY's advisors and lawyers, he added. In addition, the first two EY contracts without a tender broke public procurement law. Nickel is currently suing EY against the award of the mask mandate. In this case, an appointment at the Düsseldorf Higher Regional Court is due in April.

The text was first published by Capital.