PwC spin-off Scyne Advisory to face off over not-for-profit contracts

Scyne Advisory has set a firewall delaying when government employees can join the firm or work in fields they were previously responsible for. For ex-ministers that’s 18 months.

PwC Australia’s spin-off government consulting business, Scyne Advisory, will directly compete with its former masters and public servants who join the firm will be set an 18 month “cooling off” period before working with their former departments.

Scyne Advisory managing partner Richard Gwilym, said the wheels were in motion to formalise the split after letters were sent to 117 PwC partners on Friday.

Mr Gwilym, who takes on the top job at Scyne after three years in PwC’s consulting operation’s leadership team, said it has been working hard to clarify the scope of the new government consulting house.

The general government sector at a state and federal level will only be serviced by Scyne, but the firm and PwC will compete over business providing services to not-for-profit organisations “in line with their own policies”.

Scyne will install a hard cooling off period for public servants and ministers before they were allowed to join the consultancy.

Ministers joining Scyne would be barred from working with their respective former areas of responsibility for 18 months after leaving their role, but may work with other parts of government.

Similar rules will apply to former public servants who would be barred from working on projects with their former departments for 12 months after giving notice or going on “gardening” leave.

Any former government employees would have their appointment reviewed by Scyne’s independent probity, conflicts and ethics committee.

However, Scyne will not have any audit functions.

Scyne will take on PwC’s work with public financial corporations and non financial corporations, including NBN Co, Australia Post, icare, and the Reserve Bank of Australia.

All existing PwC work run by the government consulting arm will enter into a 12-month run off period in a bid to ensure continuity.

Mr Gwilym said the government work would “be the heartland” for Scyne.

“We’ll also continue to play in the non-profit sector; a lot of those organisations are really involved in providing public purpose services for government,” he said.

“We think there is real value for the Scyne business in supporting some of those businesses into the future.”

Mr Gwilym said Scyne had an opportunity to “help government solve its biggest challenges”, and the consultancy would compete directly with big-four rivals Deloitte, KPMG and EY in winning work.

There is increasing speculation these other firms may be forced to split or ringfence their government services arms, on the back of a series of inquiries by the federal government into the sector.

This includes a review looking at “opportunities to strengthen the management of conflicts of interest in contracts”.

“We’ve got a really live opportunity ahead of us to exploit,” Mr Gwilym said.

“We’re working as closely as we can with department of finance and other governments around the country to answer the questions they’ve got and provide them with the information they require, and give them the comfort they need in regards to how to Scyne will function.”

Mr Gwilym said it was “not the easy path” for Scyne to follow, after PwC’s government business faced a near total shut-out of lucrative commonwealth contracts in the wake of the tax scandal.

The Department of Finance put in place rules that nearly barred the door to PwC’s government services arm in late May and forcing firms to notify public servants if staff were found to have done wrong.

These rules ordered public servants to consider “a potential supplier’s relevant experience and performance history when assessing value for money”.

While PwC continued to win some contracts with the government, many departments started to look at shifting work to rival firms.

In July PwC announced it would sell its government consulting business to private equity players Allegro Funds for $1 – something industry insiders said was a massive discount to the arm’s true value.

Allegro Funds has said it will invest $100m in the spin-off operation in a bid to support the enterprise that brought in almost $600m in revenue each year.

Originally published as PwC spin-off Scyne Advisory to face off over not-for-profit contracts