Advisers Thrive on District's Many Ills: Consultants Line Up for Millions in Work

Article excerpt

Paid consultants have made tens of millions of dollars prescribing remedies for the District's financial and management woes. Now, on orders from Congress, they stand to pocket millions more for advice on how the city can fill potholes and issue business permits.

Consulting firms are hungry for as much as $20 million earmarked by the D.C. financial control board for congressionally mandated advice on how to straighten out mismanagement in nine city agencies and provide better services to residents.

"We've been swamped with offers," control board Chairman Andrew F. Brimmer said. "Many, many consultants have let us know that they are available to do this work."

The control board hasn't reviewed any offers because it hasn't decided exactly what it is that needs to be studied, Mr. Brimmer said.

But the board doesn't have much time to decide.

The legislation signed into law Aug. 5 by President Clinton transfers power over nine key agencies from Mayor Marion Barry to the control board. It requires the board to recruit consultants within 30 days to make thorough reviews of the agencies and recommend how to fix what isn't working.

"To my knowledge this is the first time that Congress has actually asked consultants to come in and solve the basic problems of the city," said Lawrence S. Herman, a partner at KPMG Peat Marwick, a D.C. consulting firm.

Mr. Herman and other observers say the requirement is unusual because it assumes consultants offer the best hope to improve city services. They acknowledge that some skeptics envision consultants simple rewriting previous outdated studies.

The working model in the view of Congress is the recent consultant-led overhaul of the Metropolitan Police Department, an effort credited with an upsurge in arrests and a drop in crime.

Whatever the process, the law is guaranteed to make a tidy amount of money for some companies. Sources close to the control board estimate it will spend from $15 million to $20 million in taxpayers' money for advice - and Congress already has agreed to allocate the funds.

Dozens of consulting firms that have done work for the District are lining up for another chance to study the problems of a city that can't seem to deliver despite a $5 billion budget and 33,000 employees.

Among those interested are Arthur Andersen Co.; Coopers & Lybrand; Thompson, Cobb, Bazillio & Associates; and Booz-Allen & Hamilton Inc.

The nine agencies now under the control board's direct authority include Public Works, Corrections, Human Services, and Fire and Emergency Medical Services. Although Mr. Barry can nominate directors, the board must confirm them and only the board can fire them.

Two years ago, Congress created the control board to prod the city out of insolvency and mismanagement. Mr. Clinton appointed the five members.

Hours after the president signed the balanced-budget bill containing the management reforms and financial aid worth $1 billion over five years, the board approved its own acting directors for the nine agencies, dismissing three of the mayor's choices.

Mr. Brimmer said the board is working with the acting directors to determine what problems to tackle first. The board won't hire consultants until it is sure which parts of each agency most need improvement, the chairman said.

The board's action plan likely will unfold later this month or early in September.

"Not later than 30 days after the date of the enactment of this act . . . the [control board] shall enter into contracts with consultants to develop management reform plans," according to the law. "A consultant shall submit a completed management-reform plan for the department . . . within 90 days."

The law allows the board to extend the 90-day deadline to 120 days. …