Sometimes, McKinsey and the Bloomberg administration become one and the same: Mark Ricks, Mr. Doctoroff’s former chief of staff, is a McKinsey alum. He was the one who recruited a fellow McKinseyan, Rohit (Rit) Aggarwala, to become the director of the PlaNYC process last summer. Mr. Aggarwala, in turn, asked a partner at the firm, Asheet Mehta, to donate some services to help with establishing an advisory board of outside business, community and environmental leaders and to do other groundwork for the long-term plan. Mr. Mehta, like Laurie Blitzer, obliged, and a team of three started in September, later expanding to six.
But PlaNYC, which already had snowballed from a mere land-use plan into something much bigger, snowballed into something even bigger as the meetings got underway.
McKinsey was flying energy experts in from Houston and pressed 20 people into service at one time or other, Mr. Doctoroff said. By November, both client and firm decided that the pro bono thing just wasn’t cutting it.
“They did agree to do it on a pro bono basis, but it turned out to be infinitely more involved than we or they imagined, putting all of the strains of sustainability together,” Mr. Doctoroff told The Observer. “So, after several months of working essentially for free, they were so integral for what we were doing, and the burden we were imposing on them was so great, we needed a lot more help.”
Over the next four months, the board of the New York City Economic Development Corporation voted to start paying McKinsey, and has ended up so far awarding the company $1.525 million. While E.D.C.’s contracts are normally awarded through an open bidding process, this contract was not.
The process by which McKinsey moved from volunteer to high-grossing contractor raises questions about just how generous their pro bono work really is, and under what conditions the city should waive bidding requirements if someone has familiarity with the work.
“Caution needs to be provided when pro bono services serve as a stepping stone to the awarding of a sole-source contract,” said Dick Dadey, the executive director of the nonpartisan, better-government organization Citizens Union. “You don’t want to give unfair advantage to sole-source contracts, but you also don’t want to make government inefficient by requiring an R.F.P. [request for proposal] for work that may be justified through a sole-source contract.”
According to the City Comptroller’s office, the E.D.C. may award no-bid contracts as long as a deputy mayor signs off on the agreement and there is some compelling reason. In this case, the deputy mayor was Mr. Doctoroff, and the compelling reason was that a process was already underway.
“We found ourselves in a situation where we needed to get it done on an expeditious basis,” Mr. Doctoroff said. “Going out and rebidding it with someone who had no background, no degree of knowledge, getting it up to speed, would not have been possible.”
According to an E.D.C. spokesperson, McKinsey was awarded the first piece of the work in November for $100,000, or one-tenth the company’s normal rate; subsequent portions, voted on in February and March, were calculated at market rates, meaning that about $2.425 million worth of work was performed for 60 percent of the cost. In other words, despite the no-bid contract, McKinsey is still in the red when it comes to the city’s contracts, which is the way the city likes it.