Consulting for the Public Sector: From the McKinsey Illusion to a Real Opportunity for SMEs

You're a strategy consultant with 10 years of experience, three staff members, satisfied clients in the private sector. And then someone tells you: "The public sector spends billions on consulting." Your first reaction: "Yes, to McKinsey and BCG." But is that really true? The answer could change your business model.

The Myth: Only the Big Ones Get Public Consulting Contracts

It's completely normal to feel that scepticism. When you look at the big public procurement portals as a small consultancy, you see endless pages full of bids from McKinsey, The Boston Consulting Group, Deloitte, and other corporates. The tender announcements are full of mega-contracts in the double-digit millions of euros. And yes, those contracts do indeed go to the big firms.

But here comes the decisive nuance: those aren't the only contracts.

The public sector doesn't only award a few mega-contracts. It awards thousands of small and mid-sized contracts – many of them deliberately sized for SMEs. Public procurement works on the principle of lot splitting. A large transformation project is not tendered as one contract, but split into several lots. One lot might be 50,000 euros, the next 150,000 euros. And those lots are made exactly for specialised SME consultancies. [1]

The problem: you don't see these contracts.

The Real Demand: Why Digitalisation and Change Management Are Overwhelming the Administration

Germany and Europe are in the middle of a digital transformation of public administration. The numbers are concrete:

In Germany, by the end of 2025 all important public services should be available online – that is the Online Access Act (OZG). But as of 2024, only about 39% of these services are really online. That means: hundreds of authorities, districts, and municipalities are behind schedule and urgently need help. [2]

What do these administrations need concretely?

Strategic consulting: How do we modernise our IT infrastructure? Which legacy systems must go?
Change management: Our employees have worked with the old processes for 20 years. How do we bring them along into the digital age?
Organisational development: Do we need new structures? New roles?
Project management and concept development: We know what we want, but not how to implement it.
Sustainability and climate targets: The Green Deal comes from Brussels and lands at the municipality. How do we implement it?

Those aren't some exotic specialist areas. Those are exactly the things mid-sized consultancies do every day for private companies. The distinction? The client wears a uniform or works in a building with a coat of arms.

In addition: BAFA (the German Federal Office of Economics and Export Control) subsidises business consulting for SMEs with up to 80% in grants. That means the Federal Ministry of Economy and ESF Plus are deliberately trying to build consulting demand at public institutions. [3]

The Reference Dilemma: The Vicious Circle You Can Break

Now comes the point that probably holds you back: references.

In 10 years you've achieved a lot, but your client list consists of private companies. When you look at a public tender and see "References for administration projects required," it feels unreachable.

That is the reference dilemma, and it's real. But there are several ways to break this vicious circle:

1. The Subcontractor Path: In Through the Back Door

Many larger consulting firms that already have contracts with authorities are constantly looking for specialised subcontractors. A large digitalisation contract for a district office needs expertise in organisational development? They are happy to outsource it to a specialised boutique consultancy. You get to know the public side, do good work, gain a reference – and next time you can bid yourself.

2. Direct Awards and Small Contracts: Getting a Foot in the Door

Not all public contracts have to be tendered EU-wide. Below certain thresholds (often 25,000–50,000 euros for services), authorities can award directly. That means: you call, present your offer, and if it fits, you get the contract.

3. Cooperation With Associations and Networks

There are various networks of specialised consultancies that team up for public contracts. Become a partner or subcontractor in an established network.

4. The Realistic Start: Building References Is Strategic

Accept that the first public reference is strategic. You may accept terms that aren't your normal rates. That's okay. An 80,000-euro project with a 15% margin sacrifice is less bad if it brings you ten more projects.

The Smoke Screens in Tenders: Why BOND Matters for Consultancies

Even if you've decided to go into the public sector – how do you find the right contracts?

The problem isn't that there aren't enough contracts. The problem is that they are scattered everywhere. In Germany, Austria, and Switzerland there are hundreds of local procurement portals. And even if you search every portal, you miss contracts because they are phrased differently than you expect.

An example: you are an expert in organisational development in administrations. You search for keywords like "organisational development," "change management," "restructuring." But the district phrases the tender as "support for the restructuring of the Office for Digitalisation and Citizen Participation." The word "organisational development" doesn't appear in it. That's why you don't see this tender.

This happens hundreds of times.

This is where BOND comes in: BOND uses AI-powered semantic analysis to find such tenders – regardless of how they are phrased. You define your competencies and focus areas, and BOND automatically scans over 2,000 public and private tender portals in more than 40 languages. [4]

That isn't just a search engine. BOND analyses the content of the tender and matches it with your profile. You don't get 500 results with 3 relevant tenders among them. You get the 3 really relevant tenders. In addition, you receive fit reports that show: where does your profile match the tender? Where could you score additional points?

Your Advantage: What Authorities Really Expect From SME Consultancies

Authorities often have a problem with large consulting firms. When a municipality gets a digitalisation consultant from McKinsey, they bring along a 50-person project organisation, spend four weeks on analysis, and at the end deliver a 200-page report. What the local official needs is someone who sits in the office at 10am on Monday, understands how things really run, and helps to change them together.

That is your strength:

Agility: You can react faster, adapt, and address local specifics.

Cost efficiency: You cost a quarter or a fifth of what a big corporate charges. That means: for the same budget the authority gets more hours, more workshops, more real implementation.

Understanding of small structures: You have probably worked with small teams yourself, understand resource constraints, small-scale politics.

Long-term engagement: A McKinsey consultant is gone after 6 months. You can say: "I'll stay in touch with you, help with implementation, be available."

Concrete Steps: How to Get Started

Step 1: Define Your Public Niche

What are the 2–3 specialisations you really do well and that public administrations really need? "Digital transformation," "change management for legacy systems," "green procurement consulting," "data protection compliance in authorities" – what's your thing?

Step 2: Use BOND Tender Match for Research

Sign up for BOND and set up your search profiles for your 2–3 specialisations. Let BOND collect all tenders over two to three months – without you having to do anything. That is your market research. [5]

Step 3: Start With Small Contracts

Look at direct awards and smaller contracts (50,000–200,000 euros). Prepare a pitch deck. Then call district offices, municipalities, city administrations. "We've heard you're working on digitalisation. We have ten years of experience in exactly this area. Can we make you an offer?"

Step 4: Build Relationships Proactively

Join associations that connect consultancies with public authorities. Speak at conferences. Write whitepapers about your insights from digitalisation projects.

Step 5: Document Your Successes Systematically

Every project with a public institution becomes a potential reference. Document it in a way that lets authorities hear about it from other authorities.

The Long-Term Perspective: Why Now Is the Right Moment

The wave is coming.

The Online Access Act is behind schedule, but not dead. Digitalisation of administrations is not a trend, it is reality. The Green Deal raises massive questions about sustainable procurement. Skilled-worker shortages create pressure to automate processes. Dealing with AI is becoming an administrative topic.

All of that creates consulting demand. Massive consulting demand.

If you start now – with realistic expectations, strategic action, and the right tools – then in three years you won't be sitting in a pitch process against 50 other consultancies. You will already have three to five successful projects, you'll know the administration's logic, you'll have relationships. You won't be the newcomer. You'll be the proven partner.

In six months you can have held three consulting conversations with authorities. In one year you can have completed your first small project. In three years the public sector can account for 30–40% of your revenue.

Sources

[1] Federal Ministry of Economic Affairs and Climate Action (BMWK): Procurement Law Reform and SME Focus in Public Procurement: https://www.bmwk.de/Redaktion/DE/Publikationen/Mittelstand/Oeffentliche-Beschaffung-KMU.html

[2] eGovernment Monitor 2024 by Initiative D21: Status of OZG Implementation and Digital Administration Services in Germany: https://www.initiatived21.de/publikationen/e-government-monitor-2024

[3] German Federal Office of Economics and Export Control (BAFA): Business Consulting Guideline (UB) – Funding Subsidy up to 80% for Consulting Services: https://www.bafa.de/DE/Beratung/Unternehmensberatung/unternehmensberatung.html

[4] BOND IQ: Tender Match – Semantic AI Analysis of Over 2,000 Tender Sources in 40+ Languages: https://bondiq.eu/products/tender-match

[5] BOND IQ: Company Match – B2B Matching and Reverse Tendering for Authorities and Public Institutions: https://bondiq.eu/products/company-match