DEI Cash Cow

The White House’s equity agenda was a boon to consulting firms.

There is an old saw that, in America, every great cause begins as a movement and eventually degenerates into a racket. This is certainly true of the past decade’s most fashionable cause: “diversity, equity, and inclusion.” What might have begun as a social movement has now become a business—and not just in the United States. According to McKinsey & Company, spending on “DEI-related efforts” across the globe totaled $7.5 billion in 2020. If trends continue, that figure will exceed $15 billion by 2026.

And, in another American tradition, government contractors have turned a profit on this fad. While it’s hard to determine the precise amount of money that Washington spends on DEI, a search for contracts, grants, and other outlays that reference “diversity, equity, and inclusion” and similar terms suggests that DEI principles were attached to more than $1 billion in federal contracts last year.

This represents a rapid change. In 2019, according to our search, the federal government awarded only $27 million in contracts with language related to “diversity and inclusion.” But after the death of George Floyd in 2020, the federal government and private contractors went all-in on DEI, seeking to implement the Biden administration’s “whole-of-government” equity agenda.

In a series of executive orders beginning in January 2021, Biden unveiled that agenda. The White House directed each federal agency to “implement or increase the availability of [DEI] training programs,” create “internal policies and procedures to support” employees “transitioning” to another gender, submit annual DEI plans and reports to a White House steering committee, establish “agency equity teams,” and appoint a “chief diversity officer” to oversee compliance. These directives created a sudden demand for DEI consulting and opened the floodgates of federal funding to private contractors who offered “expert” advice on diversity-program management. Consulting firms were delighted; they set about rationalizing and marketing a respectable front for both the ideology and their own cash grab.

The large consulting firms advertised the adoption of DEI as a moral imperative. They boasted of their spending on diversity to demonstrate their credentials. Deloitte, for example, claimed to have spent $1.47 billion on “diverse suppliers.” McKinsey committed to doubling spending on such suppliers, while investing $20 million in DEI research. Deloitte, meantime, published a report titled The Equity Imperative, which encouraged “businesses [to] take the lead in dismantling” systemic racism—preferably with Deloitte’s “premier cross-enterprise DEI analytics tool.”

These firms argued simultaneously that DEI was morally necessary and good for the bottom line. McKinsey published studies that claimed to have found economic benefits from diversity policies. Incredibly, it claimed that narrowing the “gender gap” would add $12 trillion to GDP. Economists have shown that these studies are misleading and potentially fallacious.

The consultant class cashed in. In early 2022, McKinsey partnered with another firm to present “a series of workshops” that would “equip federal leaders working across government with research-based insights” to improve their “DEIA work” (the added “a” is for “accessibility”). Deloitte, seizing the opportunity presented by Biden’s executive orders mandating DEI in the federal workforce, published a paper on the “Government’s equity imperative,” presenting the firm’s “government equity activation model.”

McKinsey and Deloitte were only two of the many consultancies reaping financial rewards from the executive orders, with firms securing millions of taxpayer dollars in DEI-related contracts.

Agencies across the federal government participated in the gold rush. The Treasury Department awarded $2.8 million to Accenture Federal Services for DEI “implementation.” The Department of Health and Human Services gave a $2.9 million DEI contract to Totem. The Department of Defense agreed to pay Tyler Federal $3.3 million for “(DEI) database services.” The Agency for International Development allocated $6.2 million to SSG Advisors for “DEIA buy-in.”

What do these contracts entail in practice? Consider the $4.4 million agreement between the Department of Labor and CALCO Consulting Group to “deliver diversity, equity, inclusion, and accessibility (DEIA) training” for the department’s Job Corps program—an initiative to help young people “complete their high school education, train[] them for meaningful careers, and assist[] them with obtaining employment.”

Rather than focus on helping its clients find meaningful work, the Department of Labor contract funneled millions to outside vendors to conform the program to the DEI creed. For example, a team of CALCO DEI consultants went to Montgomery, Alabama, to lead “a 3-day immersive Student-Centered Design training as part of Job Corps’ plan to adopt DEIA principles at all its centers.” The department, in other words, used the firm to engrain critical race theory principles at every level of the program’s operations.

At NASA, the government awarded $2.4 million to LMI Consulting “to incorporate and deeply engrain diversity, inclusion, equity, and accessibility (DEIA) in” the agency’s “culture and business.” LMI, which has “assisted NASA in transforming its workforce,” happily adapted its product to the new DEI ideology. The agency recognized the firm’s work, giving its “Group Achievement Award” to seven LMI consultants—not for advancing space travel, but for “developing innovative approaches and ways to use lessons learned when implementing [DEI] strategies.”

The Department of Homeland Security is also implementing the White House’s DEI priorities. In September 2023, the department awarded $2.1 million to the Millennium Group International for “(DEIA) professional support services,” a rolling contract that could reach $7.5 million by 2028. That contract is part of the department’s sophisticated diversity apparatus, which includes strategic plans, DEI workshops and seminars, and trainings on “the brain science of inclusion.” Instead of enforcing the law and protecting life and liberty, DHS has focused on “unleashing the power of our shared human spirit” through “inclusive diversity.”

These contracts, and the racialist ideology on which they are predicated, do nothing to serve the national interest. When Donald Trump takes office in January, he should dismantle the diversity apparatus, which threatens his agenda and the principle of equality before the law. DEI is designed to favor ideologues and consultancy grift instead of competent or public-spirited officials. The second Trump administration must put a stop to these contracts immediately, lest they become one more corrupting force in an already deeply compromised federal government.

This article was originally published in City Journal