The NYC Council’s June 4, 2026 FY27 executive budget hearing probed the Department of Social Services’ (DSS) recent termination of consulting contracts with McKinsey and Guidehouse, asked for the full cost and procurement history (FY25 and FY26 totals), and sought the timeline and budget for insourcing the AI and IT work those firms did — including a McKinsey-developed SNAP payment-error quality-assurance tool now in limited pilot. Source: https://youtu.be/daUwunHDBcs&t=2163 ; https://youtu.be/daUwunHDBcs&t=2333 ; https://youtu.be/daUwunHDBcs&t=6882
# What’s happening
– DSS ended McKinsey and Guidehouse contracts earlier in fiscal year 2026.
– DSS reported FY26 spending: McKinsey $9,000,000; Guidehouse $300,000.
– Budget adds 13 DSS IT heads to insource contracted IT work.
Source: https://youtu.be/daUwunHDBcs&t=2163 ; https://youtu.be/daUwunHDBcs&t=2333 ; https://youtu.be/daUwunHDBcs&t=2417
# Why it matters
– SNAP applicants and HRA workers using the QA tool may see changed review processes during rollout.
– City payroll and IT operations assume new costs and staffing instead of outside consulting fees.
Source: https://youtu.be/daUwunHDBcs&t=6882 ; https://youtu.be/daUwunHDBcs&t=2333
# Key details
– FY26 McKinsey contract spending reported at $9,000,000. Source: https://youtu.be/daUwunHDBcs&t=2333
– FY25 McKinsey spending reported at $450,000. Source: https://youtu.be/daUwunHDBcs&t=2333
– FY26 Guidehouse spending reported at $300,000; FY25 Guidehouse $256,000. Source: https://youtu.be/daUwunHDBcs&t=2333
– McKinsey work produced an AI-based SNAP payment-error quality-assurance tool using Amazon Web Services (AWS). Source: https://youtu.be/daUwunHDBcs&t=6882
– The SNAP QA tool remains in a small pilot with about 70 staff testers; full rollout not completed. Source: https://youtu.be/daUwunHDBcs&t=6882
– DSS said contracts were awarded via a competitive RFP and were “on-demand” per-project contracts. Source: https://youtu.be/daUwunHDBcs&t=2501 ; https://youtu.be/daUwunHDBcs&t=2333
The Council asked for the full contract histories, line-item spending, and a plan to insource the AI and IT work previously done by consultants. DSS answered with contract totals for FY25 and FY26, described the services delivered, and outlined the insourcing approach during the FY27 budget hearing. Source: https://youtu.be/daUwunHDBcs&t=2163 ; https://youtu.be/daUwunHDBcs&t=2333
**Department of Social Services (DSS)**
– Role or jurisdiction: City agency that oversees Human Resources Administration (HRA) and Department of Homeless Services (DHS).
– Action taken or responsibility: Ended contracts with McKinsey and Guidehouse; planning to insource IT and AI work.
– Relevant numbers or dates: Reported FY26 spending McKinsey $9,000,000 and Guidehouse $300,000; budget adds 13 IT heads.
Source: https://youtu.be/daUwunHDBcs&t=2163 ; https://youtu.be/daUwunHDBcs&t=2333 ; https://youtu.be/daUwunHDBcs&t=2417
DSS officials told Council members that McKinsey and Guidehouse were procured through a competitive request-for-proposals (RFP) process and were engaged under on-demand, per-project contract terms. Source: https://youtu.be/daUwunHDBcs&t=2501
**McKinsey & Company**
– Role or jurisdiction: Private management consulting firm contracted by DSS.
– Action taken or responsibility: Developed a quality-assurance tool to flag potential SNAP payment errors.
– Relevant numbers or dates: FY26 spending reported at $9,000,000; FY25 spending reported at $450,000; tool in pilot with ~70 staff.
Source: https://youtu.be/daUwunHDBcs&t=2333 ; https://youtu.be/daUwunHDBcs&t=6882
DSS described the McKinsey tool as a supportive, last-check process that compares worker inputs to documents and data matches and flags mismatches for staff review. DSS said the tool does not replace staff. Source: https://youtu.be/daUwunHDBcs&t=6882
**Guidehouse**
– Role or jurisdiction: Private consulting firm contracted by DSS.
– Action taken or responsibility: Provided consulting services under on-demand contracts; contract ended in the same period as McKinsey’s.
– Relevant numbers or dates: FY26 spending reported at $300,000; FY25 spending reported at $256,000.
Source: https://youtu.be/daUwunHDBcs&t=2333
DSS officials said the primary reason for terminating both consulting relationships was an internal determination that DSS could perform the necessary work in-house or in partnership with other city agencies. DSS representatives declined to attribute termination to any single past external report and said prior controversies involving McKinsey (raised by Council members referencing earlier McKinsey work) were not a factor DSS staff could directly address because they predated present staff. Source: https://youtu.be/daUwunHDBcs&t=2593 ; https://youtu.be/daUwunHDBcs&t=2501
DSS told the Council there is no FY27 dollar estimate available yet for the full cost to insource all AI/IT work previously performed by consultants. Officials said insourcing will be achieved by hiring city employees and relying on other city agencies when appropriate. Source: https://youtu.be/daUwunHDBcs&t=2333 ; https://youtu.be/daUwunHDBcs&t=2163
DSS confirmed the FY27 executive budget includes 13 additional IT positions that will be on the agency payroll. DSS said some savings estimates for IT insourcing were not listed separately in the executive plan because they were offset by other budget adjustments, and officials committed to supplying detailed savings estimates on request. Source: https://youtu.be/daUwunHDBcs&t=2417 ; https://youtu.be/daUwunHDBcs&t=2333
DSS described privacy and federal compliance safeguards for the SNAP QA tool. DSS said any system that interacts with SNAP benefits requires federal approval, and DSS asserted there are “significant privacy and data protections” in place for the tool that uses AWS infrastructure. Source: https://youtu.be/daUwunHDBcs&t=6882
Council members asked DSS for a follow-up with a full breakdown of FY25 and FY26 contract amounts, services delivered, and procurement records. DSS agreed to provide further contract detail to the committees. Source: https://youtu.be/daUwunHDBcs&t=2163 ; https://youtu.be/daUwunHDBcs&t=2333
For follow-up records requests referenced at the hearing, Council staff should request:
– Full contract documents and amendments for McKinsey and Guidehouse.
– Line-item spending by fiscal year (FY25, FY26).
– Procurement records for the competitive RFPs that produced those contracts.
– DSS timeline and budget estimates for hiring and operationalizing the insourced IT/AI functions.
Source: https://youtu.be/daUwunHDBcs&t=2163 ; https://youtu.be/daUwunHDBcs&t=2333
If you want, I can draft the specific Council data request language to obtain the contract files, procurement evaluations, and the FY27 insourcing cost estimate from DSS.
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