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In an effort to provide the state with a “playbook” when considering data center projects, the Indiana Economic Development Corp. is paying another $625,000 to a consulting firm to finish a white paper report on the increasingly prevalent trend.
That money is in addition to the $650,000 previously paid to Boston Consulting Group for the first phase of the study. In total, the IEDC is paying $1.275 million to the Massachusetts-based firm in a contract to examine economic and incentive structures surrounding data centers.
An IEDC spokesperson said the second payment was for the study’s second phase. The time period for that extension expired at the end of August and Boston Consulting’s report should be finished and publicly posted in “a few weeks.”
Boston Consulting declined to comment on the contract.
According to IEDC documents, Boston Consulting was first hired in April to prepare a report that seeks to answer “whether data centers provide sufficient return on investment for Indiana, given their high energy consumption, relatively low direct job creation and community concerns.” Agency documents list the source of the contract as “negotiated” as opposed to “bid/quotation,” but an IEDC spokesperson said competing bids were solicited for the study.
The contract laid out two phases of the study: a research period followed by time for consultants to compile data and write a report.
A prospectus for the project states Boston Consulting will research outcomes and trends for data centers and their supply chains and develop “an opportunity evaluation playbook outlining factors to consider” when considering data center projects.
The IEDC has given out tens of millions of dollars in tax breaks to data center projects on equipment purchases, but decisions on whether projects are built or abandoned often come down to elected officials at the city or county levels.
There’s no official count of how many data centers currently operate in the state, but the utility consumer advocacy group Citizens Action Coalition estimates there are around 40 data centers that are active or being proposed.
Indiana Secretary of Commerce David Adams was formerly a senior adviser to Boston Consulting and has overseen the IEDC, as well as several other state agencies, since his appointment by Gov. Mike Braun in January.
According to documents available in the IEDC’s transparency portal, the agency contracted with Boston Consulting two other times, both in 2023, on studies regarding development incentives.
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It’s almost as though the answer is obvious and we want to get as many projects approved before we get evidence that we’ve done the wrong thing.
I don’’t think that quite it. The first $600K didn’t give the politicians the answer they wanted, so let’s throw another $600K at it to see if we get a better answer.
I wonder what IU or Purdue would have charged, if IEDC had hired them. BCG doesn’t even have an Indiana office.
How is that relevant?
For a government that wants to do more with less, they could have gotten the same answer … but I doubt it’s the right answer.
and have a study done by a left wing faculty nut job? Or would this go to the right wing faculty nut jobs in the Econ or Business departments?
What I think many people need to understand is that even though you work in the government, it does not necessarily mean you understand every single aspect that is thrown at you. Working there is just as difficult, if not more so, than working in the private sector. Hiring a consultant that has years of experience with these types of project, is better than having a government employee do the same thing. While Purdue, IU, Rose, ND, etc. might…again, might, have those that could do this type of work…many of them are already teaching students and are not sitting around looking for the next projects. My humble opinion based on my past experience…working in both the public and private sectors. Also note, that reporters do not always provide all of the facts (I am not saying that is the case here…but it is something to consider, and sometimes they “spin” it with words (again, not saying that is the case here). You should question and wonder, but don’t always assume you know the entire story.
Well said and agreed.
I know in the private sector a consultant at the top end, will charge about $250/hour for a “skilled” person. $1,200,000 only represents about two FTEs for a year. These better be some really “skilled” people.
What I think is really happening is the first $600K didn’t give the politicians the answer they wanted, so they decided to throw another $600K at it to see if we get a better answer.
You do realize that professors have students and some of the best learning experiences would be exactly the project that we bid out a $1.2 million dollar no-bid contract on.
Heck, have IU, Purdue, and Ball State all do the research independently. Get three answers. They all have economic research centers.
I think Dan and Mike hit it on the head – the first answer wasn’t the one legislators wanted and they’re paying more to get a “revised” study that justifies the significant tax breaks.
The politicians should have requested this type of study before passing legislation in 2019 that allowed significant tax breaks for data centers. But, like most legislation recently, it was rammed thru by the controlling party.
Yes, please!! Legislators don’t have to be the expert in any field, but need to seek information from multiple sources the come to a conclusion about how projects would affect hoosiers, which would be different for different areas. THEN decide if tax breaks would be advisable.
That’s not how the American Legislative Exchange Council likes to operate …
of course tax breaks are appropriate…ask Beech Grove how that’s likely to work out for them…