Government Operations Committee on June 10th, 2024

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

This committee wants to make certain that there is no activity as such. We want to make certain that there is no coordinated effort. We want to make certain that every step is being taken to provide fairness and transparency to the system. The government's adopting recommendations and enacting some of the suggestions being made, and a pandemic happened, which also took things off the rails.

There's a lot of work and lots of issues. However, were there criminal activities? Were there any elected officials who were interfering?

With regard to the members on the opposite side, I know that even a leader of the opposition in the past stood to support one of his ministers who was charged or subject to a conflict of interest investigation during a procurement in.... I believe it was the minister representing Parry Sound—Muskoka at the time. We have to make certain that doesn't repeat. We want to make certain there is no suggestion of such.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

I have a point of order, Chair.

[The Chair, Conservative, Kelly McCauley]

I'll stop the clock. Go ahead, sir.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

It seems the member for gas plants is just making things up.

[An hon. member]

Oh, oh!

[The Chair, Conservative, Kelly McCauley]

First of all, before you continue, let's not use such stuff.

Continue, please.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

Mr. Chair, I'm trying to ensure that there is integrity, transparency and fairness. I'm not looking at accusing anyone. I'm just making certain that people are operating effectively and that those proper steps are being taken.

[Karen Hogan]

I'm not sure what more I could offer than from my previous questions. We did not see ministerial interference in any of the contracts. The review of these 97 contracts did not raise concerns that we felt were of a nature that we should refer to the RCMP. This is a question of understanding the rigour that is needed around Government of Canada procurements to demonstrate value for money to Canadians.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

How many contracts exist beyond just the McKinsey ones? What's the size and scope relative to what you've reviewed versus what actually happened?

[Karen Hogan]

I think it's important to highlight that we looked at just the professional services that would have fallen under the types of services that McKinsey could provide. We've included some graphs in our report that we thought would help give a sense of where the McKinsey contracts fit in the bigger, broader Government of Canada procurement of professional services.

Over the 12 years that we looked at, the government spent about $68 billion on professional services, $200 million or so of that was McKinsey, which represented 0.27% of what was spent on procurement.

That's why when we see that there was a frequent disregard of the rules for McKinsey, we don't believe that it's reasonable to assume it's limited to just them. It is likely that it's time to remind all public servants involved in procurement about what the rules are and why they're there, so they can be followed, and that documentation will exist to demonstrate that probity and prudence use of public funds was present.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mrs. Block, go ahead, please.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you, Chair.

To be really clear, this report was initiated by the revelation of the sudden sharp increase in the amount that McKinsey received in contracts once this Liberal government took power. I'll reiterate that from 2011 to 2015, McKinsey received $8.6 million in contracts. From 2015 onwards, under this Liberal government, they received $191 million, a much higher number than was previously reported. While I agree that it is perhaps a bellwether of what is happening across departments writ large when it comes to blatant disregard for the rules when it comes to contracting, we did see a very sharp increase in contracts to one individual company.

Prior to this audit, we found out there was a personal connection between McKinsey and the Liberals. In fact, it was Dominic Barton, the head of McKinsey, who was the brain behind the creation of the Canada Infrastructure Bank. You found in your audit that the Canada Infrastructure Bank gave two contracts to McKinsey with no evaluation criteria in the request for bids or in those evaluations.

Did the Canada Infrastructure Bank have any explanation for this?

[Karen Hogan]

I'm going to have to ask Nick if he can provide some additional details on that.

[Nicholas Swales]

The scenarios they were working with get a bit complicated. Sometimes RFPs contain provisions such that they don't necessarily have to follow very precisely the evaluation structure that they set up. That was the case with these ones in the competitive realm. Our concern was that this was not well documented.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

You also raised some serious privacy and security concerns in your audit. You found that in one case, IRCC gave five contractors without the proper security clearances access to its network.

What sort of information would these contractors have had access to on IRCC's network? Would it have included sensitive personal information of Canadians?

Also, what other instances were there of contractors doing work or being given access to sensitive information without the proper security clearances?

Were there other departments?

[Karen Hogan]

When it came to the issue with Immigration, Refugee and Citizenship Canada, I actually spoke with the deputy minister myself. He assured me that the individuals in question didn't access anyone's personal information. I would have been concerned around applications from individuals seeking either residency or work permits here in Canada.

When we looked at the security, we found that in the contracts that we sampled, there were 17 that required security clearances in order for the work to be done. We recognize that this is only in the contracts from the departments and agencies, because that's where the government security policy kicks in. We found that about 76% of them couldn't demonstrate to us that the individuals who were going to do the work had the required clearances before that work began. That is very concerning. It doesn't mean they didn't have a clearance, but it means that the individuals managing the procurement process did not have that on file and had not done that work, and that is a requirement. That is an important rule that really should have been followed.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

[The Chair, Conservative, Kelly McCauley]

Mr. Bains, go ahead, please.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. Chair.

I'm going to just go into your work with the Office of the Procurement Ombud.

In addition to the internal reviews by departments, agencies and some Crown corporations, your office and the Office of the Procurement Ombud each published reports on federal contracts awarded to McKinsey.

How did you work with the Procurement Ombud for this report?

[Karen Hogan]

I'm sorry, but I might see if Nick wants to add anything.

We did not work with the Procurement Ombud. We were aware of each other's reviews. We were both responding to requests for work. Mine was from a unanimous motion from the House of Commons, and his was from a different source. He looks at very specific compliance with procurement rules, and then we were able to bring in the Crowns. We were the first organization able to bring in the Crowns since no one else could look at the Crowns.

Our findings were very similar, and that's why we outlined some of the recommendations coming out of the Procurement Ombud as well as the internal audit shops. That's why we didn't repeat any recommendations. We felt that answers had already been provided.

Nick, I don't know if you want to expand at all on how you interacted with the Procurement Ombud.

[Nicholas Swales]

I would just add that we did talk to them frequently as they were drawing their conclusions, and they provided us with information about what they were seeing in individual contracts, which we then verified against the information we had to ensure that we had the same understanding of the situation.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Then with the respective mandates ultimately, instead of differentiating things, they were able to find similarities. In your opinion, was it valuable to have two arm's-length offices report on the same topic? Why or why not?

[Karen Hogan]

What I would tell you is that you actually had many independent parties reporting on this. The comptroller general would have asked all of the internal audit shops to do work. Where we could, we relied on that work and used some of it.

Then you would have had the procurement ombuds, and then there was my office. I think the uniqueness I was able to bring was that I was the only organization that looked at determining whether value for money had been achieved, but then I am also the only one allowed to audit the Crown corporations, and I was able to bring them into the story. Up until then, it was just departments and agencies.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

You indicated there were three or many. Were there other offices involved?

[Karen Hogan]

The comptroller general reached out to all 10 departments and agencies that indicated they had contracts with McKinsey & Company and provided them with an audit program that the internal audit shop had to, at a minimum, carry out, in addition to whatever other work they may have wanted to do around the procurement process. Every department's internal audit shop is supposed to be independent of the organization and reports directly to the deputy head on what they find when they do audit work within the department or agency.