Government Operations Committee on June 10th, 2024

[Nicholas Swales]

That's right.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

If the committee wanted to understand the motivations or the reasons behind what seems like flagrant breaking of the rules, whom would we talk to?

[Karen Hogan]

Whom would you talk to in each of the organizations, or just in general?

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Yes, we can bring anyone before committee and ask them what they were thinking when they broke all of the rules to give work to McKinsey. Sometimes it can be hard to figure out who that is.

[Karen Hogan]

I think it depends where you're going. I would tell you that deputy heads and heads of Crown corporations should be able to answer questions about all procurement within their organization, even though they were not the ones actually signing the contracts. It would be either CFOs, individuals in procurement groups...there are many layers. It depends on what you're looking for and we need to recognize, as Nick mentioned, that this was over a 12-year period. People move around a lot in the public service. If you're looking for the specific individual, you just might not find them.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Would one way to test this thesis be to simply expand this work slightly to include a broader sample of vendors and look at whether the same patterns occur?

[Karen Hogan]

I think that would be one choice.

What I would also think is a good option is that.... We've also encouraged all departments and agencies and Crowns to improve their compliance and quality control around procurements. I think it's time to give the public service a chance to recognize and refresh all of the rules, and then go back and look, because, as I said, I have no reason to believe my results would be any different if I expanded this.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

How about accountability? What's at stake here is value for money. This is Canadians' money. It's being spent poorly. There's one company that's enriching itself to the tune of millions and millions of dollars. There are individuals who make a decision to break the rules, and whether they know the rules exist or not, there's still some culpability there. How do we ensure that people are held accountable? Where does accountability ultimately fall in this place?

[Karen Hogan]

I think—

[The Chair, Conservative, Kelly McCauley]

You have about five seconds for an answer.

[Karen Hogan]

I've said it before. I think, ultimately, accountability rests with the deputy head or the head of a Crown corporation to make sure that all of their contracting provides value for money.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thanks, Mr. Bachrach.

Mrs. Block, please.

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

Thank you, Chair.

Welcome back to our committee, Ms. Hogan, and welcome to your departmental officials.

In your audit, you found multiple instances of favouritism being shown to McKinsey. In one instance, the Business Development Bank of Canada gave a contract to McKinsey, despite McKinsey's not being the highest-scoring bid. They also gave two sole-source contracts without documenting their justification, which my colleague mentioned in her intervention. The Canada Border Services Agency had three contracts missing bid evaluation documents, and Innovation, Science and Economic Development Canada had two such contracts.

As my colleagues around the table have been pointing out this morning, we see repeated abuses of the procurement system, with seemingly no checks and balances in place from the government—and, it would appear, no concern or push-back as well.

If the exception becomes the rule, then I believe this becomes the culture and we have a huge problem within the government. How is this allowed to happen with no consequences for those who are failing to follow the rules?

[Karen Hogan]

I do agree that when 70% of the contracts awarded were done so in a non-competitive way it raises concern. Competition should be the default. Competition ensures that you hopefully get a better price for taxpayers. That doesn't always mean that it is the lowest bidder. There could be business reasons for why you might choose a different bidder, but again, I would expect that kind of a judgment call is well supported and documented.

I think, often, that's what we're missing here. The rules aren't being followed, and then there is no demonstration for what business decision drove that. I would really like to see everyone across the federal government have more rigour in their procurement processes. This isn't a big burden that we're asking. It is about just being transparent and being able to answer to Canadians 10 or 12 years down the line why a decision was made. It starts with understanding the rules, and then documenting all of the judgment calls that are made along the way.

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

I want to confirm what I believe I heard you say in regard to accountability: that there needs to be accountability within a department. Regardless of whether a department head, a deputy minister, an assistant deputy minister or any one of those individuals was involved in procurement, they need to be held accountable for decisions that are made within their department and when rules are not being followed. Is that what I heard you say?

[Karen Hogan]

I believe that Andrew is going to want to jump in here, but I think I would start off by saying that legislation makes it clear that the deputy head is the accounting officer of an organization. While you might delegate those powers to others in the organization for day-to-day to happen—because, for example, I couldn't review every single contract that my office issues—you still have to make sure that people are properly trained and they understand the rules and there are good compliance and overview.

I don't know, Andrew, if you want to add something.

[Andrew Hayes, Deputy Auditor General, Office of the Auditor General]

The only thing I would add is that we stressed in our ArriveCAN report the importance of delegated decision-makers understanding and being accountable for the decisions they make to spend public money.

As much as the deputy head is the responsible person to answer and be accountable here at committee and before Parliament, there is an accountability all the way through the organization that should be enforced.

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

I'm not sure how much time I have, but I would ask, does being moved out of a position sever the responsibility that you might have held when you were in that position and making decisions?

[Karen Hogan]

I mean, my view is not: I would expect, however, that you left a really good file behind to demonstrate the judgment calls and the decisions you made.

You know, people's memories are going to fail, so it's important to make sure you document something when you're going through it.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Mr. Kusmierczyk.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you, Mr. Chair.

Thank you so much, Ms. Hogan, to you and your team and the entire Auditor General team for your incredibly important work that you're bringing forward for Canadians and for this committee. Thank you so much. All of us are seeking stronger and better accountability.

Here's what I wanted to ask you. There were 97 contracts that you looked at in 10 departments and also 10 arm's-length Crown agencies. There is a variation in terms of the degree of non-compliance you found. Are there departments that scored better or scored well or even had a clean bill of health in your review? If there are, what does that tell you about some of the challenges we're facing here if some departments actually did okay?

[Karen Hogan]

I'm going to ask Nick or Steven to pull out the one. As I mentioned, there were nine out of 10 departments and agencies that did not follow the rules when it came to procurement, so we'll get you the name of the one. Even there, we have to recognize that at times they did, right? I think that's what speaks to the need to refresh and remind everyone of the rules.

I would expect that it's not just training, but that there would then be monitoring, oversight and compliance that happen after the fact. An individual might do only one contract every couple of years, and you can't be expected to remember all of the rules, so I think it's important to do that refresh.

Nick, do you have the name? I tried to speak long enough so you could....

[Voices]

Oh, oh!

[Nicholas Swales]

Yes, I got that. Natural Resources Canada was the organization, the federal department agency, where we found that they had followed the rules.

I think the other thing to bear in mind is the number of contracts. You know that in some cases there were more, which increases your risk of missing a rule.