General items: Standing Committee on Government Operations and Estimates—February 6, 2023
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Opening statement
By: The Honourable Helena Jaczek
Minister of Public Services and Procurement
Standing Committee on Government Operations and Estimates
Study of contracts awarded to McKinsey & Company
February 6, 2023
(Word count: 885)
Good afternoon, Mr. Chair and committee members.
Thank you for inviting me to appear today as you conduct this important study into Government of Canada contracts awarded to McKinsey & Company.
Let me begin by acknowledging that we are gathered on the unceded territory of the Algonquin Anishinaabeg peoples.
With me today is my Deputy Minister Paul Thompson and the Associate Assistant Deputy Minister of Procurement, Mollie Royds.
I would like to begin by saying that I believe the growth in the use of consultants in the public service is an important question and that's why the prime minister has asked Minister Fortier and me to review the government's practices.
I also believe that these important questions can and should be asked and answered with the thoughtfulness and respect that Canadians deserve.
Our government is committed to ensuring that the public service operates in a way that best serves Canadians.
As this committee undertakes its work, my colleague, Treasury Board president Mona Fortier, and me are also undertaking a full review of all Government of Canada purchases from McKinsey & Company.
Under Minister Fortier’s direction, the Treasury Board Secretariat is requiring federal departments to review their contracts with McKinsey & Company, through their internal audit teams, to assess if contracts complied with Treasury Board policies and departmental internal control frameworks. This work is currently underway.
On the Public Services and Procurement Canada (PSPC) side, my officials have already begun a preliminary assessment of the 24 contracts which fall under the department as the central purchaser.
These contracts will also be more formally reviewed by the departmental internal audit team.
In addition, to ensure there is also a more independent review, I have written to the Procurement Ombudsman to ask him to review the procurement processes associated with the award of contracts to McKinsey & Company by all federal departments.
I know this committee has also adopted a motion that calls on the Auditor General to conduct a performance and value for audit.
I welcome these reviews which may help determine what further adjustments or refinements should be undertaken to continue to strengthen the fairness, openness and transparency of federal procurement practices.
In the interest of helping this committee with its study, allow me to provide some information regarding these contracts and the role which PSPC plays.
The department supports the government’s operations, and procures goods and services on behalf of other government departments as well as for its own needs.
Contracting is a regular part of how the government operates to deliver services to Canadians.
The decision on whether organizations will do the work in-house or seek external expertise or services is made by departments for several reasons, including to access specialized skills or knowledge.
Under the responsibility of their deputy head, each federal department decides whether to seek external expertise.
Once that decision is made, PSPC undertakes the procurement on behalf of the client.
Of the 24 contracts awarded by PSPC since 2011, 3 contracts, worth more than 50% of the total value of contracts with McKinsey & Company, were awarded through open, fair and transparent competition.
I will also note that Treasury Board Secretariat is currently collecting information regarding contracts awarded to McKinsey & Company by other departments acting on their own authority, and that work is ongoing.
Outside of the competitively awarded contracts, and with the exception of one low dollar value contract, the remainder were awarded as call-ups through what is referred to as a “National Master Standing Offer”.
My department’s preliminary assessment of this standing offer indicates that it was established in accordance with all government contracting rules related to sole-source contracting.
I recognise that there may be some confusion related to the terms standing offer and supply arrangements, which I would like to clear up.
Standing offers and supply arrangements are not contracts and do not guarantee a company future business with the government. They are both administrative tools that streamline procurement for departments, and reduce red tape and costs for governments and businesses.
A company’s status on a standing offer or supply arrangement list is reviewed regularly and can be revoked at any time if it no longer qualifies.
It is a practice that began long before this government was elected.
In addition, standing offers have expiry dates as these are instruments where goods or services are provided at pre-established prices.
Supply arrangements, on the other hand, do not have expiry dates. That is because supply arrangements are established to allow for regular refreshes of qualified suppliers and to allow competition among pre-qualified suppliers for each contract. For administrative and technological reasons, an arbitrary end-date—far into the future—is used when reporting supply arrangements on our website.
To be clear, there are no 80 year contracts with McKinsey & Company.
That said, I have asked my officials to address the way in which these supply arrangements are reported to avoid future confusion.
Mr. Chair, in everything we do, our overriding aim is clear: providing the goods and services departments needs to deliver their programs, at the best value to Canadians.
We understand the serious nature of this study and my officials and I are ready to respond to questions and provide information in support of the study.
I look forward to working with you and I am pleased to answer your questions.
Thank you.
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