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Standing Committee on Public Accounts: October 9, 2025

2024 Auditor General’s Report 5 - Professional Services Contracts

Date: October 9, 2025, 11:00 a.m. to 1:00 p.m.

Location: In person

On this page

Opening Remarks

Arianne Reza, Deputy Minister

Public Services and Procurement Canada

Standing Committee on Public Accounts

Report 5 of the Auditor General, 2024

Professional Services Contracts

October 09, 2025

Opening

Thank you, Mr. Chair.

Let me begin by acknowledging that we are gathered on the unceded territory of the Algonquin Anishinaabe People.

I want to thank this Committee for providing Public Services and Procurement Canada with an opportunity to discuss the Auditor General’s report 5 on professional services related to McKinsey & Company.

The report is, in fact, part of a series of audit reports. In 2023, the Prime Minister at that time asked the President of the Treasury Board and the Minister of Public Services and Procurement to undertake a review of contracts awarded to McKinsey. Moreover, the Office of the Procurement Ombud conducted their own independent study.

Taken together, the findings and recommendations of these studies point to 3 areas for improvement:

First, the need to better comply with existing procurement rules.

Second, the need to adequately document procurement decisions.

And third, the need to improve overall quality control over our procurement practices.

These areas for improvement are in no way unique to the focus of the audits of McKinsey contracts, rather, these areas of improvement apply across all commodities and the procurement function. There is a fundamental need to build and maintain public trust in the procurement system.

Public Services and Procurement Canada Actions

Since I last appeared before this committee, PSPC has made significant efforts to strengthen the procurement process across the continuum. By continuum, I mean from the engagement in the early stages when a client department first identifies a requirement, to planning the procurement strategy, to the award, administration and close out of the contract.

We have implemented new mandatory checklists for task authorizations and procurement file completion. We have increased the focus on procurement officer training, and increased interactions and added requirements for attestations with suppliers.

PSPC has also created the position of Chief, Contract Quality Assurance and Records Compliance focused on compliance and information management. Since it was introduced in 2024, the office has reviewed over 1200 procurement files and trained over 600 procurement officers.

Mr. Chair, turning now to the Report at hand, the Auditor General’s scope is comprehensive as it examined the procurement practices of departments and agencies and it also looked at value for money.

These are two sides of the same coin, Mr. Chair.

On the value for money side, client departments are responsible for demonstrating sound stewardship and best value in their procurement actions and decisions.

On the other side, actions related to procurement management are expected to be fair, open, and transparent, and meet public expectations in matters of prudence and integrity.

With respect to the one recommendation in this AG report, PSPC is in agreement. PSPC has put in place concrete measures to strengthen conflict of interest safeguards. In addition, to our annual mandatory Conflict of Interest Declaration for all PSPC employees, we have made explicit the requirement for the completion of an Evaluator’s Confidentiality and Conflict of Interest Certification for our solicitation process. This measure ensures that evaluators explicitly attest to being free of conflicts of interest at various steps in the contract award process. The certification will be automatically included in the file documentation.

With respect to other observations of the report, PSPC has already changed the administration of non-competitive National Master Standing Offers, by requiring clear justification by client departments. PSPC has also introduced limits on the value, duration, and amendments to minimize financial risk and encourage solution-based approaches. I have personally written to all my deputy-head colleagues on the management of professional services procurement to underscore the importance of sound procurement practices to drive best value and accountability for results.

Closing

I want to again thank the Auditor General for her reports on these matters. They have helped us improve our processes and ultimately strengthen the integrity of procurement of professional services.

The changes we have made are consistent with PSPC’s commitment to continuously improve federal procurement practices.

Thank you.

Changes in Procurement services in response to the Procurement Ombud’s and Auditor General’s reports

Issue

On November 2, 2022, a motion was passed by the House of Commons that called on the Office of the Auditor General of Canada to conduct a performance audit on ArriveCAN, including on contracts and subcontracts, as well as payments under those contracts.

Reports resulting from a review carried out by the Office of the Procurement Ombud (OPO) and an audit conducted by the Office of the Auditor General (OAG) were tabled on January 29, 2024, and February 12, 2024, respectively. The reports highlight serious concerns regarding project management and offer recommendations pertaining to procurement, specifically with regard to professional services.

Key facts

Key messages

If pressed on immediate actions that PSPC is taking to strengthen existing controls and oversight for professional services contracting:

If pressed on the actions being taken in response to the auditor general report:

If pressed on the actions being taken in response to the procurement ombud’s review:

If pressed on Indigenous contracting:

Background

Under its authorities, PSPC awarded contracts in support of ArriveCAN and was responsible for providing procurement guidance to the client department. The Canada Border Services Agency (CBSA) was responsible for developing and managing the ArriveCAN tool based on the Public Health Agency of Canada’s health requirements enforced by the Quarantine Act.

A total of 46 different contracts were used in support of ArriveCAN. Of these 46 contracts, 31 were awarded by PSPC under its authorities:

On November 14, 2022, the House of Commons Standing Committee on Government Operations and Estimates (OGGO) adopted a motion recommending that the Procurement Ombud conduct a review of contracts awarded in relation to the ArriveCAN application.

On January 13, 2023, the Office of the Procurement Ombud determined that there were reasonable grounds to launch a review of procurement activities associated with the creation, implementation and maintenance of ArriveCAN.

In light of the findings of the review and audit, PSPC took immediate action to strengthen existing controls around the administration of professional services contracts. On November 28, 2023, other government departments and agencies were informed of new measures, introducing a common set of principles and mandatory procedures that clients must abide by to use PSPC’s professional services contracting instruments.

These changes closely align with the recommendations in the OAG and OPO reports and are echoed in the resultant management action plans to which PSPC has committed.

Procurement Ombud Procurement Practices Review on Replacement Resources in Professional Services Contracts

Issue

The Office of the Procurement Ombud has undertaken a review of supplier use of replacement resources in professional services contracts (referred to as “bait and switch”), a tactic where suppliers propose highly qualified individuals in their bids but replace them post-award with potentially less qualified personnel.

Key facts

Key messages

Background

The tactic of “bait and switch” was identified in a previous review by the Office of the Procurement Ombud (OPO) on procurement practices of the Canada Border Services Agency. OPO identified that in 76% of applicable contracts reviewed, some or all of the resources proposed by the successful supplier in their bid did not perform any of the work on the contract. The present review was undertaken to study the prevalence of this practice. Where issues were found in the overall review, they were not systemic to Public Services and Procurement Canada (PSPC), and PSPC’s controls and contract management were highlighted as examples for other departments. 

Outsourcing of professional services

Issue

Public Services and Procurement Canada is working to ensure that external resources are used to provide only those services that are better and more economically delivered by the private sector.

Key facts

Key messages

Background

Parliamentary inquiries, audits of the Office of the Auditor General and reviews of the Office of the Procurement Ombud on federal government spending on professional services contracts have generated negative media attention and have raised concerns about taxpayer dollars that are spent on professional services.

In addition to the policy direction issued by the Treasury Board of Canada Secretariat in October 2023 in The Manager’s Guide: Key Considerations when Procuring Professional Services, PSPC has taken action to strengthen existing controls and has implemented measures to ensure proper oversight of public funds, clear accountability and documented decision-making.

Over the past decade, government expenditures on professional services have remained consistent relative to both total government expenditures and to the total payroll for public servants.

PSPC is monitoring its professional and services spending and is looking to reduce spending in management consulting and business services. It expects to report decreases in these areas for fiscal year 2025-2026.

As the department moves into ground-breaking on major infrastructure projects, the use of specialized resources (i.e., construction and engineering and architectural services) can be expected to rise. The department is seeing a reduction in the use of external resources in other categories, such as IT services and management services, and pivoting to the use of in-house resources wherever possible.

Review of Government of Canada Contracts

Issue

The Minister of Government Transformation, Public Works and Procurement and the Minister of Finance have directed the public service to review all current and planned federal contracts in an effort to find cost savings.

Key facts

Key messages

Background

In an effort to enhance financial discipline and strengthen and streamline procurement processes, the Minister of Finance and the Minister of Government Transformation, Public Works and Procurement have directed a comprehensive review of all current and planned federal contracts. This initiative aims to identify cost-saving opportunities, prioritize re-negotiating contracts, and ensure that Canada’s Pricing Framework be followed and regularly updated to bring cost savings to taxpayers.

Contracts awarded to McKinsey & Company

Issue

There has been recent media and Parliamentary attention related to contracts awarded to McKinsey & Company.

Note:

Key facts

Key messages

If pressed on reviews of contracts to McKinsey & Company:

If pressed on allegations of tax fraud and actions abroad faced by McKinsey:

Background

Public Services and Procurement Canada (PSPC) awarded 24 contracts to McKinsey & Company between 2011 and 2023. These contracts were assessed by Public Services and Procurement Canada’s internal audit services, the Office of the Procurement Ombud, and the Office of the Auditor General.

The internal review determined that, overall, the integrity of the procurement process was maintained and complied with the Values and Ethics Code for the Public Sector, the Directive on Conflict of Interest, and supporting procurement policy instruments and procedures. Specifically, no instances of non-conformity were found with respect to conflict of interest regarding current or former public servants or public office holders, as well as McKinsey & Company. However, it also found areas for improvement related to record management and contract administration.

PSPC accepted all recommendations associated with this audit and put in place a Management Action Plan. In addition, the department reviewed all National Master Standing Offers related to benchmarking data analytics and services and has determined that these tools will be replaced with a procurement approach that ensures open, fair and transparent competition.

The McKinsey & Company standing offer expired in February 2023, as planned, and all other existing Standing Offers for benchmarking services ended between February and June 2024.

The Treasury Board of Canada Secretariat and auditors, including the Office of the Auditor General and the Office of the Procurement Ombud has focussed on 10 departments that contracted with McKinsey & Company under their own delegation. PSPC procured various professional services, including strategic advice, subject matter experts, benchmarking services and services for the development of transformation strategies, for 7 of these departments.

Office of Supplier Integrity and Compliance

Issue

The Office of Supplier Integrity and Compliance supports the Government’s ability to identify suppliers of concern and take appropriate action to mitigate the risk they pose.

Key facts

Key messages

Background

The Office of Supplier Integrity and Compliance (OSIC), launched in May 2024, replaced the Government of Canada’s Integrity Regime that had been in place since 2015 as a government-wide, policy-based debarment system. It is designed to mitigate the risk of conducting business with suppliers of concern by excluding them from being awarded contracts, as opposed to being punitive which is the role of the criminal justice system.

OSIC plays a significant role in safeguarding the federal procurement and real property systems, which encompasses approximately $20 billion annually for contracts, real property agreements, the management of Crown-owned properties, and rental payments on lease contracts across Canada.

Under the updated Ineligibility and Suspension Policy (the Policy), changes have been introduced to enable OSIC to better mitigate risks posed by suppliers of concern. Triggers for suspension or debarment have been expanded to include:

The updated Policy accords flexibility to determine appropriate periods of ineligibility, up to a maximum of 10 years, based on an assessment of aggravating and mitigating factors. This ensures OSIC’s responses are commensurate with the conduct and risk posed by the supplier.

OSIC actively monitors current events for allegations of supplier misconduct through research, information sharing, and data analytics. OSIC exercises due diligence and procedural fairness when assessing suppliers, and apply administrative safeguards to allow for independent decision making while taking action when the Policy is triggered.

Vendor Performance Management System

Issue

Vendor Performance Management is used within Public Services and Procurement Canada and its client departments to assess vendor performance and use past vendor performance information in awarding contracts.

Key facts

Key messages

Background

Public Services and Procurement Canada (PSPC) had already begun developing a Vendor Performance Management (VPM) system as part of its efforts to modernize federal procurement and strengthen the system's performance.

In its new report on knowledge development and sharing, the Office of the Procurement Ombud (OPO) proposes five 5 key solutions to address persistent systemic issues in federal procurement. These include the implementation of a VPM system. The VPM initiative, which has been underway for a few years now, responds to recommendations made by the OPO.

The first phase of the VPM applies to PSPC goods and services contracts for PSPC valued at more than $100,000, excluding those using a standing offer or supply arrangement. Vendors will be evaluated on such things as how well they respect timelines, incidents of consultant turnover and invoicing accuracy. Scores are not yet used in vendor selection. The next few months will be used to test the system and gather feedback. Vendors will be given a 90 day notice before scores are considered.

Program development was supported by extensive consultations with other levels of government, sector and regional buyers, vendor associations and legal services. Should the decision be made to expand it to other departments, adjustments will have to be made to the e-procurement solution. PSPC is currently working to expand the program for all contracts over $100,000, including those managed for other departments as part of its common service provider role.

Fraudulent Billing

Issue

The Government of Canada is pursuing efforts to investigate and deter fraudulent billing by individuals working as sub-contractors on federal professional services contracts.

Key facts

Key messages

Background

Since March 2024, Public Services and Procurement Canada (PSPC) disclosed nine cases of fraudulent billing by professional services subcontractors (i.e. individuals who were subcontracted) who were employed by prime contractors that held multiple contracts with a number of federal departments and agencies. These cases have been referred to the RCMP for criminal investigation:

PSPC has a robust fraud risk management framework in place to prevent, detect and respond to wrongdoing in order to safeguard the integrity of the federal procurement system. This approach includes the use of a variety of tools to actively detect fraudulent activity, and respond to alleged misconduct that the Government of Canada is being defrauded in either a specific contract or on a broader scale. To date, several actions have been taken to reinforce the capacity to detect and deter overbilling fraud schemes, and PSPC is actively working on implementing further measures.

PSPC employs active measures to raise awareness among procurement officers on how to identify potential instances as well as the use of data analytics and tips from the public to identify potential instances of fraud and wrongdoing. In order to respond to alleged instances, the department has an investigatory capacity to examine allegations that the Government of Canada is being or has been defrauded within its procurements.

The focus of PSPC’s administrative investigations have been on the illegitimate billing practices of sub-contractors, not the prime contractors. That said, Canada has provisions in its contracts to recover these illegitimate payments and is working with the impacted prime contractors to recover these funds.

Increasing Indigenous involvement in procurement

Issue

Public Services and Procurement Canada, in partnership with Indigenous Services Canada and the Treasury Board of Canada Secretariat, are actively working to increase the participation of Indigenous businesses in federal procurement.

Note: All questions regarding the Indigenous Business Directory, verification of Indigeneity and alleged cases of Indigenous misrepresentation should be directed to Indigenous Services Canada.

Key facts

Key messages

Background

On August 6, 2021, the Government of Canada announced a mandatory requirement for federal departments and agencies to ensure that a minimum of 5% of the total value of contracts are held by Indigenous businesses by 2024-2025. The announcement included Canada’s commitment to continue meaningful engagement to co-develop a longer-term transformative approach to Indigenous procurement and to increase the capacity of Indigenous-owned businesses to compete and receive more federal procurement contracts.

Public Services and Procurement Canada (PSPC), Indigenous Services Canada (ISC) and the Treasury Board of Canada Secretariat (TBS) help the government achieve this goal by partnering with organizations representing Indigenous peoples and businesses.

PSPC did not achieve its 5% target commitment in the 2023 to 2024 fiscal year; however, concrete actions are being taken to help increase Indigenous business participation in federal procurement, including developing Indigenous Participation Plans to boost subcontracting with Indigenous businesses and provide employment and training opportunities for Indigenous Peoples; applying Indigenous-by-default measures to consider Indigenous participation in all procurements; using limited bidding among prequalified Indigenous offerors; updating supply methods to include Indigenous businesses; structuring and unbundling projects to enable competitive Indigenous bids; and incorporating weighted Indigenous criteria in bid evaluations. PSPC also continued to increase awareness of federal procurement opportunities through its outreach and engagement activities.

Report 5: Professional Services Contracts

Report 5—Professional Services Contracts

Auditor General Report 4 – Professional Services Contracts with GCStrategies

Report 4—Professional Services Contracts with GCStrategies Inc.

Procurement Practice Review of Contracts Awarded to McKinsey & Company

Procurement Practice Review of Contracts Awarded to McKinsey & Company - Office of the Procurement Ombudsman

Procurement Practice Review of ArriveCAN

Procurement Practice Review of ArriveCAN - Office of the Procurement Ombudsman

Related Order Paper Questions (ArriveCAN, McKinsey, Brookfield)

Q-0027: Contracts provided to McKinsey & Co

With regard to contracts provided by the government to McKinsey & Company since January 1, 2023, broken down by department, agency, Crown corporation, or other government entity: (a) what is the total amount spent on contracts; and (b) what are the details of all such contracts, including (i) the amount, (ii) the vendor, (iii) the date and duration, (iv) the description of the goods or services provided, (v) the topics related to the goods or services, (vi) the specific goals or objectives related to the contract, (vii) whether or not the goals or objectives were met, (viii) whether the contract was sole-sourced or awarded through a competitive bidding process?

Public Services and Procurement Canada:

Regarding contracts provided by the government to McKinsey & Company since January 1, 2023, Public Services and Procurement Canada has not awarded a contract for the time period, and therefore has nothing to report.

Canada Lands Company

Regarding contracts provided by the government to McKinsey & Company since January 1, 2023, Canada Lands Company has nothing to report.

Canada Post Corporation

Regarding contracts provided by the government to McKinsey & Company since January 1, 2023, please see Annex 1.

Defence Construction Canada

Regarding contracts provided by the government to McKinsey & Company since January 1, 2023, Defence Construction Canada has nothing to report.

National Capital Commission

Regarding contracts provided by the government to McKinsey & Company since January 1, 2023, the National Capital Commission has nothing to report.

Translation Bureau

Regarding contracts provided by the government to McKinsey & Company since January 1, 2023, Translation Bureau has nothing to report.

Shared Services Canada

With regard to contracts provided by the government to McKinsey & Company since January 1, 2023, Shared Services Canada has nothing to report.

Q-2588: Contracts with McKinsey

With regard to government contracts with McKinsey & Company and the report from the Office of Procurement Ombud, entitled "Procurement Practice Review of Contracts Awarded to McKinsey & Company": (a) what are the details of the 25 non-competitive contracts listed on page four of the report, including, for each, (i) the date of the contract, (ii) the title, (iii) the file number, (iv) the value of each contract, (v) the department, (vi) the reason for sole sourcing, (vii) who authorized the sole sourcing, (viii) the purpose of the contract and services provided; (b) what are the details of the seven competitive contracts listed on page four of the report, including, for each, the (i) date of the contract, (ii) title, (iii) file number, (iv) value of the contract, (v) department, (vi) purpose of the contract and services provided; and (c) why did the government change their procurement strategy to allow two contracts to be awarded to McKinsey & Company when they were originally ineligible, in the instance outlined on page six, paragraph 26 of the report?

Public Services and Procurement Canada (PSPC) as a common service provider

Table 1: What are the details of each contract, including:
The date of the contract The title The file number The value of each contract The department The reason for sole sourcing Who authorized the sole sourcing The purpose of the contract and services provided
2021-03-22 Benchmarking Services W3371-215048/001/ZM $1,998,409.22 Department of National Defence (DND) See Note 1 Supply Specialist (PG-04) To support the Digital Navy Program and diagnose the Navy’s readiness to execute the digital initiatives
2021-03-24 Benchmarking Services G9292-217764/001/ZM $339,894.84 Employment and Social Development Canada (ESDC) See Note 1 Supply Specialist (PG-04) To support ESDC with the expansion view of its mandate and an improved, enhanced and augmented business model by assessing the department’s maturity and inform the leadership team on the key components of this new business model.
2021-03-25 Commercial Team Fees W3371-215051/001/ZM $1,075,734.84 Department of National Defence See Note 1 Supply Specialist (PG-04) To support Royal Canadian Navy with their AI (artificial intelligence) driven fleet management tool and assess their readiness and analytics maturity
2021-07-30 Benchmarking Solution W8484-222002/001/ZM $2,567,535.47 Department of National Defence See Note 1 Supply Specialist (PG-04) To support an actionable roadmap to build a modern complainant-centric digital solution, to replace the current fragmented data sets and technologies used across DND/CAF (Canadian Armed Forces)
2021-08-05 Benchmarking Solution W8484-222003/001/ZM $1,606,488.19 Department of National Defence See Note 1 Supply Specialist (PG-04) To support an actionable Diversity, Equity, and Inclusion (DEI) Framework to support the review of culture-related reports and recommendations and to categorize topics and recommendations according to Organizational Frameworks
2021-09-20 Leadership Counseling W6883-222004/001/ZM $5,718,569.06 Department of National Defence See Note 1 Supply Specialist (PG-04) To support Canadian Armed Forces with its current culture gaps contrary to professed culture
2021-10-05 Agile 360 EP978-212887/001/ZM $5,252,632.88 Export Development Canada See Note 1 Supply Specialist (PG-04) To support Export Development Canada (EDC) in its organization’s transformation with digital and non-digital lever by the implementation of a more agile team-based operating model through an assessment of the organization and operating model and by making recommendations on roles, team composition and orchestration across the organization.
2021-10-25 Advisory Service G9292-219440/001/ZM $517,387.50 Employment and Social Development Canada See Note 1 Supply Specialist (PG-04) ESDC/Service Canada Transformation – Leadership Counseling Support
2021-11-03 Benchmarking Services W3371-225059/001/ZM $2,647,586.81 Department of National Defence See Note 1 Supply Specialist (PG-04) To support the Digital Navy Program and identify capabilities gap that needs to be filled for their digital initiatives
2021-11-04 Leadership Counseling W6883-222006/001/ZM $3,087,078.75 Department of National Defence See Note 1 Supply Specialist (PG-04) To support a capability assessment for the Integrated Complaints Management Solution for DND/CAF
2022-02-16 Organizational Health index (OHI) Benchmarking and expert support 1K003-220004/001/ZM $3,383,714.00 Business Development Bank of Canada See Note 1 Supply Specialist (PG-04) To support the Business Development Bank of Canada (BDC) on the assessment of the organization’s overall health as it moves to fully launch its transformation (2030 vision and aspiration).
2022-02-24 Minimum Viable Product (MVP) for Complaints Management Solution W6883-222015/001/ZM $2,486,334.38 Department of National Defence See Note 1 Supply Specialist (PG-04) To support a capability assessment for the Integrated Complaints Management Solution for DND/CAF
2022-03-15 Agile Pilot EP978-220358/001/ZM $2,486,334.38 Export Development Canada See Note 1 Supply Specialist (PG-04) To support Export Development Canada (EDC) in refining strategies, concepts and tools developed to date for its blueprint to support agile ways of working to deliver products and services better and faster to customers.
2022-03-31 Benchmarking Services W6775-220012/001/ZM $1,195,021.41 Department of National Defence See Note 1 Supply Specialist (PG-04) To support Canadian Armed Forces operational level HQ (headquarters) to improve and accelerate its modern digital and agile practices
2022-08-05 Benchmarking Services CW2236731 / W6775-230001 $1,533,766.50 Department of National Defence See Note 1 Supply Specialist (PG-04) Benchmarking Services to support Canadian Armed Forces operational level HQ to improve and accelerate its modern digital and agile practices
2022-08-16 Benchmarking support services G9292-221331/001/ZM $5,742,857.53 Employment and Social Development Canada See Note 1 Supply Specialist (PG-04) To support ESDC with its digital journey assessment that will enable reimagination of the end-to-end client and employee experience.
2022-10-21 Co-benefits management enhancement roadmap CW2245815 / 47419-236755 $1,975,271.00 Canada Border Services Agency (CBSA) See Note 1 Supply Specialist (PG-04) To support CBSA with the review of its assessment and revenue management solution’s ability to enable outcomes/benefits and to recommend mitigations where benefits are at risk.
2022-10-24 Digital 2020 - Technology 360 CW2245524 / W7809-230019 $2,047,704.75 Department of National Defence See Note 1 Supply Specialist (PG-04) Benchmarking Services to support DND’s complaints process transformation
2023-01-09 Organisation Health Index - Benchmarking Services CW2267593 / W7809-230052 $3,092,827.50 Department of National Defence See Note 1 Supply Specialist (PG-04) Benchmark of the Chief of Professional Conduct and Culture (CPCC)'s overall current state of culture.

Note 1: PSPC established a non-competitive National Master Standing Offer (NMSO) with McKinsey & Company because of its exclusive rights. McKinsey & Company holds exclusive rights to provide this type of benchmarking as per its proprietary survey-based diagnostics. These data sets are based on information obtained from McKinsey's clients through proprietary surveys. There are no authorized resellers. PSPC took steps in 2021 to establish a NMSO to procure proprietary McKinsey benchmarking services that were in demand from client departments. As of 2023, PSPC has required sole-source justifications and statements of work that were clearly defined requirements for all benchmarking national master standing offers until they expired. Going forward, PSPC will be procuring this type of capacity through a competitive process.

Table 2: (b) what are the details of the seven competitive contracts listed on page four of the report, including, for each:
The date of the contract The title The file number The value of each contract The department Purpose of the contract and services provided
2018-08-31 Value Management Office 47419-187760/001/EL $ 1,332,000.00 Canada Border Services Agency To establish and operate a Value Management Office (VMO) for the CBSA Assessment and Revenue Management (CARM) Project. The Contractor is to provide methodologies, processes, strategic advice and a team of qualified resources.
2019-06-26 Office of Transformation Service Management (OTSM) Support Services B7310-190321/001/ZQ $ 24,848,700.00 Citizenship and Immigration Canada Expertise from global experts in developing and implementing transformation strategies to support IRCC’s service transformation

National Defence, Employment and Social Development Canada, Natural Resources Canada, the Privy Council Office, and Veterans Affairs Canada will also respond to part (a).

Innovation, Science and Economic Development (ISED) and Immigration, Refugees and Citizenship Canada will also respond to part (b).

Public Safety Canada and ISED will respond to part (c).

Q-2516: Deliverables prepared by McKinsey & Co since December 1, 2020

With regard to reports, studies, assessments, and evaluations (hereinafter referred to as "deliverables") prepared for the government, including any department, agency, Crown corporation or other government entity, by McKinsey & Company since December 1, 2020: what are the details for each deliverable, including the (i) date that the deliverable was finished, (ii) title, (iii) summary of recommendations, (iv) file number, (v) website where the deliverable is available online, if applicable, (vi) value of the contract related to the deliverable?

Public Services and Procurement Canada (PSPC)

As the common service provider for procurement, PSPC works in close collaboration with client departments to ensure that Government suppliers meet their contractual obligations. PSPC also does contracting on its own behalf and a standard requirement of PSPC contracts with McKinsey & Company is regular reports that detail the status of all deliverables within the contract for PSPC. These reports are not centrally tracked, nor do summaries of their content exist. As such, PSPC is unable to respond to this question in the time allotted as it would require a manual search and validation of data that could lead to the disclosure of incomplete or incorrect information.

Canada Lands Company (CLC)

CLC has no deliverables to report.

Canada Post Corporation (CPC)

The information requested is not systematically tracked in CPC’s central database. Therefore, producing and validating a comprehensive response to this question would require a manual intervention of information that is not possible in the time allotted and could lead to the disclosure of incomplete and misleading information.

Defence Construction Canada (DCC)

DCC has no deliverables to report.

National Capital Commission (NCC)

NCC has no deliverables to report.

Shared Services Canada (SSC)

SSC has no deliverables to report.

Q-0978: Regarding the awarding of contracts by the government to the private firm McKinsey

With regard to the awarding of contracts by the government to the private firm McKinsey: (a) how many contracts were awarded by the government to the private firm McKinsey; and (b) what is the value and nature of each of these contracts?

Public Services and Procurement Canada (PSPC):

PSPC did not award any contracts to the private firm McKinsey between November 22, 2021, and November 16, 2022.

Shared Services Canada (SSC) :

SSC did not award any contracts to the private firm McKinsey between November 22, 2021, and November 16, 2022

Q-0924: Regarding contracts provided by the government to McKinsey & Company since March 1, 2021

Mr. Van Popta (Langley-Aldergrove) — With regard to contracts provided by the government to McKinsey & Company since March 1, 2021, broken down by department, agency, Crown corporation, or other government entity: (a) what is the total amount spent on contracts; and (b) what are the details of all such contracts, including (i) the amount, (ii) the vendor, (iii) the date and duration, (iv) the description of goods or services provided, (v) the topics related to the goods or services, (vi) the specific goals or objectives related to the contract, (vii) whether or not the goals or objectives were met, (viii) whether the contract was sole-sourced or awarded through a competitive bidding process?

Public Services and Procurement Canada (PSPC) as a Common Service Provider:

With regard to contracts awarded to McKinsey & Company since March 1, 2021, on behalf of other federal organizations, see Annex 1.

Public Services and Procurement Canada (PSPC):

PSPC has not awarded contracts to McKinsey & Company since March 1, 2021, for use by PSPC.

Canada Lands Company (CLC):

CLC has not awarded any contracts to McKinsey & Company since March 1, 2021.

Canada Post Corporation (CPC):

The requested information is commercially sensitive and third party in nature and has always been treated as confidential.

Defence Construction Canada (DCC):

DCC has not awarded any contracts to McKinsey & Company since March 1, 2021.

National Capital Commission (NCC):

NCC has not awarded any contracts to McKinsey & Company since March 1, 2021.

Shared Services Canada (SSC):

SSC has not awarded any contracts to McKinsey & Company since March 1, 2021.

Q-2834: AG report on Professional Services Contracts

With regard to the Auditor General of Canada's Report 5 entitled "Professional Services Contracts", paragraph 5.55 which states "In 30 (91%) of the 33 contracts in our sample, we found that the federal organizations did not perform sufficiently detailed cost estimate calculations before receiving proposals,": (a) what are the details of the 30 contracts, including (i) the value of the contract, (ii) the vendor, (iii) the date and duration, (iv) the description of the goods or services provided, (v) the specific goals or objectives related to the contract, (vi) whether the goals or objectives were met, (vii) the contract number, (viii) the Request for Proposal number; and (b) for each contract in (a), what is the government's reason for not performing a detailed cost estimate before receiving proposals?

Public Services and Procurement Canada (PSPC)

Table 3: (a) The Auditor General’s sample included one contract belonging to PSPC. The contract details are as follows:
Details of the contract Data
Value of the contract $29,620,266.25
Vendor McKinsey & Company Canada
Date and duration February 27, 2020 to May 31, 2023
Description of the goods or services provided McKinsey provided a range of services to streamline processes and standardize work at the Pay Centre. This included introducing new ways of working that focused on capacity building, team experience, quality improvement, standardization, and timely customer service. In addition, McKinsey supported the Pay Centre in successfully transforming its training and onboarding practices.
Specific goals or objectives related to the contract PSPC sought solutions to develop and deploy standard tools, processes, and procedures to increase efficiency and quality and to reduce processing times for pay transactions, with a goal of improving pay process efficiency by at least 30%.
Whether the goals or objectives were met Yes, the goal of achieving 30% pay processing efficiency was met.
Contract number EN920-190988/005/XE
Request for Proposal number EN920-190988/L

(b) PSPC awarded this contract following an open, competitive Request for Proposal process. The contract was designed to be outcomes-based and iterative, based on demonstrated success. The contract was for the development of a pilot, and PSPC exercised options in the contract to deploy the delivered pilot across the Pay Centre.

Communication messages related to Auditor General’s Report 5

Context

On January 11, 2023, the Prime Minister of Canada asked the President of the Treasury Board and the Minister of Public Services and Procurement to undertake a review of government contracts awarded to McKinsey & Company.

On February 3, 2023, the Minister of Public Services and Procurement requested the Procurement Ombud conduct a review of contracts awarded to McKinsey & Company.

On February 7, 2023, the House of Commons passed a motion to concur with the January 2023 request by the House of Commons Standing Committee on Government Operations and Estimates that the Auditor General of Canada conduct a performance and value-for-money audit of the contracts awarded to McKinsey & Company since January 2011 by any department, agency or Crown corporation.

On February 8, 2023, the Office of the Comptroller General of Canada (OCG) directed the Chief Audit Executives of government organizations that had contracted with McKinsey to conduct internal audits of the related procurement processes. The results of these departmental audits were released in March 2023.

On March 16, 2023, after considering available information and determining there were reasonable grounds to do so, the Procurement Ombud launched a review of procurement practices for the award of contracts to McKinsey in order to assess their fairness, openness, and transparency and their compliance with legislative, regulatory, policy, and procedural requirements.

On June 27, 2023, the Government of Canada announced that it had completed its review of contracts with McKinsey. The review found no evidence of political interference. Nonetheless, it reinforced that there were opportunities to further improve and strengthen the Government of Canada procurement practices, including reinforcing internal controls, policies and procedures; clarifying disclosure and official languages requirements; and strengthening guidance to departments and procurement specialists.

On April 15, 2024, the Procurement Ombud published his report on the Procurement Practice Review of Contracts Awarded to McKinsey & Company.

On June 4, 2024 (TBC), Auditor General of Canada presented her report on the Performance Audit of Professional Services. The report provides a single recommendation on conflicts of interest. In other areas, the audit confirmed gaps and weaknesses that have been raised in other internal and external reviews of government procurements processes. The publication of this audit is expected to generate further parliamentary and media attention on Government of Canada procurement processes.

Statement

Today, the Auditor General of Canada presented her report on the Performance Audit of Professional Services.

The Government of Canada welcomes the findings of the Auditor General’s report and remains fully committed to fairness, openness and transparency in federal procurement practices. A rigorous process is in place to ensure that procurement activities are effective and well managed.

And with the intention of constantly improving its process, the government had already accepted the recommendations of previous studies and continues to implement strong measures to strengthen and streamline oversight and controls of federal government management practices in the area of procurement, as announced by Public Services and Procurement Canada (PSPC) and the Treasury Board of Canada Secretariat (TBS) on March 20, 2024. The department achieved a key milestone on May 31, 2024, with the coming into force of the Office of Supplier Integrity and Compliance and the revised Ineligibility and Suspension Policy. This will strengthen the integrity and oversight of the procurement process and will allow the department to better respond to misconduct and wrongdoing.

I also welcome the Auditor General’s recommendation to further strengthen measures to appropriately report and monitor potential conflicts of interest.

TBS recently announced new mandatory procedures as part of the Directive on the Management of Procurement. The procedures provide an additional check and balance for public service managers to ensure that they are clear about their responsibilities and accountabilities when undertaking professional services procurement activities related to oversight, conflict of interest and integrity provisions in the Directive.

In addition, there are important conversations taking place across the public service to ensure that employees understand their obligations and duties in alignment with the Values and Ethics Code for the Public Sector, including requirements related to Conflict of Interest.

The other findings in this report are in line with several previous internal and external reviews relating to professional services contracts and other procurements. PSPC and TBS have instituted several changes and process improvements including but not limited to implementing a new mandatory professional services requirement for PSPC and client contracting authorities to retain contractual decisions, as well as taking steps to change how it administers non-competitive National Master Standing Offers, including ensuring justifications are on file and a challenge function occurs. The position of Chief of the Contract Quality and Records Compliance Office has been created to ensure that critical elements of decision-making throughout the procurement process are properly documented, that guidelines and tools are put in place and that quality is being actively monitored.

The government is committed to protecting the integrity of procurement, and we expect public servants and departments to operate at the highest standard and prioritize value of money for Canadians.

Quick facts and stats from the Auditor general’s report

Questions and answers

Question

How will PSPC address the OAG’s recommendation on conflicts of interests?

Answer

The government takes the Auditor General’s recommendation regarding conflicts of interest seriously.

Although PSPC’s procedures already require a nondisclosure agreement and a conflict of interest agreement from third parties participating in the bid preparation or evaluation, the department will modify its guidance and tools to integrate obligations into the department’s procurement process to require key contracting and technical authorities to reaffirm that they are not in a real or perceived conflict of interest at various steps in the contract award process.

To address this situation, TBS recently announced new mandatory procedures as part of the Directive on the Management of Procurement. The procedures provide an additional check and balance for public service managers to ensure that they are clear about their responsibilities and accountabilities when undertaking professional services procurement activities related to oversight, conflict of interest and integrity provisions in the Directive.

In addition, there are important conversations taking place across the public service to ensure that employees understand their obligations and duties in alignment with the Values and Ethics Code for the Public Sector including requirements related to Conflict of Interest.

Question

What is the proactive conflict of interest process in place for procurement processes within PSPC?

Answer

PSPC has a framework in place to prevent, detect and respond to situations of conflict of interest or potential wrongdoing, in order to safeguard the integrity, fairness, openness and transparency of the federal procurement system. For more information on this aspect, please visit the Code of Conduct for Procurement.

Public servants

When faced with a real, apparent or potential conflict of interest, employees of the federal public service must immediately recuse themselves, inform their supervisor of the situation and complete a Conflict of Interest Declaration. In addition, supervisors must take immediate steps to address and mitigate the risk of a conflict of interest situation in the workplace whenever possible. These measures must ensure that employees conduct their official duties and responsibilities objectively, and in the interest of the public.

Deputy ministers

Deputy ministers must adhere to conflict of interest obligations to prevent private interests from influencing their public duties. This includes abstaining from decisions that would place them in conflict, avoiding preferential treatment and misuse of confidential information, and disclosing any conflicts, gifts over $200, and significant assets. They must recuse themselves from any involvement where a conflict arises and comply with post-employment restrictions to prevent taking improper advantage of their former position. For more details, visit the Conflict of Interest and Ethics Commissioner website.

Question

Why does PSPC award so many sole-source contracts for goods and services?

Answer

Public Services and Procurement Canada (PSPC) is committed to holding open, fair, and transparent procurement processes.

PSPC competitively awarded contracts, call-ups and amendments for approximately 70% in volume and 71% in value. The contracts awarded non-competitively represent approximately 30% in volume and 29% in value.

While the majority of instruments are competitive, in certain circumstances, PSPC establishes procurement tools using non-competitive methods.

As the Government of Canada’s common service provider, PSPC establishes procurement instruments, such as supply arrangements and standing offers, to streamline and reduce redundancies in the procurement process. This allows the government to pre-qualify suppliers for specific goods and services as well as construction requirements.

A non-competitive procurement approach can be considered in certain circumstances such as:

PSPC ensures that all procurement tools respect trade agreements, policies, directives, procedures and guidelines when they are implemented.

Question

Why did PSPC put in place a non-competitive National Master Standing Offer (NMSO)?

Answer

In 2021, Public Services and Procurement Canada (PSPC), as the central purchasing agent for federal departments and agencies, established the National Master Standing Offer (NMSO) with McKinsey. This approach, based on the exclusive access to McKinsey's proprietary databases, was designed to empower the federal government in the effective management and delivery of complex projects and programs. The NMSO for Benchmarking Services with McKinsey provided a useful toolset for supporting digital transformation and improving organizational performance to approach global standards through a data-driven methodology, through the delivery of tailored insights derived from McKinsey's extensive global database, particularly highlighted by the Organizational Health Index (OHI)—the world's largest repository of organizational health data.

However, PSPC recognizes the procurement instruments associated with benchmarking products and services were overdue for review and modernization. Notably, similar products and services were offered under five separate non-competitive instruments, including the McKinsey instrument. All of these instruments have been subject to robust additional governance and challenge function since January 2023 and have each expired on their planned end date without replacement or extension, with the final instrument to expire later in spring 2024.

A refined competitive procurement strategy, emphasizing enhanced oversight and transparency, will roll out during spring and summer 2024, as well as new tools and training for procurement officers to ensure effective and robust processes are in place across federal departments and agencies, representing a shift in our existing approach.

These new tools and processes have been designed to ensure the rigour and efficiency of government contracting processes are maintained.

Question

What actions will PSPC undertake to ensure that the recommendations from recent reports regarding professional services contracting are implemented?

Answer

PSPC is modernizing procurement to make it simpler, faster and digitally driven. Over the last few months, the department has made important changes to procedures and guidance regarding professional services contracting.

In November 2023, PSPC wrote to government departments and agencies to inform them that it would be invalidating and replacing all Master Level User Agreements with client departments. These agreements set out the conditions for access to select professional services methods of supply maintained by PSPC, namely Tasked-based informatics professional services (TBIPS), Solutions-based informatics professional services (SBIPS) and the Tasks and Solutions Professional Services (TSPS).

PSPC is working with client departments to finalize new Master Level User Agreements, which will require the use of new contract provisions to increase costing and subcontractor transparency, and provide important clarifications on the role of client departments and agencies (i.e. technical authorities) in ensuring consistent practices when using these procurement instruments.

Important changes that are being implemented to professional services contracts include:

The department is actively engaging with client departments and agencies to ensure that these new measures are implemented quickly and efficiently.

In addition, a new position of Chief, Contract Quality and Records Compliance Office, has been created to ensure that critical elements of decision-making throughout the procurement process are properly documented, that guidelines and tools are put in place and that quality is being actively monitored.

Question

Is PSPC taking any other actions to improve documentation practices and strengthen its challenge function as the government’s central purchasing agent?

Answer

PSPC has instituted several changes and process improvements to address deficiencies in documentation, including but not limited to, implementing a new mandatory professional services Procurement File Completion Checklist that includes the requirement for PSPC and client contracting authorities to retain contractual decisions. In addition, a new position of Chief, Contract Quality and Records Compliance Office, has been created to ensure that critical elements of decision-making throughout the procurement process are properly documented, that guidelines and tools are put in place and that quality is being actively monitored. 

Furthermore, PSPC has reminded procurement staff of the requirement to engage the Contract Security Program when a contract has security requirements as well as to confirm and document the proof of security clearances have been received before any work is undertaken. These requirements are reflected in the new mandatory professional services Procurement File Completion Checklist, which will need to be completed for all Professional Services procurement files. These steps will help confirm that all resources have the required security level to perform the work on the contracts. It also contains the requirement for PSPC and client departments to retain contractual decisions.

As outlined in PSPC’s own audit of McKinsey contracts, PSPC is taking steps to change how it administers non-competitive NMSO, including ensuring justifications are on file and a challenge function occurs.

Question

What are PSPC’s plans to replace the National Master Standing Offer for benchmarking services?

Answer

PSPC allowed the non-competitive National Master Standing Offer (NMSO) for McKinsey benchmarking services to expire in February 2023 without replacement.

A thorough review, prompted by independent audits, industry engagement and collaboration with multiple departments and agencies, played an important role in making an informed decision to revise the procurement strategy for benchmarking services. The feedback revealed a broader market availability, indicating that multiple vendors had the capability of offering a variety of benchmarking services, not limited to existing National Master Standing Offers (NMSOs) providers.

The department is working on shifting towards a refined competitive procurement approach that is anticipated to roll out over spring and summer 2024.

Question

Why did PSPC use a non-competitive National Master Standing Offer for Professional Services to engage McKinsey and Company? Did PSPC change its procurement strategy to ensure McKinsey would be eligible to win contracts?

Answer

Of the 24 services contracts awarded by PSPC to McKinsey and Company since 2018, 3 contracts were awarded through competition, 19 were undertaken as call-ups against a non-competitive standing offer and 2 directed contracts, of low dollar value, were awarded outside the standing offer. The 3 competitive contracts represent more than half (53%) of the total value of contracts awarded to McKinsey & Company.

Establishing a non-competitive NMSO with McKinsey and Company was an effective approach, at the time, to support departments in the management and delivery of complex projects and programs, but we recognize that a review and modernization of this procurement vehicle is overdue.

In light of this, PSPC made significant process changes in its administration of non-competitive standing offers for benchmarking professional services. These changes include requiring that client departments draft all Statements of Work themselves and that a sole-source justification be provided for every contract awarded under a non-competitive standing offers for benchmarking services which are being challenged by PSPC.

PSPC is also taking action to strengthen call-up procedures for professional services, including instructing authorized users to prepare a Statement of Work specific to their requirement and requiring written justification for issuing a call-up without competition.

Question

What other steps is PSPC taking to ensure integrity in the procurement process is strengthened and upheld?

Answer

As announced on March 20, 2024, PSPC is moving forward to further strengthen oversight of federal procurement processes with the launch of the new Office of Supplier Integrity and Compliance (OSIC) program. The new Office will enhance PSPC’s capacity to identify and respond to instances of supplier misconduct.

The establishment of OSIC modernizes the Government of Canada’s debarment and suspension program, further strengthens its approach to identifying potential instances of fraud and wrongdoing within federal procurement through the use of data analytics capacity, and gives the government the tools to address other concerning conduct, such as terrorist financing, the use of human trafficking or forced labour, or relevant offences recognized in provincial and foreign civil judgments. This approach mitigates the risks posed by specific situations, while acting as a deterrence for other potential actors of wrongdoing against the Government of Canada.

On May 31, 2024, the revised Ineligibility and Suspension Policy, came into effect. This is a key supporting instrument of the work that OSIC will administer on behalf of the Government of Canada. The revised policy brings enhancements to PSPC’s approach to addressing suppliers of concern, allowing the department to better respond to misconduct and wrongdoing and further safeguard the integrity of federal procurements and real property agreements.

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2026-02-05