A review by the independent ombudsman responsible for studying federal government procurement has flagged concerns about “a strong perception of favoritism” in contracts awarded to the global consulting firm McKinsey and Company.
Monday’s report by the Office of the Procurement Ombudsman says McKinsey was awarded contracts with a total value of $117-million between 2011 to 2023, with the value of contracts significantly increasing between 2019 and 2022.
The review’s authors looked at 32 contracts valued at $112.8-million and awarded by 10 federal departments and agencies. This excluded contracts valued under $10,000.
Of the 32, seven resulted from competitive procurement processes and 25 were issued through non-competitive processes.
Overall, the varying processes for awarding these contracts challenge the ability of government procurement practices to stand the test of public scrutiny, the report said.
“Collectively, these observations create a strong perception of favoritism toward McKinsey,” it concluded.
Internal audits of McKinsey contracts raise fairness, transparency concerns
The report’s authors raise concerns about what is described as the failure of departments to establish the estimated procurement costs in advance of discussions with McKinsey.
And there is a reference to “inappropriate re-evaluation of bids resulting in McKinsey deemed the only compliant bidder and awarded the contract.”
Recommendations in the report include greater efforts to review decisions to pursue non-competitive procurement strategies.
Josephine Laframboise, the communications manager for the Office of the Procurement Ombudsman, declined to answer questions about the report.
She said Alexander Jeglic, the Procurement Ombudsman, will speak to the report’s conclusions in a coming appearance before the standing Commons committee on government operations and estimates.
New York-based McKinsey has long been associated with the current federal Liberal government. Dominic Barton was the global managing partner of McKinsey from 2009 to 2018. In 2016 and 2017, he acted simultaneously as a volunteer chair of an influential advisory committee on economic growth to then-finance-minister Bill Morneau. Mr. Barton went on to serve as Canada’s ambassador to China from 2019 until 2021.
The Globe and Mail has previously reported on the Liberal government’s increasing spending on McKinsey service to provide assistance with varied files, including the Phoenix pay system, which handles payroll for the federal government.
The federal departments and agencies that have sought McKinsey’s services include the Finance Department, the Defence Department, the Canada Border Services Agency, the Privy Council Office and Veterans Affairs.
Monday’s report, prompted by a February, 2023, request by then-procurement minister Helena Jaczek, raised a number of concerns about changing procurement strategies in contracts to allow for McKinsey’s participation.
However, McKinsey pushed back on the report’s assertions.
“‘McKinsey & Company Canada follows all relevant procurement laws in all of our work, responding to the needs of the public sector and adhering to the procurement processes that are put in place by our client departments. Any suggestion to the contrary is simply inaccurate,” said a statement issued by Alley Adams, communications head for the company’s Canadian operations, on Monday.
“We remain proud of the work we do on behalf of the Government of Canada and the programs which we have strengthened through our independent analyses.”
Ms. Adams said a previous review by the Treasury Board Secretariat showed no evidence or suggestion of political involvement in any of McKinsey’s contracts or of any procurement errors by the firm.
But the Official Opposition said the report raises concerns.
Stephanie Kusie, the Conservative’s Treasury Board critic, said that based on the report’s conclusions, the government favoured McKinsey.
“Life has never been better for the well-connected Liberal insiders at McKinsey,” Ms. Kusie said in a statement, referencing the past links of Mr. Barton to the Trudeau government.
“There is no reason why federal public servants were unable to perform the tasks that were outsourced to McKinsey.”
Ian Bailey