Question Period Note: Contracts Awarded to McKinsey and Company

Note: All questions related to McKinsey’s work on Robotic Process Automation and Accelerator Services are in a separate question period note (Phoenix IBM and pay stabilization)

There has been recent media and Parliamentary attention related to contracts awarded to McKinsey and Company, and outsourcing more broadly.

• Public Services and Procurement Canada is committed to open, fair and transparent procurement processes, while obtaining the best possible value for Canadian taxpayers
  • As central purchaser for Canada, Public Services and Procurement Canada awarded 24 contracts to McKinsey and Company since 2011 with a total value of $104.6 million
  • Half of the total value of the contracts awarded to McKinsey and Company were awarded through competitive processes. More than 40% of the total value was under a standing offer for specialized services
  • The decision to procure professional services to meet operational requirements rests with client departments, which can then request Public Services and Procurement Canada’s procurement services or departments can award contracts within their own authorities

If pressed on various reviews of contracts to McKinsey and Company

• As you are aware, on January 11, 2023, the Prime Minister tasked the President of the Treasury Board and me to undertake a review of contracts awarded to McKinsey and Company
• The review is examining whether the integrity of the procurement process was maintained and complied with government policies and control frameworks
• As part of this process Public Services and Procurement Canada’s Office of the Chief Audit, Evaluation and Risk has reviewed all contracts awarded to McKinsey by the department, including those awarded on behalf of client departments as a common service provider
• The review determined that overall, the integrity of the procurement process was maintained and compliant with the Values and Ethics Code for the Public Sector, 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. However, it also found areas of improvement related to record management and contract administration
• Public Services and Procurement Canada has accepted all recommendations associated with this audit and has put in place a Management Action Plan
• In addition, my department is currently reviewing all National Master Standing Offers related to Benchmarking data analytics and services and will replace these tools in the future with a procurement approach that ensures open, fair and transparent competition as a starting point
• The McKinsey standing offer sunset in February as planned and the remaining Standing Offers all sunset between February and September 2023
• At my request the Procurement Ombudsman is currently reviewing the procurement processes associated with the award of contracts to McKinsey and Company by all federal departments and agencies
• I welcome these reviews as they will help determine what further adjustments or refinements should be undertaken to continue to strengthen the fairness, openness and transparency of federal procurement practices

If pressed on Public Services and Procurement Canada issued contracts:

• Of the 24 services contracts awarded by Public Services and Procurement Canada, 3 contracts were awarded through competition,19 were undertaken as call-ups against a non-competitive standing offer that was established for McKinsey and Company’s benchmarking services and which ended as planned in February 2023, and 2 other sole source contracts, of low dollar value, were awarded outside the standing offer
• All 24 contracts were awarded in 2018 or later. The 3 competitive contracts represent more than half (53%) of the total value of contracts awarded to McKinsey and Company

If pressed on open-ended supply arrangements

• Public Services and Procurement Canada establishes Supply Arrangements and Standing Offers instruments to facilitate access to, and accelerate the procurement of, various goods and services by establishing qualified suppliers These instruments are not legally binding contracts and do not involve any guarantee of work to suppliers
• The year 2100 is commonly used for these types of arrangements so that our IT system does not inadvertently end the Supply Arrangement
• The lists of qualified suppliers are refreshed through regular intake processes. Supplier compliance is confirmed on a quarterly basis. In addition, supply arrangements themselves are reviewed on a regular basis, with the most recent review launched in 2019 as part of procurement modernization
• Based on my direction, my officials are currently revising the relevant procedures to ensure that in the future we reflect this kind of arrangement in a way that is more clear

If pressed on the allegations around tax fraud and actions abroad that McKinsey is facing:

• Public Services and Procurement Canada is aware of the adverse information related to McKinsey and Company and its affiliates. The company’s status under the Integrity Regime remains unchanged at this time
• Under the Government of Canada’s Integrity Regime, if a supplier is charged or convicted of one of the offences listed in the Ineligibility and Suspension Policy, the supplier may be suspended or determined to be ineligible to be awarded a contract. A suspension or determination of ineligibility would also be triggered by a foreign offence that is similar to one of the listed offences

If pressed on the allegations around McKinsey conducting lobbying activities with Public Services and Procurement Canada without registering as a lobbyist group:

• McKinsey and Company, like many suppliers, reached out to Public Services and Procurement Canada at the onset of the pandemic emergency to offer its assistance
• Companies are responsible for understanding and complying with their obligations under the Lobbying Act

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