Question Period Note: Contracts Awarded to McKinsey & Company

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

• PSPC is committed to open, fair and transparent procurement processes, while obtaining the best possible value for Canadian taxpayers
• The decision to procure professional services to meet operational requirements rests with client departments, which can then request PSPC’s procurement services or award contracts within their own authorities
• PSPC accepts the OPO recommendations in their entirety, and has developed action plans to strengthen and modernize its procurement policies and processes and to provide training opportunities for its procurement workforce

If pressed on reviews of contracts to McKinsey & Company:

• My department has taken significant action in the context of the audits of contracts with McKinsey & Company, and questions raised about professional services contracting more broadly, and will continue to do so
• The review of federal contracts with McKinsey & Company by officials from the Treasury Board Secretariat and my Department found that the integrity of the procurement process was maintained and that there was compliance with the Values and Ethics Code and the Conflict of Interest directive 
• PSPC has accepted all the recommendations from the relevant audits and reviews and has prepared Management Action Plans to address the areas of improvement identified
• PSPC also continues to collaborate with the Office of the Auditor General on its audit  

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

• We are aware of the adverse information related to McKinsey & Company and its affiliates. The company’s status under the Integrity Regime remains unchanged at this time
• Under the Government’s Integrity Regime, if a supplier is charged or convicted of an offence 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

Public Services and Procurement Canada (PSPC) awarded 24 contracts to McKinsey & Company between 2011 and 2023. These contracts have recently been assessed by Public Services and Procurement Canada’s internal audit services and the Office of the Procurement Ombud and are also subject to ongoing reviews by 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 has accepted all recommendations associated with this audit and has put in place a Management Action Plan. In addition, the department has reviewed 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 & Company standing offer expired in February 2023, as planned, and all other existing Standing Offers for benchmarking services will end 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 have been focussing 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.

• As central purchaser for the Government of Canada, Public Services and Procurement Canada (PSPC) awarded 24 contracts to McKinsey & Company since 2011, with a total value of $104.6 million
• Of the 24 services contracts awarded by PSPC, 3 contracts were awarded through competition, 19 were undertaken as call-ups against a non-competitive standing offer that was established for McKinsey & 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 & Company
• In January 2023, the Prime Minister tasked the President of the Treasury Board and the Minister of PSPC with reviewing contracts awarded to McKinsey. Internal audits were completed and posted publicly in March 2023. The review’s final report, published on June 27, 2023, noted that the integrity of the procurement process was maintained, that there was compliance with the Values and Ethics Code for the Public Sector, the Directive on Conflict of Interest, and the  procurement policy. It also noted areas for improvement related to record management and contract administration
• On February 3, 2023 the Minister of PSPC requested to the Office of the Procurement Ombud to review all federal contracts with McKinsey & Company
• On Monday April 15, 2024, the Procurement Ombud published its procurement practice review report for contracts awarded to McKinsey & Company