Question Period Note: Office of the Procurement Ombud Report on McKinsey

On Monday, April 15, 2024, the Office of the Procurement Ombud (OPO) published its procurement practice review report for contracts awarded to McKinsey & Company.

• I am glad that the Procurement Ombud has released his review of all contracts awarded to McKinsey, as requested by my predecessor in February 2023
• PSPC accepts the OPO’s recommendations, and has developed action plans to strengthen its procurement policies and processes and to provide training opportunities for its procurement workforce
• I would also like to highlight some of the positive findings in the report, including the availability of proper documentation that supported fair enquiry processes during the solicitation period, and the consistency with which PSPC invoked and documented sole-sourcing decisions in low dollar value non-competitive contracts

If pressed on recommendation 2: Security clearances:

• PSPC can confirm that all resources added through task authorizations had the required security level to perform work on the contracts, as well as to access sensitive information and assets. The Procurement Ombud’s report reflects the information available at the time of the review and did not take into account pending confirmations
• Nonetheless, PSPC agrees that security clearance records have not been consistently included in procurement files, and will be taking further action to promote recordkeeping diligence
• We have communicated clear expectations to PSPC clients and procurement teams in relation to documenting these security validations before issuing contracts or call-ups and during contract management
• We have also introduced a checklist for professional services procurement files that includes the requirement for PSPC and client contracting authorities to retain proof of security requirements

If pressed on recommendation 4: Non-competitive national master standing offer (NMSO) for professional services:

• Establishing a non-competitive NMSO with McKinsey 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 was 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 offer for benchmarking services

If pressed on recommendation 5: Non-competitive call-up procedures:

• 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

If pressed on lack of documentation:

• PSPC agrees that procurement files should include documentation that outlines decisions; the rationale for making the decision cannot be assumed without evidence
• We are taking action to better document client driven decisions and actions and to promote recordkeeping diligence

On February 3, 2023, the Minister of Public Services and Procurement requested that the Procurement Ombud conduct a review of all contracts awarded to McKinsey & Company. On March 16, 2023, after considering available information and determining that there were reasonable grounds to do so, the Procurement Ombud launched a review of the procurement practices of departments within his mandate to look at the award of contracts to McKinsey to assess fairness, openness, and transparency and compliance with legislative, regulatory, policy, and procedural requirements.

On January 18, 2023, the House of Commons Standing Committee on Government Operations and Estimates (OGGO) adopted a motion for the Auditor General to conduct “a performance and value for money audit of the contracts awarded to
McKinsey & Company since January 1, 2011, by any department, agency or Crown corporation.” The Committee’s motion was accepted by the House of Commons on February 7, 2023.

Further, 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.

• 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 and 2 directed 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