Government Operations Committee on April 29th, 2024

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Chair.

It's great to be back at OGGO after an unusually long hiatus.

Mr. Jeglic, thank you for the incredible work you're doing on behalf of Canadians by bringing to light these various significant problems in our procurement system.

Your report talks about favouritism, favouritism in terms of the government's treatment of McKinsey, how they favoured McKinsey and how they structured systems in order to give contracts to this favourite consulting company of the Prime Minister. McKinsey benefited from this favouritism.

Based on the previous work of this committee, it's clear how this happened. Dominic Barton was brought in to chair the Prime Minister's Canada Growth Council at the same time as he was a managing partner at McKinsey. McKinsey analysts did so-called pro bono work for the growth council.

Andrew Pickersgill, who ran the Canadian operations, supplied the analysts to do the pro bono work, but while he was supplying McKinsey analysts to do supposedly helpful pro bono work for this growth council that was chaired by Dominic Barton, he was also selling to the government.

You have this process where Prime Minister Justin Trudeau and Dominic Barton are kind of making this connection at the top between McKinsey and the Government of Canada, and then that is clearly filtering out over time throughout the whole system where the connection at the top was shaping and impacting the kind of procurement that was happening across government to work to the advantage of McKinsey. That led to the establishment of the national master standing offer.

In terms of the analysis you did about specific individuals involved and what roles they played in getting these things established, can you speak about Dominic Barton and Andrew Pickersgill, for example, and where they showed up along the way in terms of looking at how this favouritism manifests itself?

[Alexander Jeglic]

To my knowledge, in our review those names did not come up. I'll look to Derek just to confirm, but my belief is that those names did not come up.

[Derek Mersereau]

I can confirm that Dominic Barton's name did not appear. Andrew Pickersgill...I'd have to go back and review your documentation. I don't recall seeing that name, just off the top of my head, but I can come back to you with that information.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Could you provide some follow-up information in writing about some of the specific individuals? I'm not at all surprised, in the sense of Dominic Barton, because I see that connection having been made at the top between the Prime Minister and him, but the selling process happened by Andrew Pickersgill bringing in these analysts. It was the relationship that happened at the top between the Prime Minister and the leadership at McKinsey that then allowed this favouritism to take place.

We know as well that there's been a lot of interplay among senior Liberal offices and McKinsey. There's a former member of Parliament in the government caucus who was a former manager at McKinsey. Former staff members of the government have gone to work for McKinsey. What kind of information were you able to identify around political involvement or decisions made by ministers or by ministerial staff who were part of this broader culture of favouritism for McKinsey?

[Alexander Jeglic]

In the report we found one example in which a minister approved a contract. It was an ESDC contract. I believe the question came up before you entered the room. Essentially, what happened in that circumstance was that, as a result of an internal delegation document within the department that required that contract, due to the value, to go to the minister for approval, it went to Minister Tassi for approval. However, that would be the only example in our report in which we saw any action on the part of a political actor.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Other issues that frequently come up about McKinsey are questions of conflict of interest, how McKinsey works for governments and then also works with people who deal with governments. For instance, it works for health regulators. It also, famously and tragically, worked for certain manufacturers of opioids. In your work, did you see clear instances in which McKinsey was doing work, for instance, for Health Canada or for other entities in government, while also working for companies that the government regulates? Part of the difficulty is that it has not been willing to give this committee a client list when requested.

Were you able to identify instances of those kinds of conflicts?

[Alexander Jeglic]

I can answer no, but that's because we weren't looking for that specifically.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

In the time I have left, I just reiterate how important it is, and I think there hasn't been the agreement—which I would have hoped for in the past—about how important it is that this committee gets the documents that it had previously requested. Previously, there had been agreement to order, and we hadn't been able to get in the past...

[The Chair, Conservative, Kelly McCauley]

Thank you, sir.

Mr. Kusmierczyk, go ahead, please.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you, Mr. Chair.

Thank you so much, Mr. Jeglic, for your testimony. Again, you always bring so much information, light and context to this critically important conversation that we are having.

McKinsey is a global company that has 40,000 employees around the world, in 60 countries. e see that its clients represent a broad swath of both private sector companies—some of the largest private sector companies in the world—but also governments. Recently the Alberta Conservative government hired McKinsey to do a review of its school policy, schools and education system. As well, recently we saw the provincial Conservative government hiring—I believe it was a sole-sourced contract—McKinsey to review or to provide direction in coordinating its pandemic response. We're seeing governments of all stripes at all levels—federal, provincial, municipal—hiring McKinsey. Can you provide us with some insight on why McKinsey is successful at receiving contracts at all levels of government and from governments of all political stripes?

[Alexander Jeglic]

Obviously, I could not comment on why other jurisdictions would be contracting with a specific supplier, but we did see examples in the documentation that it has a good reputation. That good reputation is ultimately what leads the starting point of the conversation.

One clarification I need to make, though, is that we're not reviewing the practices of McKinsey. We're reviewing the practices of the departments that ultimately contracted with McKinsey. I think it is an important distinction.

Where we talk about favouritism, it's favouritism on the part of department actions, not on the part of McKinsey.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Excellent. Thank you for that clarification.

Your report has been consistent with previous reports. You're finding weaknesses and gaps in terms of justification, as you mentioned, at critical, seminal points of when a decision is made to provide a contract. There's weakness in terms of written justification for a certain decision.

You highlighted the weaknesses in documentation during the process, which would provide us with confidence that the rules are being followed, that it is fair and that Canadians are getting value for money.

In your evaluation, did you find fraud?

[Alexander Jeglic]

No, we did not, to my knowledge.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

In your evaluation, did you find corruption?

[Alexander Jeglic]

No, I don't believe we did.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

In your evaluation, did you find political interference in those contracts?

[Alexander Jeglic]

No, we did not.

As I've mentioned before, there was only one instance in the review we did where there was intervention on the part of any political actor.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

We talk about benchmarking. McKinsey was brought in for benchmarking.

Can you tell us what benchmarking is and what exactly we were benchmarking, typically, in terms of those contracts?

[Alexander Jeglic]

I'll ask Derek if he could speak to this one.

I know Derek is prepared to answer this one, but I can fill in some of the gaps.

[Derek Mersereau]

I won't claim to be the benchmarking expert, but I'll try to cut through a lot of the consultant-speak and describe it.

A company like McKinsey has clients all over the world. It runs surveys in these companies. It can ask a variety of questions. The ones we're speaking about here are mostly around information technology, such as the maturity of an organization's information technology processes and procedures, as well as its culture. In this context, it will select what it refers to as its “solutions”. There are nine different solutions it offers to the Government of Canada.

It will administer a survey within the organization. It will receive the responses. It will do the analysis of those. It will compare those results against information within its proprietary database and then it will provide a report back to the government organization that issued the contract.

That's how it's supposed to work, in a nutshell. I think what we saw is that it ended up being a lot more than that.

[The Chair, Conservative, Kelly McCauley]

Perfect. That's our time.

We'll go to you, Mr. Brock.

[Larry Brock, Conservative, Brantford—Brant, ON]

Do you want to take it?

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Yes, for sure.

[The Chair, Conservative, Kelly McCauley]

Go ahead, Mrs. Kusie.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much.

I wanted to go back to the non-competitive contracts your office reviewed that were missing conflict of interest declarations from those who reviewed the bid submissions. Something that we've really been focusing on at government operations, as well as at public accounts, is the aspect of the conflict of interest.

We learned a couple of weeks ago that 38% of public servants who declared a conflict of interest were determined to be in an actual conflict of interest.

How concerning is it that this number is already high, yet we seem to be missing multiple conflict of interest forms in many contracting instances?