Government Operations Committee on April 29th, 2024

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Mr. Bachrach, please go ahead.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

I wanted to go up to the 10,000-foot level for people who might be watching this committee and wondering what the impact of all of this is. We've talked a little bit about the impact on other companies that are seeking government contracts, but there's a public interest here. I wonder, Mr. Jeglic, if you could talk a little bit about having a broken procurement process across all of government. What is the result for the public and for average Canadians who are watching this and wondering what the impact on their lives is?

[Alexander Jeglic]

That's a good question, and I think it is a fair question as well. Could we achieve better value for money for the taxpayer if the system worked more efficiently? The answer is absolutely yes.

I think there are mechanisms in government procurement that need to be reconsidered and that ultimately lead to a much more efficient system. Something that we hear—and I hate to use this word because it sounds like a broken record—is “simplification.” Simplification is always used in the context of trying to simplify what exists, but you're taking a very burdensome system and trying to make the burdensome system simpler. I think there's a different way to approach this problem. The real costs are time and money. A lot of time is spent on crafting procurement solutions, and a lot of money is ultimately wasted where competitions lead to no competitive tension in the pricing. Yes, there's an evaluation of whether the price is fair and reasonable in many instances, but there is no price tension that would ultimately result in a lower price for the taxpayer.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Your investigation spanned the years 2011 to 2023, and we see the real spike in non-competitive procurement with McKinsey after 2019, in those years, which corresponds to the pandemic. I'm wondering to what extent the pandemic broke the procurement system, or whether the systemic issues that you are seeing already existed and were simply accentuated by the conditions of the pandemic.

[Alexander Jeglic]

If you look at reports dating back over a decade, you'll see that they still resonate today. That was the starting point when I started in this role; it was to look back before looking forward. One thing I noted was that where our office collects datasets from a number of stakeholders, the issues that we see are repetitive in nature.

We create what we call a “top 10 list”. That top 10 list is pretty static year over year. It was disappointing to learn that the same issues persist, so we said that we wanted to be part of the solution. That's why we started that five-year review plan. It was to look at those top 10 issues across the three lines of enquiry, or LOEs.

We plan to publish that five-year report shortly. I don't think you'll be surprised by any of the findings; many of them have been discussed. Again, it's indicative of these being the same issues that we're seeing.

I will say that we've seen significant changes in recent years in procurement, like the move towards e-procurement. What changes that will amount to have yet to be seen. In the early days I was very optimistic that it could produce very positive results. I wouldn't say I've lost that optimism, but I wouldn't say that I would put all of my optimism in e-procurement.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I'd just say that it's pretty troubling that the same issues have been coming up for a decade and the government hasn't managed to fix them. I think that's something that should worry all Canadians.

[The Chair, Conservative, Kelly McCauley]

That's a fair comment.

Mr. Brock, go ahead, please.

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

Thanks, Chair.

Mr. Jeglic, we finished off my first round discussing fraud. I want to talk now about forgery under section 366 of the code, which is defined as anyone who “commits forgery” by making a “false document, knowing it to be false, with intent”. Upon conviction, they could be looking at a prison sentence of 10 years.

Making a false document is defined in the code to include “altering a genuine document in any material part...making a material addition to a genuine document or adding to it a false date” or “making a material alteration in a genuine document by erasure, obliteration, removal or in any other way.”

In paragraph 110 of your report, you talk about a number of observations that are creating a strong perception of favouritism towards McKinsey. Subparagraph 110(d) talks about “The inappropriate re-evaluation of bids resulting in McKinsey deemed the only compliant bidder and awarding the contract.”

As a parliamentarian with some legal background, I view this as taking an original contract that has so many different qualities and manipulating the contract so that McKinsey, in essence, becomes the successful bidder.

In my opinion, sir, as a former Crown attorney, a case could be made out for an element of forgery in relation to that practice.

Would you agree, sir, that this could be the subject of an RCMP investigation?

[Alexander Jeglic]

I can't definitively answer yes or no to the question because the fact set is a little bit more complicated than what's portrayed here.

Essentially, we made a negative inference in this specific circumstance because this specific file had documentation at all steps of the process except for the point in time that this is identified, which was where the decision of the evaluation committee was sent to the contracting authority. The contracting authority performed the financial evaluations. The results of the financial evaluations were then made known to all the evaluators.

It was at this point in time that one of the evaluators saw who the ultimate winning proposal should be. At that point in time, there's no further documentation as to what happened. Ultimately, it was indicated by that specific evaluator that there had been an error in the assessment of one of the criteria associated as part of the technical evaluation.

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

That was their opinion.

[Alexander Jeglic]

Yes, it was in their opinion.

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

That could, in essence, be a material alteration of that particular term.

I'm not asking you to agree with me. I'm just asking, sir, if a case could be made out for investigation, in much the same way you agree with me with respect to fraud.

[Alexander Jeglic]

Right.

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

Okay, I'll move on.

I understand your office is also investigating the concept of bait and switch across all federal departments.

Is that correct?

[Alexander Jeglic]

Just to clarify, it was reported to the committee that it's something we found reasonable grounds for. As you'll remember, it is a funding issue for our office, so I have put forward a funding request to the department. Pending funding, yes, that is something that we intend to pursue.

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

If you pursue it, if you undertake it, that in and of itself could reveal criminality, correct?

[Alexander Jeglic]

Potentially.

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

Right.

If you do receive the funding and the approval to proceed, would the bait and switch investigation also include, in these circumstances, McKinsey, in much the same way you investigated Government of Canada Strategies?

[Alexander Jeglic]

I think it is possible that McKinsey contracts are captured by the bait and switch now.

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

Thank you.

In your review of the McKinsey contracts with the Government of Canada, did you uncover any evidence of the destruction of documentation that was prevalent throughout the GC Strategies investigation?

[Alexander Jeglic]

We didn't see a prevalence of document destruction. We did see, as you noted, that same file where there was an offer to delete a document associated with the financial evaluation. However, that would be the only example that I could think of.

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

You talk about a lack of oversight, particularly by PSPC.

Are you in a position to file at a later date all of the individuals who worked at PSPC and CBSA, in fact all the departments that you reviewed, who are responsible for their involvement with McKinsey in allowing this misuse of taxpayer funds to occur?

Can you give us all the names, sir, within those departments?

[Alexander Jeglic]

What I can do is I can provide you the names that were captured in the documentation that was provided to us.

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

Thank you.

[The Chair, Conservative, Kelly McCauley]

Mr. Sousa, please go ahead.