Government Operations Committee on Feb. 1st, 2023

[Gord Johns, NDP, Courtenay—Alberni, BC]

You don't know either. It seems like nobody knows the answers.

Obviously, you saw something. You saw a vulnerable Canadian government.... You and the six other big companies saw something here. You saw a vulnerable government, so you created a shadow government. You're even telling us that there are record amounts in research and development in these consulting companies.

There is a new phenomenon. You're absolutely right. The new phenomenon that's been skyrocketing out of control for a decade is of outsourcing. It has gone from $50 million under the Conservatives. It doubled under them and has gone up fourfold under this government.

You love your country. How do we stop it?

[Dominic Barton]

I think that focusing on the training and the technology development in the civil service is there, but I also think it's the nature of the work. Consulting firms have consultants.

[Gord Johns, NDP, Courtenay—Alberni, BC]

No kidding. They're subcontracting out, and they're expensive consultants, charging expensive consultant money.

I guess my question to you is this: Do you think this is ethical?

[Dominic Barton]

I think consulting the government is ethical.

[Gord Johns, NDP, Courtenay—Alberni, BC]

You think making profit margins off subcontracting, like we saw with GC Strategies.... These guys are making between 50% and 30%. We don't even know. They're not sharing that information with us. They subcontracted out. These guys are making between $1.3 million and $2.7 million just on the ArriveCAN app.

Do you think it's ethical that two guys who don't have an office and who have no staff—they could just have two stools at a bar—make that kind of money? They're not even tech guys.

[Dominic Barton]

I'm not familiar—

[Gord Johns, NDP, Courtenay—Alberni, BC]

It's who you know. That's really what it is.

[The Chair, Conservative, Kelly McCauley]

I'm afraid that is our time.

We're going to go to Mr. Paul-Hus, please, for five minutes.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

I'm going to share my speaking time with Ms. Block.

First of all Mr. Barton, I'd like to tell you that you're a fascinating person. You've told us that you worked for the McKinsey firm for 30 years, and that for nine years, you were the global managing director, but that you have no recollection of what went on. That's rather intriguing.

I'd like to ask you a straightforward question. Can you tell me how things work when the McKinsey firm is giving advice to the Department of National Defence and Lockheed Martin at the same time? Don't you think that's a glaring conflict of interest?

[Dominic Barton]

Between which companies?

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

The example I gave was the Department of National Defence and Lockheed Martin.

Your company advises the government…

[Dominic Barton]

I'd like to make two comments. I said I don't know what's going on with the Canadian contracts at McKinsey & Company. I'm not embarrassed about that at all.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

I'll ask the question hypothetically.

Suppose that a department of defence in a country like Canada signed a procurement contract with a company like Lockheed Martin. Would it be appropriate for your former company to be providing advice to both parties at the same time? Wouldn't that be a conflict of interest?

[Dominic Barton]

Yes, there's very strict conflict.... As long as there are strict walls in terms of the information...that those do not go between.... They can't. McKinsey & Company works with competitors in the industry. You have to have very strict walls in terms of who the people are who work in that particular industry, the data that's—

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

So McKinsey is aware of everything, but the partners on each side do not know what is happening on the other.

I have to give the floor to my colleague. Thank you.

[The Chair, Conservative, Kelly McCauley]

Go ahead, Mrs. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Mr. Chair. Thank you to my colleague for splitting his time with me.

I want to follow up on some of the questions that my colleague Mrs. Kusie was asking you. When it comes to pro bono work and the work that was pro bono when you were participating on the economic advisory panel—or when McKinsey was—is it common practice for McKinsey & Company to provide work pro bono?

[Dominic Barton]

Absolutely it is. McKinsey provides pro bono...to the United Way, to various different organizations. This is part and parcel of what they do around the world.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

They're doing this pro bono work for the government. You clarified that in its pro bono work, McKinsey would not have been privy to any information that would have positioned it to procure future contracts. If that's the case, why does McKinsey do this?

[Dominic Barton]

It's because it's about being a part of society. Other organizations do that too. Corporates do a lot of pro bono work. It's a normal thing for all corporates to provide pro bono services.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

What you are positing to this committee is that a consulting firm does pro bono work for a client and then ends up with some very lucrative contracts falling on the heels of that pro bono work. There is no correlation between the two of them.

[Dominic Barton]

Yes. I think you're missing the connection. To be able to get that work, a very rigorous process is gone through. Just because you know someone doesn't mean you will get the work. It's not about a relationship. You have to follow the criteria that are set, and they include the price. They include your capabilities, your track record, your references. I don't see that linkage.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Okay, so it's not who you know.

[Dominic Barton]

No, it's not who you know.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I just want to read a quote from a book, When McKinsey Comes to Town. This is quoting a senior partner from McKinsey. It says:

If there was an award for squeezing the most out of [our] clients, McKinsey might be the favourite to win it. A senior partner told young recruits that when he started at the firm, a McKinsey manager helped him by offering tips on building client relationships. “Wedge yourself in and spread [yourself] like an amoeba,” he said. “Once in, you should spread yourself in the organization and do everything.” In other words, he said, act like “a Trojan horse.”

You would have us believe that the work McKinsey & Company was doing pro bono was very philanthropic, that it did not benefit in any way from contracts with the Government of Canada because of the pro bono work it did. It was not about being known to the Government of Canada.