Government Operations Committee on Feb. 13th, 2023

[Jean-Denis Garon, Bloc, Mirabel, QC]

No.

[Alexander Jeglic]

I'm sorry. Perhaps I'll listen to the translation. I apologize.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Yes, you should.

The minister has asked you to review the procurement process for contracts awarded to the McKinsey firm.

What is the total value of the contracts that you will be reviewing?

[Alexander Jeglic]

My understanding is that they're all different values. There is no one specific value, and we won't scope by value. It's our anticipation that we might look at all the contracts awarded to McKinsey.

[Jean-Denis Garon, Bloc, Mirabel, QC]

As has been already stated, the government will not be disclosing the contracts to parliamentarians.

According to what has been published in the media, it is estimated that all the contracts awarded over a period of seven to eight years could be worth more than $100 million.

Does your office have the necessary resources to conduct such an in‑depth review of the procurement process for all these contracts in such a short period of time?

Do you have the resources needed?

[Alexander Jeglic]

That's the point I made to the minister in response, in my letter dated February 8. We have an existing cadre of procurement practice reviews already under way. Without additional financial resources, we would not be able to undertake the review.

[Jean-Denis Garon, Bloc, Mirabel, QC]

More than $100 million worth of contracts have been awarded to a firm over a period of seven years. We are now going through a big public relations crisis because of the lack of transparency within the government. You are now being asked to do an in‑depth analysis of these contracts and you don't have the necessary resources.

Have I understood correctly?

[Alexander Jeglic]

I'll also clarify this.

In response to what I said about our letter, the minister indicated that we would receive the resources necessary to undertake the review. We've been in touch with the CFO of PSPC, who has assured us we will get those resources. Now the ball is in our court to identify how much financial resource we need to complete the review.

[Jean-Denis Garon, Bloc, Mirabel, QC]

When do you think your review of the procurement process could be completed?

You know the process well. Realistically, are you looking at three months, six months, two years or five years to review $100 million worth of contracts? What sort of timeline are you projecting?

[Alexander Jeglic]

The procurement ombudsman regulations, which govern my activity, indicate that these reviews have to be performed within a year. Obviously, I understand it's the will of the committee to expedite the review as quickly as possible, so it's certainly a priority file for us.

I don't want to commit to a time frame. I know others have committed to a time frame. However, until we see the full scope of the volume of contracts that came in, I think it would be inappropriate for me to identify a time frame.

[Jean-Denis Garon, Bloc, Mirabel, QC]

You will obviously look at the processes that were followed and make sure that the rules were adhered to. Earlier today, a witness mentioned that certain government decisions should never be outsourced, such as overarching government policy decisions.

Are you qualified to take a critical look at this kind of mandate, or will your work simply consist of making sure that the procurement rules were followed?

[Alexander Jeglic]

Again, the statute in the regulations indicates what we may look at. We can look at compliance with multidepartmental policy and the Financial Administration Act, which offers fair, open and transparent language that is pretty broad in nature. Then there are other considerations as well, but those are our predominant guideposts in terms of what we're looking at: compliance and consistency with those rules and regulations.

[Jean-Denis Garon, Bloc, Mirabel, QC]

McKinsey does not put its logo on documents; instead, we see the Government of Canada logo. But from what I understand, if the government has outsourced its overarching government policy decisions, such as immigration policies, which are very important, your own guidelines, which are general in nature, would mean that your office would not be able to undertake a critical analysis of the types of invitations to tender that were issued or the work that was done.

[The Chair, Conservative, Kelly McCauley]

Give a very brief answer, please.

[Alexander Jeglic]

That's correct. The policy decision as to whether to engage McKinsey or not would be beyond the scope of our review.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Mr. Johns, you have six minutes. Go ahead, please.

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

Thank you.

Thank you so much for being here and for your work.

I wrote you on November 10, just after this committee supported my motion, the NDP's motion, recommending that the Auditor General conduct and prioritize a performance audit for all aspects regarding the ArriveCAN app.

I wrote to you asking that you consider doing an analysis of any contracts regarding ArriveCAN and that you look at whether they were awarded on a non-competitive basis and were issued in compliance with the Financial Administration Act and its regulations and applicable policies and procedures.

Are you looking at all of those components when it comes to McKinsey? You talked about resources and looking to the CFO. Will you be looking for all of those components when you do your review?

[Alexander Jeglic]

It's a bit premature for me to indicate whether I would be doing that for McKinsey or not, since we have not yet set the scope, but it's anticipated that it's one of those situations in which we don't normally, in a practice review, identify the supplier. This has only happened once before in our office's history, when we looked at the WE Charity file. We looked at it from a supplier perspective.

Again, the purpose of these practice reviews is to look at the practices of the department.

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

Would that encompass Deloitte, PricewaterhouseCoopers, etc.—all of the big $600-million-plus highly paid procurement consultant club?

[Alexander Jeglic]

For McKinsey, obviously we'd be limited in scope to McKinsey only.

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

In your recent review, you flagged something that I find really concerning, and that's “a risk of perceived contract splitting with several cases of multiple, same-day call-ups made to the same supplier”.

Can you talk a bit about contract splitting and trends you're noticing there, and maybe, in a case like this when contract splitting has potentially happened, what sorts of investigations are being done and how you determine whether it occurred? If it did happen, this is a pretty serious evasion of regulations. What does the enforcement look like?

Those are a lot of questions in one.

[Alexander Jeglic]

In terms of contract splitting, just to be clear, it's the practice by which the scope is artificially split into two to avoid a governance. If it's a free trade agreement obligation that would apply, you would let two or multiple contracts apply, as opposed to allowing one.

The purpose of contract splitting is an intent question. If there isn't an intent to evade the obligation, then it's not, in fact, contract splitting if there is a justifiable reason or rationale for the splitting, but if the intent is to evade a governance structure, then that, in fact, is contract splitting.

The enforcement mechanism is essentially that now, if you're talking about free trade obligations, you're offside on a free trade obligation rule.

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

What other concerns would you have in terms of contract splitting, outside of trade?

[Alexander Jeglic]

The practice means, again, that you're subverting the intent.

I'm not sure if I understand the question.