Public Accounts Committee on Dec. 2nd, 2025

[The Chair, Conservative, John Williamson]

Good afternoon everyone.

I call this meeting to order.

Welcome to meeting number 18 of the House of Commons Standing Committee on Public Accounts.

Today's meeting is taking place in a hybrid format, but I believe all our witnesses are in the room.

Thank you very much for coming in today to see us in person.

Pursuant to Standing Order 108(3)(g), the committee is resuming consideration of report 5 of the Auditor General of Canada, entitled “Professional Services Contracts”, from the 2024 reports 5 to 7 of the Auditor General, referred to the committee on Tuesday, June 4, 2024.

I'll just remind you, although I think everyone knows, to address all comments through the chair. I don't think there will be any outside debate, but should there be, just look to be recognized by me. Otherwise, we'll proceed in rounds, as we always do.

I'd now like to welcome our witnesses.

From the Department of Citizenship and Immigration, we have Harpreet Kochhar, the deputy minister.

It's nice to see you. Thank you for coming in today.

We also have Jason Choueiri, senior assistant deputy minister and chief digital officer, client service, innovation; Nathalie Manseau, chief financial officer; and Matthew Oommen, general counsel.

From the Business Development Bank of Canada, we have Christian Settano, chief financial officer.

From Canada Post Corporation, we have Maya Walker, general manager, sourcing management; and Nathalie Séguin, general manager, finance business partner.

From the Office of the Auditor General, we have Andrew Hayes, the deputy auditor general; and Josée Surprenant, director.

To all of you, thank you for coming in today. I understand that there will be three opening statements. There will be none from the Office of the Auditor General.

Mr. Kochhar, you have the floor for up to five minutes or thereabouts. I'm not terribly strict unless you go on and on and on. I won't cut you off if you are wrapping things up.

Thank you.

[Harpreet S. Kochhar, Deputy Minister, Department of Citizenship and Immigration]

Thank you, Mr. Chair and members of the committee.

My name is Harpreet Kochhar. I am the deputy minister for Immigration, Refugees and Citizenship Canada.

I want to acknowledge that we're meeting on the traditional, unceded territory of the Algonquin Anishinabe nation.

As public servants, we welcome the Auditor General's work and the opportunity to demonstrate how we continue to improve transparency and stewardship of our operations.

I also appreciate the opportunity to appear before you to discuss the Auditor General's report 5 on professional services contracts.

My department participated in this audit, which examined 97 federal contracts with McKinsey & Company between 2011 and 2023, including two at IRCC. In 2018 and 2019, we undertook major service and digital transformation work to improve how we deliver programs to Canadians and newcomers. To help design and launch the transformation, we engaged McKinsey & Company through two competitive contracts awarded under Public Services and Procurement Canada supply arrangements.

The first contract, valued at $2.9 million, provided an in-depth assessment of the department's operations and a road map for modernization. The second, valued at $24.8 million including amendments, helped establish our transformation office and deliver new digital tools and digital journey labs that improved processing efficiency and client experience. These engagements were designed to bring in short-term expertise and to build internal capacity, not to outsource our core work.

The Auditor General's report offered a valuable independent review of these contracts and of the department's contracting practices more broadly. The report's findings were very constructive and helpful, and did not identify any integrity or value-for-money concerns specific to IRCC.

However, the Auditor General did note two administrative issues. First, that our files did not fully record the rationale for one contracting decision. Second, that a small number of external consultants received temporary network access before their final security clearance was confirmed.

We took these observations very seriously. Since that time, my department has strengthened its documentation and verification processes. Each procurement decision must now include a written justification, and no external resource can access our systems without documented security clearance. We have also strengthened conflict of interest guidance and expanded training for managers to reinforce oversight and accountability in contracting.

These measures build on controls that are already strong. Both of our contracts with McKinsey were competitively awarded, audited and found compliant with Treasury Board and PSPC rules. This work helped lay the foundation for our ongoing digital modernization—creating a transformation office, growing our service design expertise and creating client tools that make applications faster and easier to use.

My department remains committed to stewardship, transparency and continuous improvement.

We appreciate this opportunity to demonstrate the steps we've applied towards continuing to serve Canadians with integrity. We'll continue to work closely with the Auditor General and central agencies to ensure that our procurement processes remain rigorous, transparent and constantly aligned with Treasury Board policies.

Thank you.

I am happy to take any questions.

[The Chair, Conservative, John Williamson]

Thank you very much.

Up next is Mr. Settano.

You have the floor for up to five minutes.

[Christian Settano, Chief Financial Officer, Business Development Bank of Canada]

Thank you, Mr. Chair and members of the committee.

For over 80 years, the Business Development Bank of Canada, or BDC, has played a vital role in the Canadian economy as the only bank fully dedicated to entrepreneurs. We support small and medium-sized businesses with financing, advisory services and investments, addressing gaps in the market and collaborating with private lenders, thanks to our teams' expertise.

We are proud to operate profitably, ensuring that BDC is not a burden on the taxpayer while providing an annual dividend to our sole shareholder, the Government of Canada. Since 2021, BDC has paid more than $1.4 billion in dividends to the government, an approach that directly benefits not only our more than 107,000 clients who drive the country's economy forward but the Government of Canada's balance sheet in support of every Canadian.

I'm here today to answer your questions regarding the report from the Office of the Auditor General on professional services, which mainly concerns two contracts with McKinsey.

The first contract, awarded through a competitive tender, aimed to validate our new corporate strategy as we emerged from the pandemic, with our client base growing by 20%. This project, which was launched in 2021 and completed in summer 2022, demonstrates BDC's ability to support a greater number of entrepreneurs during a crisis.

The second contract, which was awarded by mutual agreement, involved adjusting our go‑to‑market strategies. McKinsey had unique expertise and direct knowledge of our strategic development, which allowed for quick action and fast‑tracked the time to market.

I want to emphasize that all BDC procedures were followed, the decisions were justified and the value for money was strong; however, the Auditor General recommended that we strengthen the process for documenting our selection committee's decision.

Since then, we have addressed the auditor's feedback and improved our procurement processes, including assurance of thorough documentation. Our procurement team oversees the administration of all processes, working closely with internal teams to ensure compliance. Reporting on contracts exceeding $100,000 is made semi-annually to both our management committee and our board of directors.

Regarding value for money, we assess McKinsey's mandates in both the short and the long term. In the short term, their support enhanced our capabilities without disrupting day-to-day operations. Since implementing our new strategy, the number of clients served has grown by 49%, especially among the smallest and youngest businesses and those in rural and remote regions.

In the long term, the new strategy that was developed should bring about a change as profound as the one resulting from the creation of BDC Capital 11 years ago. Since then, the Canadian venture capital market grew from $750 million to $15 billion, and BDC is now Canada's most active venture capital investor in terms of number of transactions.

Lastly, the launch of our community banking initiative, in partnership with local lenders and financial institutions, is a key pillar of our strategy. This initiative aims to foster the creation and growth of businesses outside of major urban areas with unconventional business models, little credit history and from underserved groups. It also aims to support 100,000 new entrepreneurs over the next 10 years.

In summary, the initiatives stemming from our strategy are generating positive and lasting impact on entrepreneurs and on the Canadian economy.

I am happy to take any questions.

[The Chair, Conservative, John Williamson]

Thank you.

The next person to speak is Ms. Walker.

Ms. Walker, you have the floor for five minutes.

[Maya Walker, General Manager, Sourcing Management, Canada Post Corporation]

Good afternoon Mr. Chair.

Thank you for inviting me here today.

My name is Maya Walker and I'm the general manager of sourcing management at Canada Post. I'm joined by my colleague Nathalie Séguin, general manager, finance business partner.

I appreciate the important work of the Standing Committee on Public Accounts and welcome the opportunity to discuss the 2024 report 5 of the Auditor General of Canada on professional services contracts.

I look forward to the discussions and questions from committee members.

Canada Post, as a federal Crown corporation, is responsible for serving all Canadians and is one of the country's largest purchasers of goods and services. Each year, we procure over $2 billion in goods and services from suppliers who meet our requirements and deliver value for money. We are committed to conducting fair, open and transparent procurement in accordance with all applicable laws and regulations and our own rigorous policies.

Our policies and practices ensure that procurement activities are compliant, conducted with integrity and focused on achieving the best overall value for Canada Post and, in turn, for Canadians. All suppliers are treated equitably, and no proposer receives special advantage.

Our approach to procurement always starts with a clear sourcing strategy aligned with our policies, defining value for money, understanding market conditions, and challenging the necessity and the scope of each procurement.

The Auditor General's 2024 report, “Professional Services Contracts”, made important findings about following procurement policies and practices, and about demonstrating value for money. The OAG also put forward a recommendation regarding the strengthening of conflict of interest requirements and practices. Canada Post has strong proactive conflict of interest measures in place and fully agrees with the recommendation.

In parallel with the Auditor General's process, Canada Post began implementing its enhancements early, launching an internal audit of our consulting services. We take the Auditor General's findings seriously, and over the last year, we've taken actions to improve our processes in contracting for professional services and consulting.

First, we enhanced our policies and practices with respect to the hiring of consulting services, including a new process and checklist aligned with the Treasury Board guidelines. This new process has helped to clarify the roles and responsibilities of the requesting business function.

Second, we've strengthened training for employees to reference the importance of value for money and the specific role they play in the procurement process when contracting for professional services.

Third, while we already had conflict of interest declarations built into the procurement cycle, building these declarations into our systems for employees and for suppliers is helping to ensure more consistency and transparency. In addition, Canada Post employees undergo annual conflict of interest reviews and declarations as part of our human resources process.

In conclusion, procurement policies and processes must continuously evolve and remain subject to ongoing review. Canada Post thanks the Office of the Auditor General for its observations and recommendations regarding sound procurement practices. We are committed to continuously reviewing best practices and informing our employees of their responsibilities when obtaining professional services. For Canada Post, and all Canadians, we will continue to procure goods and services in a fair and transparent manner, with a focus on delivering the best value.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much.

We'll begin with our first round, which will consist of three members with six minutes each.

Mr. Deltell, you'll start things off for us, please.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

Thank you very much, Mr. Chair.

Good afternoon, colleagues.

Ladies and gentlemen, welcome to your parliamentary committee. You're Canadian citizens, so this is your parliamentary committee.

I want to thank everyone who spoke in French. I congratulate them on the quality of their French. I am sure that those who were more discreet are also very skilled in both official languages.

The first few questions will focus on the Canada Post Corporation, so they will be addressed to Ms. Séguin and Ms. Walker.

Ms. Walker, you talked about the best value. In other words, we should get our money's worth.

As you know, when the Prime Minister created his new cabinet, he appointed a new Minister of Government Transformation, Public Works and Procurement. One of his first public statements concerned the Canada Post Corporation. He took a critical look at the Canada Post Corporation's financial situation.

During its last 10 years in power, the Liberal Party turned a blind eye to this. Today, the Liberals seem to be pounding on their chests and saying that people need to get their money's worth, but they turned a blind eye for 10 years.

Can you explain to us how it is that, over the past 10 years, the Canada Post Corporation accumulated a deficit of $5 billion and how, as we speak, based on what the minister said, it's losing $10 million every day?

[Maya Walker]

Thank you for the question in French. I'm going to answer in English, because it's easier for me.

I will repeat a little bit.

First of all, Canada Post very much welcomed the announcement by the government in our current situation. Yes, over the period of time when these contracts were being reviewed.... Canada Post has been in a financial situation with the erosion of letter mail since 2006. Our financial situation as a result of COVID and the loss of the parcel business with new players coming into the market has also had an effect. With the new announcement.... We very much welcome that.

We put forward our transformation plan regarding the changes that we need to make to be able to be solvent. Our goal is always to find revenue that comes from the products that we deliver and not from the public, and we are hoping that this plan can get us there.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

A lot gets blamed on COVID‑19 in many situations and, indeed, in this case, the goods delivery industry has changed completely in 10 years. I think you're in the best position to see that. Canadians listening to us are now turning to private delivery companies, whereas before, they didn't even question it and immediately relied on the Canada Post Corporation.

By the way, I'm a big user of Canada Post. I appreciate its services and I'm very well served in my riding. I say that in all honesty, not because the sorting centre is in my riding. As a citizen, I use Canada Post quite often. However, as a manager, member of Parliament, Canadian and a taxpayer, I'm not happy to see that we've lost $5 billion and that, as we speak, we're losing $10 million a day. I know you're not happy about that either.

When you had contracts with McKinsey, did you ask them how you could develop a brand new approach? These kinds of questions can be introduced into the conversation quite easily. Compared to where we were 10 years ago, we're in a new world now. However, for 10 years, very little constructive action has been taken, which has resulted in a $5‑billion deficit and losses of $10 million a day.

Did McKinsey not help you with that?

[Maya Walker]

When we have requirements for procurement, including our consulting requirements, we are looking at the services that we need to help inform our current situation. When we have requirements, especially when we deal with consulting requirements, we have a need, and we look at that need on a case-by-case basis.

At the time, Canada Post was in a position where we were losing money, and we are continuing to lose money. We have now put forward that plan to help us get out of that. The consulting service was a requirement to look outside of the expertise that we had in-house to help inform on a more global scale how we can come out of the current situation that we're in.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

My next question is for Mr. Kochhar regarding the Department of Citizenship and Immigration.

I understand that it is under your authority that Canadian passports are approved before they are issued. Is that correct? Canadians will unfortunately remember how, at the time that you had contracts with McKinsey, we were going through a major passport crisis. Canadians had to line up, wait and even sleep in hallways to get their passports.

Did McKinsey help you solve that problem?

[Harpreet S. Kochhar]

Mr. Chairman, I'll just add to this that McKinsey was actually hired to do more of a departmental plan or strategy development for digitization, which was on the processing side of things, not on the passport side of things. The passport itself was a different situation, in which McKinsey wasn't playing any role.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

Did you award contracts to other companies to help you get out of the passport crisis, which was caused entirely by your department?

[Harpreet S. Kochhar]

Mr. Chair, again, the aspect of actually addressing that situation was done through internal resources and working with ESDC. To clarify, IRCC is the policy authority. However, ESDC is the authority that is dealing with passport provision to all Canadians.

[The Chair, Conservative, John Williamson]

Thank you very much.

Next is Ms. Tesser Derksen for six minutes, please.

[Kristina Tesser Derksen, Liberal, Milton East—Halton Hills South, ON]

Thanks, Mr. Chair.

Welcome, everyone.

I'd like to start by asking questions of Mr. Kochhar.

IRCC—and immigration in general—has been under some scrutiny lately, including by this new government, of which I am a new member. I know that's resulted in some review of policies and in changes for temporary foreign workers, international students and so forth. I feel this meeting is quite timely to have you here to talk to you about this particular report.

I'll note that one of the things the Auditor General's office was particularly concerned about was the pervasiveness of non-competitive contracts. The report notes that IRCC's two contracts were, in fact, competitively offered.

Does IRCC always require a competition for the contracts that it puts out?

[Harpreet S. Kochhar]

Mr. Chair, the contract, which is done by IRCC, is based on the Treasury Board guidelines. For up to $3.75 million, we have the ability to do it. Otherwise, we do have PSPC, which allows us, but they are always done through competitive processes.

[Kristina Tesser Derksen, Liberal, Milton East—Halton Hills South, ON]

I'll ask about the policies in your department. You said that you follow Treasury Board policies, so any contract over $3.75 million would have to be competitively offered. Is that correct?

[Harpreet S. Kochhar]

Mr. Chair, for anything above $3.75 million, we would actually go first to PSPC and it would assist us in standing offers and that. For anything below $3.75 million, we do have internal capacity to do that competitive process. Both are competitively done.

[Kristina Tesser Derksen, Liberal, Milton East—Halton Hills South, ON]

Tell me a little bit about the benefits that you see in having that competitive process within your policies.

[Harpreet S. Kochhar]

The benefit of having a competitive process is to be very transparent and upfront with the requirements and what the tangible benefits are that we are looking for from those contracts.

At times, we are looking for diagnostics. For example, with the first contract we had with McKinsey, we were looking to see if there was an ability for us to design a road map or a strategy for digitization and improving the client experience, given the fact that we were experiencing a high volume and increasing wait times for the processing. That was done just to make sure that we had a very clear task authorization to develop that strategy and give us a road map. That is where it ended.

That is how we run all of these, in terms of a clear indication of what we are looking for and then asking for the RFP or request for proposals from different companies to participate in that. Finally, we have the assessment of those that have submitted that. Based on that, we assess which one is the winner.

[Kristina Tesser Derksen, Liberal, Milton East—Halton Hills South, ON]

That sort of leads into my next question about the RFPs.

I'm going to refer to paragraph 5.31 of the report. The Auditor General found that four of the 28 contracts that they reviewed were awarded through a competitive process, two of which were for your department. The report also found that it looked like some procurement strategies were actually structured to make it easier for this particular service provider, McKinsey, to be awarded the contract.

For IRCC specifically, I believe that McKinsey was the only service provider to submit a bid. Is that correct?

[Harpreet S. Kochhar]

To my knowledge, it was not. There were a couple that submitted a bid for the first one. That is how it was. It wasn't just McKinsey.

[Kristina Tesser Derksen, Liberal, Milton East—Halton Hills South, ON]

Okay.

I do believe as well, referencing the Auditor General's reports, that there were some concerns that some bidders found the criteria rather restrictive or maybe even too restrictive for their purposes. I believe that IRCC did respond to some questions and address some concerns from bidders. Can you talk a little bit about what was involved with that?