Government Operations Committee on April 29th, 2024

[Alexander Jeglic]

Obviously, as the member rightfully points out, the conflict of interest declaration is a seminal document, particularly for evaluators. I believe the statistic you provided was in general, but this is specific to the evaluation of proposals, where I would argue it's even more important to have these declarations on file and also to bring awareness to the issue.

This is a conversation we had in previous reviews as to whether conflict of interest forms would need to be completed by all participants in an evaluation, including public servants. We strongly advocated that, yes, all participants in an evaluation should complete a conflict of interest declaration as a participant.

The fact that they're missing is problematic, absolutely.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

We saw that the Department of National Defence has contracted a total of $29.1 million with McKinsey. I'm also noting that it had the greatest number of contracts, as well—a total of 12 out of the 19. That's a significant number. It's almost two-thirds.

We also learned over the past few months that another major contracting firm with defence, known as Dalian—this goes back to my original question—received millions of dollars from that department. The owner of Dalian started working for defence while continuing to sign contracts for the company. In this instance, there was no conflict of interest form signed.

Due to McKinsey's favoured nature, do you feel there are numerous connections that led McKinsey to make $29 million from the defence department specifically?

[Alexander Jeglic]

Mr. Chair, unfortunately, I can't answer that question in terms of the connections. What we saw, we reported on in the report. I can't speak about any connections made behind the scenes.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

PSPC stated that it took issue—I used that phrase in my first round—with the assumptions and interpretations in your report, as they were not the same as the department's.

Do you think a department can simply state its own version of events if it has not bothered to provide any evidence to support its claims?

[Alexander Jeglic]

That was the nature of our discussions with the department. We certainly believe the version depicted in the report is accurate. Any assumptions made were only based on the facts that were provided. If there was a fact provided and no fact provided on the other side, I think we were safe to make the assumptions we did.

There were a number of instances where we had discussions with the department to understand its perspective because, at the end of the day, what we're trying to achieve here is factual accuracy. That is why we engage with the department. First of all, it's required by way of the regulation. Second of all, we want to make sure the report accurately reflects the facts. If there are facts that are wrong, we want those to be corrected before we finalize the report.

I think the issue the department was having was regarding any inferences made as a result—a conclusion based on what it saw as unrelated facts that we saw as related.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Do you think it's respectful of your work to have a department push back on what you find?

[Alexander Jeglic]

I absolutely feel it's within the department's purview to put forward its view. However, I would implore the department to document its view in the future so that, when it comes forward with what actually happened, it's reflected in the documentation, as opposed to surmising what may have happened after the fact.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

I think that's my time.

Thank you very much, Chair.

[The Chair, Conservative, Kelly McCauley]

We'll give you eight seconds in your next round.

Mr. Jowhari.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

Welcome back, Mr. Jeglic and colleague. It's good to have you back in the committee.

What I've heard so far is that our procurement process is quite complicated and outdated. The department goes around, at times, to make sure it gets the job it is trusted to do. I also heard there's no evidence of fraud. There's no evidence of criminal activities or political interference. There's no mention of the PM or Mr. Dominic Barton, which is good.

It comes down to this question: Why McKinsey?

The question I have is where my colleague Mr. Kusmierczyk started going: What does McKinsey do? I heard from Derek that it does technology and culture benchmarking activities. We then got into asking what “benchmarking activity” means. It means they look at where the department or organization is at. They look at best practices, figure out where the gap is and develop a road map.

If the Government of Canada is trying to develop a road map for updating its technology and changing the culture and processes, what type of organization should it reach out to at the outset to develop that road map?

[Alexander Jeglic]

It's a fair question. I think there are a number of approaches by which you can consult the supplier community in a transparent way to obtain information. I think the approach taken here was to establish multiple, non-competitive national master standing offers. As you heard me mention before, there are five in total, so that dilutes some of the favouritism that was seen towards McKinsey, because there was the creation of four other national master standing offers.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you for going there.

You mentioned Gartner. What does it do?

[Alexander Jeglic]

I don't believe I'm qualified to answer that. I don't have any specific knowledge, but Gartner is a multinational consultancy.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Gartner actually is another arm of, let's say, an industry that provides a lot of data. It develops quadrants in which it says—as it relates to the topic—who the top performers are, how they are performing, what the best practices are, etc.

Do you know what Info-Tech does?

[Alexander Jeglic]

No, I do not.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay, I'm going to stop going down that road. However, what consistency I see is the complementary role that those four and McKinsey played with each other. When you're trying to do benchmarking and trying to develop a road map for a transformation of an organization such as the Government of Canada, you really need industry best. I come from a consulting background. McKinsey is one of the best on developing strategy, specifically around IT and culture. The other four organizations that were highlighted here are the ones that can provide a complementary set of data and benchmarking to the work that McKinsey is doing. I think the approach that the Government of Canada has done by making sure that we get one of the best...and also making sure that we have other advisory...at that level to validate what McKinsey is telling us—actually having four other pairs of eyes—is a wise decision.

However, having said all of that, we see inconsistency. We see that inconsistency around different stages of the process—we've switched back and forth between following the procurement process and not following the procurement process. That's what I suggest we should probably focus on.

With 30 seconds to go, is there anything that you've seen among those activities that we have...that we have stepped out of the procurement process...that would shed some light on why something like that would happen?

[Alexander Jeglic]

I think what we saw that was concerning in the creation of the national master standing offer was the justification for the exception. There's nothing wrong with the government wanting the best solution, but it's the methodology used to create the pathway to achieve that best solution. Here I would argue that there are exceptions under the government contracting regulations cited. It's 6(d), where “only one person” can perform...which was cited to allow for the creation of the national master standing offer. However, the rationale was limited to the tools that McKinsey offers. It was the rationalization of why we need the McKinsey tools rather than the governmental objective. The governmental objective should have been the focus, and then saying only one supplier could meet that governmental objective would have been an appropriate understanding of the rationalization. However, that's not what we saw.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We have Ms. Vignola, please.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

I'm going to briefly circle back to the statements of work.

Do departments have to justify the needs implied in a statement of work?

[Alexander Jeglic]

I believe the answer is yes. The work needs to be justified.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

Are those justifications usually part of the record?

[Alexander Jeglic]

I think the answer is that that's really the issue we're seeing. The objective of the government wasn't absolutely clear, and the focus was more on the opportunity to use McKinsey tools, and why the McKinsey tools were so exceptional, rather than focusing on what the government objective was that needed to be met.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much.

This sheds a great deal of light on the almost blind trust that the government—and I'm not just talking about this government, by the way—seems to have had for years in outside services, instead of looking internally for strengths and skills that would be more representative of what we really need.

Thank you very much for responding so transparently to each of our questions.

Mr. Chair, I would like to move the following motion:

That the committee invite the Minister of Public Services and Procurement to appear on May 1, 2024, to answer the committee's questions regarding the study on the Consulting Contracts Awarded by the Federal Government to McKinsey & Company.

The motion has been sent to the clerk, who will also have the opportunity to send it to all my colleagues.

If you want to discuss it after the rounds of questions, I'm open to that as well.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Are you just putting the motion on notice, or do you wish to have it put forward, tabled and debated right now?

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

As I said, I am moving it today.

If my colleagues agree, we can discuss it once the rounds of questions are over, to respect everyone's speaking time.