Government Operations Committee on April 29th, 2024

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

Thank you, Mr. Chair.

Thank you, Mr. Jeglic and Mr. Mersereau.

I'll pick up where my colleague left off. This issue of there being a systemic problem as opposed to a specific problem with one company is, I think, an important one. I'm curious. You mentioned that there were four other standing offers with a similar structure to the one that was awarded to McKinsey.

Which companies were awarded those other four standing offers? If you have the relative value of them, that would be helpful as well.

[Alexander Jeglic]

The four others were Forrester Research Limited, Gartner Canada Inc., CEB Inc. and Info-Tech Research Group Inc.

Before I give the values, I just want to caveat that we established these values through proactive disclosure. We know ourselves that there are issues with proactive disclosure, so we don't want to say that these numbers are absolutely accurate, but these are the best that we could identify based on our review. Gartner, by far, would be the most significant, coming in at approximately $240 million. Next would be Info-Tech Research Group at $20.8 million. Then you'd have Forrester Research Limited at $12.5 million and CEB Inc. at $6.4 million.

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

Given that you've looked into one company, have found these problems with procurement and have extrapolated from that and suggested that there's a systemic issue, what would need to be done to confirm your suspicion that there's a systemic issue with the way the procurement system is being used?

[Alexander Jeglic]

The difficulty in answering that question is that it's not a specific issue. It's multiple systemic issues, right? I've used this terminology internally, but I'll share it: I do think that now is the time to act. We really need to reconsider federal procurement in its totality. I know it seems like a pretty dramatic thing to say, but I've been in this role for over six years. We've done a great deal of foundational work in terms of what we've seen in the landscape, and I'm fearful that if I don't start acting in a more aggressive manner, significant changes will not come. I don't think band-aid solutions are the answer. I think there needs to be significant rethinking as to how federal procurement is done.

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

Does part of that rethinking involve looking at how to rebuild the public service so that we're not outsourcing hundreds and hundreds of millions of dollars of contracts to consulting firms that are likely overcharging us for their services?

[Alexander Jeglic]

We are developing a piece on the potential creation of a chief procurement officer. That role would have the mandate of looking into foundational changes, including the interplay of various organizations that are currently implicated in federal procurement.

I think if you asked all players or actors in the federal procurement sphere and they answered honestly, they would tell you that the system does not produce the results that they want in an efficient and timely manner, so I think—

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

They hack the system, essentially. They have a tool to do a job and the tool doesn't work, so they use the tool in a way that it's not designed for.

[Alexander Jeglic]

I think that's a fair characterization.

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

Okay.

What are the next steps from here? How can the committee contribute to this work of reforming the procurement system so it delivers better for the public?

[Alexander Jeglic]

One identifiable solution that I think is well known within the federal procurement space is the creation of a vendor performance management framework. What that would do is actually evaluate the performance, in the administration phase, of how suppliers are actually performing, because I do think a part of this is an avoidance of poor performers. Currently, there is no federal vendor performance management framework. PSPC is piloting an individualized policy within their department to implement vendor performance management, but like I said, I've been in my role for six years, and this is probably my number one priority. I repeat this ad nauseam. I think this is an immediate step that needs to be taken. I think this will help address the poor performers. It will legitimize the process.

Again, I would describe that as a medium-term solution. I'm not naive enough to say it's a short-term solution, and the creation of the chief procurement officer in and of itself is not a solution, but it is the first step towards what I would describe as “transformational change”.

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

One of my colleagues mentioned that some of these revelations are similar to the ones we received regarding the ArriveCAN procurement. I'm just wondering if you can do a very quick compare-and-contrast of what we saw in that case and what we see in this case.

[Alexander Jeglic]

In that case, we saw favouritism in a different way, through what I would describe as “transparent favouritism”, which was by having overly restrictive criteria so that anyone who looks at those criteria will be able to assess whether in fact there is a desired outcome.

Here, it's not happening at surface level. It happens below the surface, so the change of procurement strategy wouldn't be made transparent to suppliers, whereas in ArriveCAN I would argue the restrictions were made transparent to other suppliers and they were aware of the restrictive nature, and that may have caused a chill effect in terms of the number of bidders.

What I'll also say is in the seven competitive processes that McKinsey won they were either the sole bidder or the sole compliant bidder in every one of those processes. That also tells you that on the supplier community there's something not working, right? It's not just on the governmental side. It's also on the supplier community side, because if there's a known buyer that pays, why is the community not participating in greater volumes? There are legitimate questions to be asked across the board, and that's why I posit the idea that this is the time for action.

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

Thank you.

[The Chair, Conservative, Kelly McCauley]

Mr. Brock, go ahead, sir.

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

Thank you, Chair.

Thank you, gentlemen, for your attendance today.

I'm going to share some of the comments of my colleagues in terms of some of the overlap between McKinsey and Government of Canada Strategies, also known as GC Strategies, and in terms of the focus of the documentation, which in most cases, on both sides of the equation, was often missing, incomplete, altered after the fact.... It really begs the question—and this is something that I get continuously and daily from constituents from all across the country—who is actually responsible for this?

It's one thing for us as parliamentarians to expose the rot and the corruption in this government and this broken procurement process, but where are the consequences? That's going to be the focus of my first round with you.

The consequences, in my view, ought to be criminal in nature, because you have a mandate, Ombudsman. I know you do. You mentioned that during your last appearance at OGGO. That is, you uncover elements of criminality, and I believe your threshold is a mere suspicion of criminality. Am I correct in that assessment?

[Alexander Jeglic]

There is nothing formal in either the legislation or regulation in regard to criminality. However, that being said, if we were to see something that would give rise to a suspicion of criminality, we would refer that to the RCMP.

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

Sure, and your threshold is the lowest rung of the ladder, ultimately, until you get a conviction.

There's suspicion. Then there's reasonable and probable grounds by a police service. Then there's proof beyond a reasonable doubt by Crown attorneys and ultimately a conviction. A suspicion is a very low threshold.

I'm looking at literally the same sort of criminal charges as it relates to McKinsey as the Government of Canada Strategies, where the RCMP have confirmed they raided his house a couple of weeks ago. They're looking at two counts: fraud under section 380 of the Criminal Code and forgery under section 267 of the Criminal Code.

I know that you may not be comfortable in answering this question, but I'm going to put it to you in any event. Do you feel, given your review of McKinsey and the irregularities and the strong presumption against a favouritism towards McKinsey over any other contractor, that there is an element of fraud in relation to the Government of Canada? Yes or no, sir.

[Alexander Jeglic]

You always ask me these difficult questions with only yes and no options.

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

If it's not a yes or no, I'll allow you to expand.

[Alexander Jeglic]

I would say no in this circumstance.

What we saw is a bunch of different reference points across different departments. That's why you see in our conclusion that we say, “in some”.

Within any given department, we didn't see 10 examples of favouritism. The only example of communal favouritism, I would say, was in the creation of the national master standing offer. It offered an opportunity to contract in an unsolicited way, whereby it's directed to McKinsey on a repetitive basis. That is what I would identify as the single most problematic aspect of this review.

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

Are you familiar with the definition of fraud under the Criminal Code?

[Alexander Jeglic]

Yes.

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

It's “Every one who, by deceit, falsehood or other fraudulent means...defrauds the public...”—in this case the taxpayer—“of any property, money,”—in this case, taxpayer funds—“or valuable security, or any service” if it's over $5,000, proceeding by indictment and imprisonment for 14 years.

Favouring one particular company and allowing it to egregiously break the procurement rules in non-compliance with numerous statutes, numerous regulations and numerous policies.... In fact, PSPC published a document called “Doing Business with the Government of Canada”, in which it highlighted openness, transparency and accountability.

In all of those circumstances, do you not see a low threshold case of making out that the Government of Canada, through the PSPC and other departments, is defrauding a taxpayer by favouring McKinsey over other legitimate vendors? Could an argument not be made, sir?

[The Chair, Conservative, Kelly McCauley]

Now I have to ask that it be a yes or no, because we're out of time.

[Alexander Jeglic]

Could an argument be made? Yes. Did we see it? No.