It is important to me as the deputy minister with a key responsibility for procurement to be given the opportunity to comment.
I would also like to sincerely thank the procurement ombud and his team for their review of the contracts awarded to McKinsey.
We have carefully considered the entire report—not only the recommendations where Public Service and Procurement Canada, or PSPC, is implicated directly, but all recommendations to consider how we can take a leadership role to further strengthen procurement practices.
By way of context setting, in the midst of increasing public scrutiny and discourse related to procurement practices, the Prime Minister tasked the President of the Treasury Board and the Minister of Public Services and Procurement to undertake a review of contracts awarded to McKinsey and examine if contracting processes complied with Treasury Board policy and departmental internal control frameworks. Shortly thereafter, in February 2023, the Minister of Public Services and Procurement made a further request that the procurement ombud conduct a review of federal contracts awarded to McKinsey.
Consistent with the result of the first review, the procurement ombud found no instances of political interference, no wrongdoing and no fraud. I believe this is important to the committee and to the procurement workforce, who take their stewardship and integrity responsibilities seriously.
The ombud's report looked at 32 contracts with McKinsey. PSPC was the contracting authority responsible for 23. As a result of this review, the ombud made three recommendations directed to PSPC. The department accepts and welcomes the recommendations and is implementing an action plan to further strengthen procurement processes, specifically as it relates to better documentation, among others.
For example, one area of this review relates to the verification of security clearances for resources. I would like to reassure this committee that all the McKinsey resources had the required security level to perform work and to access sensitive information and assets. That being said, the OPO report identifies documentation shortcomings, for example, noting that the security clearance records should also be consistently included in procurement files.
As a result of the report, I've asked security and procurement officials to take a step back to reconsider the existing rationale as to why the security clearance and contract records need to be kept in two physical places, and if this is still relevant as we move to e-procurement.
Turning to examine the procurement instruments that were used for contract award, PSPC took steps in 2021 to establish a national master standing offer as an efficient approach to procure proprietary McKinsey benchmarking services that were in demand from client departments. In total, PSPC issued 19 contracts under the standing offer, which has now expired. The ombud's observations on the standing offer are actively informing the next iteration of instruments related to procuring benchmarking services.
Separate from the findings related to the standing offer, the ombud concluded that—taken collectively—his observations led him to believe there were instances that the procurement processes created a “strong perception of favouritism towards McKinsey”. PSPC has no direct evidence of this. We have responded to the procurement ombud, noting some assumptions and interpretations differ from those made by PSPC. The ombud acknowledged this by including references to our views in his report, which he referenced in his testimony to this committee earlier this week.
In closing, I want to be clear with the committee that as the DM and as senior officials responsible for the procurement function in PSPC, we take to heart the observations and recommendations made by the ombud. We have a responsibility to better understand and address his findings, especially as they relate to ensuring better record keeping and transparency to advance both the process and controls related to procurement.
