Government Operations Committee on May 1st, 2024

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Can you explain to Canadians the value that benchmarking brings to the work of government? I want to start from first principles here. What's the value of benchmarking that companies like McKinsey and others provide?

[Arianne Reza]

Really, the client departments will be best placed to talk about the value that they bring. At a high level, benchmarking against global standards and practices using proprietary datasets gives the government a sense of where they are on their transformation projects and on citizen delivery. It is a global overview. It's actually a requirement of Treasury Board policies to have that independent kind of review function, which can be achieved through benchmarking contracts, as we described, or through independent audit.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

What value does benchmarking provide to the government?

Is it a matter of efficiency and being able to more efficiently deliver government programs? Is it about effectiveness? Is it all of the above?

[Arianne Reza]

It is all of the above in the sense that benchmarking gives you a gold standard to aim for, and it understands whether or not gates can proceed in big IT transformation projects.

I know that PSPC, as a client department, actually competed some McKinsey tools. They came and looked at our pay processing and were able to benchmark their training and introduce certain efficiencies that were pretty significant for the pay function of the government.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

When I had a chance to question the procurement ombudsman here this week, I asked him flat out if he had found any instances of fraud, and his answer was an unequivocal no.

I asked the procurement ombudsman if there was any evidence of corruption in his review, and his answer was an unequivocal no.

Then I asked him if he found in his analysis and investigation any examples of political interference, and his response was an unequivocal no.

What he did find, as you had mentioned, was a strong perception of favouritism. He was referring to the practice of changing procurement strategies midstream. The ombudsman criticized departments for changing requirements about whether they required a task-based contract or a solution-based contract.

I wanted to ask if you can explain the differences between these two types of contracts, and then speak to that criticism of the perception of favouritism that the ombudsman had found.

Can you help us understand both of those things?

[Arianne Reza]

Let me start, and then I'll turn to my colleague to add some remarks.

I read that with grave concern. It's in the report, and certainly we wanted to work with the ombudsman to unpack it.

When you think of procurement strategies that change, sometimes a client comes and they don't know the procurement world. They don't know what the correct or best method of supply is. At the same time, we're trying to change how we do procurement. We want to move away from task-based procurement, where you're asking someone to produce one, two and three tasks, to solutions-based procurement, where they're providing the government with a turnkey solution: this is our opportunity, and this is our problem.

There are always lots of moving pieces. Each individual procurement has a procurement plan that gets locked in when they go into the solicitation. Until then, things are moving back and forth, and they are fluid. It's being shaped to provide the best output for Canadians.

I'm going to stop here and see if Dominic—

[The Chair, Conservative, Kelly McCauley]

I'm so sorry. I'm glad you're stopping there, because that is right at our six minutes. We'll get a chance to come back.

Mrs. Vignola, please go ahead.

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

Thank you very much, Mr. Chair.

Ms. Reza, Ms. Royds, Mr. Laporte and Ms. Poulin, thank you for joining us today.

In response to the procurement ombud's report, PSPC stated in paragraph 118 that there were legitimate reasons for taking the approach it did when it awarded the non-competitive National Master Standing Offer, or NMSO, and using those reasons as the impetus for all subsequent call ups. This includes non-competitive call ups.

In your presentation, you said you welcomed the ombud's recommendations. However, the implication is that he was a bit out to lunch, if I can put it that way. That's my interpretation.

What are his reasons? How do you explain the fact that McKinsey & Company was awarded a non-competitive NMSO? The company has a trademark, data, and so on. We've heard it all before.

As far as data is concerned, the last time I checked, Canada still has a countrywide data collection system and specialists, paid for by taxpayers' money.

So why is McKinsey & Company, in particular, getting preferential treatment?

[Arianne Reza]

Thank you for the question.

I'll try to give you a two-part answer. I'll start and then I'll ask my colleagues to respond.

For the first part, it's important to understand that McKinsey & Company was one of the five suppliers. To our minds, it was transparent. It wasn't just McKinsey & Company.

That was a decision we made in the context of benchmarking, which allowed us to use that method. At the contract stage, if the situation is unique, regulations allow for the establishment and use a special procurement method.

In a way, it's going to make it helpful to the suppliers and the clients to move expeditiously. If you know there's only one that can compete, you go there.

For the second part, I'll ask my colleague Mr. Laporte to take over.

[Dominic Laporte, Assistant Deputy Minister, Procurement Branch, Department of Public Works and Government Services]

Thank you.

In hindsight, it's often so easy to see everything in black and white. I have to say, however, that this wasn't the case here. In fact, it involved data that was only available through McKinsey & Company.

As Ms. Reza mentioned, agreements were reached with four other suppliers. So it was transparent, the process was known to everyone. I don't think our procurement officers came to work in the morning thinking they were going to favour one company over another. It was indeed a transparent process.

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

Thank you.

Where are the missing supporting documents?

[Arianne Reza]

The supporting documents were linked to the master tool. Justification was always established using the procurement tool. According to the ombud, we should have had a unique justification each time a client wanted to use it. We thought about it and decided that perhaps we should adopt that method. But before that, the standard was to use the justification that had been prepared once the tool was in place.

There was no expectation of individual justification.

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

Why not provide justification at each step in a contract, precisely in order to demonstrate transparency and ensure that there isn't even the appearance of collusion, backroom dealings or favouritism?

Why weren't those justifications included from the start?

[Dominic Laporte]

The ombud noted that point. We can improve our best practices in documentation. As the new assistant deputy minister responsible for government contracting, that is very important to me. A new position has therefore been created: chief, contract quality and records compliance. That individual will ensure that these steps are followed in all files.

Every critical step in a contract is documented. To that end, we use tools and procedures. Those measures will serve to comply with the ombud's recommendations.

[Arianne Reza]

I'd like to add a comment, if I may.

We also need to determine the key data and milestones. The Canadian government awards 400,000 contracts each year, worth $34 million.

I'd like everything to be in the system and to be transparent, but we need to work together, with the ombud and the Auditor General, to decide what the key documents and milestones are.

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

In your speech, you mentioned an action plan. Would it be possible to provide it to the committee as soon as possible?

[Arianne Reza]

It would be our pleasure to do so.

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

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mrs. Vignola.

Mr. Bachrach, please go ahead, sir.

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

Thank you, Mr. Chair, and thank you to our witnesses.

This is obviously a complex matter. At the same time, when you read through the ombudsman's report, it's pretty scathing about the procurement process. You've accepted the findings of the ombudsman. What I'd like to get at is why those shortcomings exist.

For instance, why is the lack of documentation occurring? Is it sloppiness? Is it because there's a lack of respect for the stated requirements that are laid out in the procurement process? Is there something more nefarious going on? What's the reason for the shortcomings?

[Arianne Reza]

I think we're all going to be fighting for response time.

I'll tell you that there is no one single reason. We'll unpack it in many ways.

One thing that we saw in the report was there are no conflict of interest declarations on some of the reports. I asked, why not? We went back to the supply manual that provides the direction to procurement officers and clients. A COI doesn't have to be on file if you're a public servant because your code of conduct manages it. What is defined as a lack of documentation in the report is accurate, but we haven't established a baseline of requiring it in the first place.

It's the same with the security requirements. I saw that the security requirements weren't there. Well, they were there, but they weren't in the two or three places they were supposed to be.

We need to rationalize the lack of documentation. We need to be clear on what's causing it and we need to capture—

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

I'm not quite sure I understand the nuance behind that point.

They were there, but they weren't where they were supposed to be.

Doesn't that mean they weren't there?

[Dominic Laporte, Assistant Deputy Minister, Procurement Branch, Department of Public Works and Government Services]

If I may add to that, over time there was a different way to store information on the record. It could have been by email. It could have been stored on some local drive.

I have to say that it's not because something was not there. I do appreciate that we don't have the evidence to show that it was there.

This is where we need to leverage the electronic procurement solution that will make sure that we document every step and maintain a central repository of all information. Madam Reza was mentioning the numbers of procurement that we handle on a yearly basis, going back in time.

We need to improve on the tool and this is exactly what we've been doing over the last five years.

[Mollie Royds]

I'll just add to that in terms of the use of these methods of supply. We use them for the flexibility they provide to the system and for us to be able to leverage them.

I just wanted to add that, as of 2023, we did require sole-source justifications and statements of work that were clearly defined requirements for all of the benchmarking national master standing offers until they expired. Going forward in the future, we'll be procuring this type of capacity through a competitive process.

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

Did the national master standing offer that we're talking about for McKinsey pre-exist that commitment in 2023 to start documenting everything more thoroughly?