Government Operations Committee on May 1st, 2024

[Mollie Royds]

That's correct. It was consistent with the approach that we were taking in the business line at the time, but we have adjusted that in light of the observations that have been made. We noted the requirement to have additional documentation.

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

In your response to the ombudsman's report, you pushed back on some of the assumptions and characterizations of the lack of rationale for the national master standing offer decision. You say that “rationale for making the decision cannot be assumed in the report without evidence”.

My read is that the ombudsman didn't take issue with the rationale. He was taking issue with the lack of evidence. The question is, where's the evidence? Why did you push back on that finding, which is that the evidence wasn't provided? It seems like you're pushing back on something the ombudsman didn't actually say, which is that the rationale was incorrect. What the ombudsman was saying was there was no rationale. It's not transparent why that particular procurement process was chosen.

[Arianne Reza]

Quickly going back, lack of documentation haunts us, and we're fixing it. I don't enjoy coming to committee to talk about lack of documentation and any inferences it makes, so that has to be shut down.

With respect to our response to the procurement ombudsman, we've accepted the findings. We've accepted recommendations.

On the issue of rationalization, it is because, from our assessment, when we set up the national master standing offer, we did all the price verification, the rationale and the evidence. Adding on that each call-up had to have this individual justification has not been in our line of sight for the last 20 years. It is now.

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

In terms of getting back to my original question about the reason for the shortcomings, is it because the requirements were not understood or because they weren't clearly enough laid out?

I'm a layperson when it comes to this stuff. When I read the ombudsman's report, he says that there are clearly laid out requirements for documentation, and those requirements were not met. Either they were not met because they were missed, because they weren't understood or because the people filling out the documentation didn't want to. I'm trying to understand why they weren't there.

[Arianne Reza]

I don't think there was an articulation of a requirement for the rationalization and justification for individual call-ups.

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

It wasn't articulated clearly enough to the people in charge of the procurement process.

[Arianne Reza]

It wasn't required as part of the procurement process. There's a distinction.

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

It wasn't required. Okay, that's interesting.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Mrs. Kusie, please go ahead.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair.

A previous PSPC minister personally signed a $5.7-million contract, even though your department agreed that ESDC had not met the threshold for a sole-source contract with McKinsey.

Why did this minister personally sign this contract when your department had already challenged this contract?

[Arianne Reza]

By way of quick context setting, Treasury Board policy on management and procurement sets out the financial delegation authority specifically related to each department and each minister. For us, it's $5.7 million.

Each department then sets up a delegation tool that's posted that tells you—and you've often asked us—what level of authority is required to enter in a contract. What's your level? Who signed it? Anything over $4.5 million needed to go to the minister.

To do that, we—Mollie and I have a role in this—took on additional requirements to ask the client to justify the contract. The initial set of justifications was based on the seven questions that are a Treasury Board template. The procurement officer went back, received additional information, was satisfied with the justification provided by ESDC, papered the file and provided a recommendation to Mollie, and that turned into a recommendation for the minister to use her authority to enter into the contract.

There's a pretty significant paper trail. I saw, as you did, the commentary in the report, but there was additional information provided as well as a robust rationale.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Could you please table that paperwork with the committee? Thank you.

Did you receive any direction from any procurement minister, before or after this contract, on a procurement strategy with McKinsey?

[Arianne Reza]

No.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Has there been any indication of a minister of any other department or agency directing officials to specifically contract with McKinsey?

[Arianne Reza]

No.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

I'm going to go back to the missing documents.

It seems to be a trend that documents will go missing in numerous procurement procedures that we review here at OGGO. As I mentioned in the previous meeting, this has been a trend in numerous reports of numerous parliamentary officers.

The procurement ombudsman said on Monday that this is a long-standing issue that we've seen in many of our procurement practice reviews. The one distinction I would note specific to McKinsey is the timing of these documentation lapses.

Traditionally we saw a lack of documentation across the board, but here we sometimes see it at discrete times within a process where we would have documentation present for certain steps of the process and then, at seminal moments, there would be a lack of documentation. That's the part that's concerning.

Why do you think these departments are choosing not to document at times that seem inconvenient for them to document?

[Arianne Reza]

I would note that when you look at the universe of contracts that were reviewed in this review, there were 32. Of those, 19 were part of the national master standing offer, so it's a very different set of documentation requirements that we're discussing. The remaining ones—not all of them, but the vast majority—were of low contract value, under $40,000. I think as the paperwork went back and forth, there was probably not enough hygiene and rigour around making sure that it was well collated.

Another issue when it comes to documentation, and some of the frustration, perhaps, of the committee, or that I feel from the committee, is that when you do an evaluation of a bid, half of the bid documentation goes to a department that does the technical evaluation. There's a whole bunch of bid methodology material prepared there. PSPC keeps the financial envelopes. They're kind of independent keys. Then we have to put the file back together and make sure the documentation is well described.

I don't know if you have anything else.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you so much. I will leave it there. If he's concerned, I'm concerned.

In a $2.9-million competitive contract for ISED, two bids were received. McKinsey was not chosen because it did not have the best price and financial score in comparison to its technical capabilities. After this review, ISED asked to re-evaluate and choose McKinsey instead despite the completion of this evaluation. In response, ISED stated they would be happy to delete the financial evaluation email to hide the fact that they were requesting a change. McKinsey shockingly then received this contract.

Do you condone the deletion of emails in order to favour certain companies in the procurement process?

[Arianne Reza]

Absolutely not. PSPC was not involved in the procurement.

Further, I picked up the phone and spoke to the ISED deputy. He assured me that training is in place. It was really inexperience and error, and it was noted.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Mr. Bains, before you start, the bells are ringing. As everyone is aware, we have 27 minutes. We'll all vote electronically—

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

No.

[The Chair, Conservative, Kelly McCauley]

Are you going to vote in person?

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

I have to be in the House.

[The Chair, Conservative, Kelly McCauley]

Okay. We'll suspend with 10 minutes to go. Is that fine for you?