Government Operations Committee on Sept. 19th, 2024

[Dominic Laporte]

We had three contracts. The two others were non-competitive. One got cancelled and there was basically no call-up issued. The other one was below $25,000, which we would allow for non-competitive contracts in those instances. PSPC had three contracts. One of around $26 million was a competitive one. The one that got cancelled was the one that was below the threshold of $25,000.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much for that response.

Also, further to our questioning last year, I would like to please get on the record how many cases of contracting fraud and contracting abuse your department and the government have turned over to the RCMP. How many?

[Dominic Laporte]

Unfortunately, I'm not the responsible for that. This is our oversight branch, and it is Ms. Catherine Poulin, who has appeared many times, who has these numbers and who has oversight for cases of fraud and those cases that have been referred to the RCMP.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Okay. The RCMP said in the spring that they have approximately seven investigations related to federal contracting. I was looking for the total number, but it's evident to me that more is to come.

On February 6, 2023, the PSPC minister—again, at that time, Minister Jaczek—stated, “The minister's office is not involved in any way in awarding these contracts.” According to the procurement ombud's report that came out earlier this year, the previous PSPC minister, Minister Tassi, had personally signed off on an ESDC McKinsey contract worth $5.7 million.

Can you please explain why the minister stated that the government was not involved when there was clear evidence of another minister signing a contract?

[Dominic Laporte]

Thank you for the question.

That one was exceeding the delegated authority of our deputy minister at the time. It's routine practice to send those instances to the minister. This is something that also got confirmed by the procurement ombud when he appeared in front of this committee, in terms of the reason why that one got directed to Minister Tassi back then.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

If the minister is required to sign off on contracts while simultaneously knowing little about the contracting, wouldn't it mean that the minister would be incapable of making independent choices, as my colleagues and I have been inferring, about contracting?

[Michael Mills]

Just to clarify, the approval for the contracting question was by Minister Tassi. I believe the comment you made around none coming to our office was by Minister Jaczek.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Okay. I wonder what the purpose of the minister of procurement is if it's not in fact to procure the contracts and sign for the procurement of the contracts.

For my final question, I and my colleague Mr. Genuis have shown that there is an absolute link between Dominic Barton and Mr. Carney to McKinsey and, therefore, McKinsey's oversight of this government. Given the evidence we put forward throughout the last spring and continue to put forward today and the horrible record of McKinsey in many regards, which we have provided an example of before—for example, their implication in the opioid crisis and their holding of a major event next to a Uyghur camp—my final question is this.

Is McKinsey & Company banned from applying for contracts with the Government of Canada? Please say yes.

[Michael Mills]

McKinsey & Company is eligible to compete in processes for contracts with the Government of Canada.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Expect more from conflict of interest, carbon tax Carney, Mr. Chair.

Thank you very much.

[The Chair, Conservative, Kelly McCauley]

Thanks.

Mrs. Atwin, please go ahead.

[Jenica Atwin, Liberal, Fredericton, NB]

Thank you very much, Mr. Chair.

Thank you to our witnesses for being with us again today.

The audit report speaks about a contract where there was a lack of security documentation on file for a project, in particular one individual whose security clearance wasn't found. Can you explain what happened in this case? Did someone without security clearance work on this project?

[Michael Mills]

Thank you for the question.

I can confirm that, as I said in my opening statement, all resources that worked on these contracts had appropriate security clearances. I cannot speak to why the documentation was not added to the file. It was not a question of whether the individual had security clearance. It was an issue that there wasn't a document on file confirming that they did.

We have taken measures on it. We've now put in place a checklist to ensure that, before any resources start work on contracts, they have confirmed, and we have on file the confirmation, that they have sufficient security clearance to undertake the work.

[Jenica Atwin, Liberal, Fredericton, NB]

Excellent. Thank you.

Mr. Laporte, you previously mentioned that 98% of PSPC's procurement is now covered by an e-procurement system. Can you explain what e-procurement is and its benefits, particularly when it comes to improving this documentation and oversight?

[Dominic Laporte]

It plays a huge part in making sure that we have sound record-keeping practices. When you have a single repository to keep all your information pertaining to all procurement.... Keep in mind that we have basically $26 billion in value, with 16,000 or more than 17,000 contracts awarded every year by PSPC. A huge number of records need to be tracked, properly documented and properly filed. The beauty of EPS is that, for example, if you have a hundred bids in response to a solicitation, they will all be filed in one single place. Communication between bidders and the contracting authority will all be recorded. It does ensure that we have transparency in the process.

On this ability, I'm very sad every time that I see...because I know that our procurement officers are truly professional. They don't wake up in the morning with the intention of favouring one company over another. At the same time, we appreciate the need to be able to properly document things. This is a key priority for me and something that we're tackling and addressing with EPS.

[Jenica Atwin, Liberal, Fredericton, NB]

Excellent. Thank you very much.

When it comes to the national master standing offer mechanisms, PSPC has already said that these mechanisms are all being allowed to expire and not be renewed. McKinsey's expired more than a year ago, for example.

How many active national master standing offers remain? What measures have been taken surrounding professional service contracts awarded under the NMSO mechanism?

[Dominic Laporte]

In terms of the ones that were an issue with the OAG finding, all of them are basically no longer active. They've been cancelled. They were not renewed. I want to say that, in terms of benchmarking and an NMSO with McKinsey or other firms with respect to benchmarking services, those are no longer in place.

What we've seen also is that the ability to put a non-competitive NMSO or standing offer in place is now being basically delegated at the ADM level. I don't think we should be seeing those very often. I fail to see, honestly, the need for those tools now. They were put in place, but we've had the opportunity to renew our process and to have a second look at them. We're taking into account the feedback that has been received. Those tools in the future will be extremely rare. This is why delegated authority is at the ADM level to put them in place.

[Jenica Atwin, Liberal, Fredericton, NB]

Great.

I know that PSPC is working on a replacement mechanism. Are you able to share any updates on that process?

[Dominic Laporte]

Yes, of course. When we look at these particular categories of services, they are complex because there is one component that is oftentimes proprietary—the data that belongs to a particular company that they've been able to acquire through various surveys of the industry as a whole. You want to know where you situate yourself amongst your peers.

These basically large players do have proprietary information. What we want to do is carefully dissociate what is a subscription service from what we'll be doing with those subscriptions. If the goal is to get advice into a department, to a DG, that should be a competitive process. That advice component, that professional services component, should be basically run competitively. There's no reason to extract and then take that and ask for a sole source.

This is what we want to address and what we've been addressing. Competition is the norm for those services in future.

[Jenica Atwin, Liberal, Fredericton, NB]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much, Ms. Atwin.

Mr. Genuis, go ahead, please.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Chair.

I want to start with a comment about the relationship between McKinsey and the opioid crisis. As I think is relatively well known by now, Purdue Pharma was largely responsible for the opioid crisis by overpromoting with false information new opioid products it produced. They were presented as sort of the catch-all, problem-free solution to pain, and they led to intense personal pain and trauma for so many families, which is continuing.

At a time when people were becoming aware of many of these problems, Purdue Pharma sought the assistance of McKinsey to try to whitewash what was going on. McKinsey worked with Purdue Pharma and gave it advice that would horrify the moral sensibilities of most Canadians about the various tools it could use to try to keep the money pouring in at the expense of people who were negatively affected by opioid substance use disorders.

The Conservatives' proposal is to make the pushers of these drugs pay financially for all of the costs associated with the opioid crisis and to put that money into prevention, treatment and recovery—to make the pushers pay for the problems they caused and to use those resources to assist the people who are struggling.

The approach of the current government, by contrast, is to continue to pay the pushers, to continue to allow McKinsey to benefit from lucrative government contracts and to have a so-called safe supply policy that continues to see money go to Purdue Pharma to produce opioid products that are then given away at taxpayers' expense to people who are struggling. They are paying the pushers while we want to make the pushers pay.

What would you say to Canadians who find it deeply troubling and offensive that companies like McKinsey and Purdue Pharma are still cashing in big time as a result of government contracts instead of being held accountable for the damage they caused?

[Michael Mills]

Thank you for the question.

I would say that, again, being responsible for procurement, I wouldn't really be able to speak to the policy and the outcomes with respect to the opioid crisis. What I can assure Canadians is that with our new office of supplier integrity and compliance, we are analyzing companies. We're looking for instances in which companies have maybe defrauded governments or in which they have been involved in corruption and collusion, and we're making sure we're not doing business with those entities.

With respect to the NMSO and the work that was done, I would note that the work was done by McKinsey & Company Canada and was very focused on benchmarking, transformation, IT and procurement—and not on health advice.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

This is a question about procurement. It's not a question about health policy; it's a question about procurement. When procurement decisions have been made and tens of thousands of Canadians have died as a result of the opioid crisis while companies have benefited from those procurement decisions, obviously a message is sent to Canadians, to their families and to their communities who have suffered. In this case McKinsey, which was part of the process of offering advice to Purdue Pharma, was able to benefit from these contracts.

Do you consider the public interest? Do you consider the impact on those families? When you are giving such a large volume of contracts to a company that was instrumental to their suffering, is that part of your calculations, or is that not something you do or you're supposed to do or you're able to take into consideration?

[Michael Mills]

Thank you for the question.

When we're looking at procurement, one of the factors we take into account is whether a company is legally able to operate within the country. We'll look at whether they have been convicted or they are charged with fraud, corruption or collusion in Canada, in any provinces or territories or in other—