Government Operations Committee on Feb. 6th, 2023

[The Chair, Conservative, Kelly McCauley]

You have 13 seconds.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you very much for your answers.

[The Chair, Conservative, Kelly McCauley]

Thanks, Mr. Bains.

Mr. Paul-Hus, welcome back again to OGGO.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

Good afternoon, Madam Minister, Mr. Thompson and Ms. Royds.

I'd like to come back to a question you were asked at the beginning of the meeting, Madam Minister, and get a confirmation from you. Were you aware that McKinsey was not registered on the list of businesses that can lobby the Government of Canada, or did you learn it this morning through Radio-Canada?

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

I read it in the media. The Radio-Canada—

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

You did not have prior knowledge of that. Okay.

Based on the information we have, there need to be special circumstances for a no-bid contract to be awarded when it exceeds the base amount.

Can you give us an example of special circumstances where the Department of Defence, for example, was able to award contracts to McKinsey without going through the bidding process?

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

I will have to turn to Ms. Royds.

[Mollie Royds]

Thanks very much for the question, Mr. Chair.

I believe the national, master standing offer is being referred to. In those circumstances, there is a requirement for us to confirm that the work in question brought forward by our client department is consistent with the scope of work associated with the standing offer, as well as the funding requirement associated with it. We facilitate the call-up against the standing offer tool on behalf of the department.

We previously addressed the circumstances for putting in place the overarching standing offer, but in that instance, because there were proprietary datasets and methodologies—

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

I'm sorry to interrupt you, Ms. Royds, but my question is about all the contracts awarded to McKinsey without competition. On behalf of the Department of National Defence, the Department of Citizenship and Immigration or the Canada Border Services Agency, the Government of Canada awarded contracts to McKinsey with no bidding process under special circumstances, an emergency.

I'd like some examples. What was so urgent in the country that those departments had to award McKinsey contracts without competition?

[Paul Thompson]

Thank you for the question.

In those cases, the use of the instrument was not related to an emergency, but to an intellectual property issue, as part of the benchmarking process. The instrument was used by other departments as well, including the Department of National Defence.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

What do you mean by that? Only McKinsey could do the work?

[Paul Thompson]

Four other firms use the instrument, the national master standing offer, and provide a benchmarking service like this. There are five in total.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Which five companies?

[Paul Thompson]

I don't have the list on hand, but perhaps Ms. Royds can name them for you.

[Mollie Royds]

The other companies that we have national master standing offers with for benchmarking services are Forrester, CEB, Info-Tech, and Gartner.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Okay, thank you.

There was another time McKinsey was used and I'm looking for an explanation.

When Ms. Hudon, the former ambassador of Canada to France, was appointed president of the Business Development Bank of Canada, the first decision she made was to award a $4.9-million contract to McKinsey. Why was that the first thing she did? We found out that her team, including the vice-presidents, were not very happy with the decision.

Who told Ms. Hudon to do business with McKinsey? Why was McKinsey awarded that $4.9-million contract directly?

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

I would have no knowledge whatsoever of this.

Deputy Thompson, could you comment?

[Paul Thompson]

I would offer two points.

Crown corporations have their own procurement authorities and typically work outside the services of PSPC. However, BDC, in one instance, did make use of our national master standing offer for benchmarking, in the amount of $3.4 million. That was one transaction we executed on its behalf, but that's more of an exception. Crown corporations generally independently manage their own procurement.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

I understand that Crown corporations can manage acquisitions independently, but it's still quite a surprising situation. After a two-year stint in Europe, Ms. Hudon comes to the BDC and the first thing she does is award a contract to McKinsey. Someone somewhere must have recommended that to her.

Anyway, we hear the same thing at every meeting: Everyone works in a vacuum and no one knows what's going on. However, we mustn't forget that the federal government spends hundreds of millions of dollars.

We're just trying to figure out whose idea it was to suggest to Ms. Hudon that she do business with McKinsey.

[The Chair, Conservative, Kelly McCauley]

I'm afraid that's our time, Mr. Paul-Hus. Mr. Thompson, if you have an answer, perhaps you could provide it in writing to the committee.

Next we have Ms. Thompson, please, for five minutes.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

This is probably to you, Mr. Thompson. It's going back to comments that were made earlier around data analytics. It's the comment that McKinsey has a set of data analytics that would helpful for a particular contract.

Could you speak about the relevance of data analytics with benchmarking, and how they link? That is, they are not the same, but how are they interconnected?

[Paul Thompson]

As I noted, there are a range of different benchmarking methodologies and services. McKinsey comes with a certain tool kit of methodologies and data sets that it can use. They're used often by service-providing organizations. Employment and Social Development Canada has used these services to compare its offerings to those of other peer organizations. They've been used by CBSA, EDC and BDC, as well as the Department of National Defence.

They can be used in a service delivery context. They can also be used for very in-depth IT comparisons between the costs of developing and running an IT system in one organization versus another. There are a host of different situations that all benefit from this kind of independent review.

The last thing I would note is that the Treasury Board policy on management of projects actually requires and encourages independent advice on these large transformation projects that are undertaken by the government. It's part of the due diligence on a large project.

[Joanne Thompson, Liberal, St. John's East, NL]

Certainly as we modernize legacy systems and further digitalize operations and services, obviously increased IT investment is essential. Could you explain when it makes sense for government to use internal resources and when existing resources within government need to be supplemented by an outside source?

[Paul Thompson]

The minister has noted a few such examples, such as when we don't have access to the expertise, the skill sets in question, or it's not the type of skill set that we would need on our payroll on a permanent basis. It could be that we need it on a very time-limited basis for a defined period of time. It could be in relation to an initiative that only has temporary funding; it would then not be appropriate to hire a full-time public servant if we had a six-month or twelve-month project to undertake. In this circumstance, we look for independent advice from outside the public service to help give critical perspectives on a project.

Those are some circumstances.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

This question is open to whoever would like to take it. Could you go into more depth in terms of that integrity process and how PSPC ensures a fair and open transparent process in how you award contracts?