Government Operations Committee on Feb. 13th, 2023

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

Just to follow up on that, since 2011 there have been six large consulting companies that have done about $1.5 billion in contracts with the Government of Canada. They are companies like Deloitte, Accenture and others. McKinsey only represents a very small fraction—less than 10%—of those budgets since 2021.

How many cases have you looked at or studied in terms of contracts with all of those consulting companies? Have you analyzed those contracts? Are you aware of any issues with those contracts?

Do you have evidence, for example, that Canadians have not received value in any of those contracts in the past 10 years?

[Dr. Benoit Duguay]

As I said to your colleague about half an hour ago, I have no direct knowledge except for the public knowledge that is in books, articles and such, but there is one thing that I can remember. In one instance, McKinsey got a contract with National Defence about harassment and sexual misconduct. They proposed a solution, and one person who I think is extremely credible, Judge Louise Arbour, said that what McKinsey was proposing would not work at all. In that instance, they were not providing value, and I'm not the one saying it. Judge Arbour is a very, very competent person, much more competent than I am.

That's the only instance I can provide, and I have not read that report. I am just reporting what Ms. Arbour said.

[The Chair, Conservative, Kelly McCauley]

That is our time.

Witnesses, thank you very much.

Mr. Hutton, it's always a pleasure to have you with OGGO.

Dr. Duguay, thanks very much for joining us.

Dr. Thomas, thank you as well.

We will suspend for about 15 or 20 seconds to bring in our new witness.

We're suspended.

[The Chair, Conservative, Kelly McCauley]

We welcome back our procurement ombudsman, Mr. Jeglic. It's a pleasure to have you with OGGO again. You have the floor for a five-minute opening statement.

[Alexander Jeglic, Procurement Ombudsman, Office of the Procurement Ombudsman]

Thank you, Mr. Chair.

I'd like to begin by acknowledging that the land on which we gather is the traditional unceded territory of the Algonquin Anishinabe people.

Thank you, Chair and members of the committee, for having me here again today.

Good day, everyone.

I am Alexander Jeglic. I am the procurement ombudsman.

I'd like to start by explaining my office's role in federal procurement, as some of you were not part of this committee when I was last here in February 2022.

The Office of the Procurement Ombudsman opened in 2008 with a focus on providing Canadian businesses, mostly small and medium-sized, an avenue of recourse for procurement and contracting issues. My office operates at arm's length from other federal organizations, including Public Service and Procurement Canada. While I report to the Minister of Public Services and Procurement, the minister has no involvement in my office's daily activities or the contents of my reports.

We are a neutral and independent federal organization with a government‑wide mandate, with the exception of Crown corporations, the Senate, the House of Commons and certain federal security agencies.

Specifically, my legislative mandate is first to review complaints from Canadian suppliers about the award of a federal contract below $30,300 for goods and $121,200 for services. Second, it's to review complaints respecting the administration of a contract, regardless of dollar value. Third, it's to review the procurement practices of federal departments to assess fairness, openness, transparency and consistency with laws, policies and guidelines.

Unlike complaints, these larger systemic reviews examine the procurement practices of federal departments by reviewing multiple procurement files. As part of our five-year review, we have traditionally looked at a sample size of 40 files by reviewing documents and information provided by the reviewed department.

In terms of good practices to ensure fairness, openness and transparency in federal procurement, my office has identified these three highest‑risk procurement elements.

We use them as lines of inquiry to assess the highest-risk procurement elements.

The first is the establishment of evaluation criteria and selection plans. The second is the bid solicitation process. The third is the evaluation of bids and the contract award.

While these systemic reviews point out good practices that can be emulated by other departments, they mainly identify areas where departments can take concrete steps to improve the overall fairness, openness and transparency of their procurement practices. Any recommendations made in these reviews are designed to improve these practices and do not focus on individual complainants or winning and losing bidders in the same way that reviews of specific complaints do.

Prior to launching a review, I must determine whether there are reasonable grounds to do so, taking into account several factors, such as consistency with the Financial Administration Act and the government's contracting regulations, the resources required by the department to respond to the review, observations of previous audits or assessments and the time elapsed since the previous review of the practices of that department.

Four, we also offer dispute resolution services, which we offer with our certified mediators from our office. Either a supplier or a department can request our mediation services; both parties have to voluntarily agree to participate in order for the mediation session to take place. This is a highly successful and effective service offered by my office. Unfortunately, it is underutilized by federal departments. There are no dollar threshold limitations associated with our mediation services. We can mediate contracts valued at $5,000 or $50 million, and we offer a quick, inexpensive and effective alternative to litigation.

Five, we also draft research studies on important issues in federal procurement.

Six, my office is also very involved in helping to diversify the federal supply chain. We've hosted a summit for the last four years in which we help to provide diverse and indigenous-owned businesses with access to the tools and information necessary to win federal contracts. Last year we had over 850 participants attend the summit online, and we hope to be able to continue to grow this important initiative in the future if our funding allows for it. The next summit is to be held virtually on April 4 and 5 this year, and I'd like to invite anyone interested to register with my office.

Now that I've shared more information about the nature of the work of my office, I'll turn my attention to why I'm here today.

On February 3, I received a letter from the Minister of Public Services and Procurement, the honourable Helena Jaczek, to conduct a procurement practice review to examine the procurement practices used by federal departments and agencies to acquire services through contracts awarded to McKinsey & Company. At this time, we have not yet launched a review, but we believe we have the mandate and reasonable grounds to do so, based on the request of the minister and the results of our previous reviews.

We look forward to discussing our role in this review with the committee. I would also like to thank the OGGO committee for its support of my office, which has helped increase visibility and awareness among Canadian suppliers and federal buyers.

Thank you for your attention. My office remains available to work with committee members as long as necessary.

I'd be pleased to answer your questions.

Thank you very much.

[The Chair, Conservative, Kelly McCauley]

Thank you, sir. We appreciate that.

Mr. Barrett, we'll start with you for six minutes, please.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Thanks, Chair.

Thank you, sir, for joining us today.

You mentioned the letter that you received from the minister. Would you be able to table that with the committee?

[Alexander Jeglic]

Yes, I believe I may.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Thanks very much.

When the the procurement minister was at this committee, we heard her speak about this review. She said she'll review your recommendations but didn't commit to implementing them. Do you have any thoughts on that?

[Alexander Jeglic]

I do. Ultimately, when we draft a report, it's on the understanding that when we see instances that require recommendations, it's on the basis that there is an issue with the procurement practice in place. It's our sincere hope that if we offer recommendations, they will in fact be implemented.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

A scenario that seems to crop up quite often was an observation of some folks who are sometimes bidders on federal contracts. In the work that was done on ArriveCAN, the scenario or the conditions seemed to be that contracts are shaped so that only specific companies could possibly qualify. They require a very unique or narrow capability that other companies wouldn't have, though with a broader scope, they would be able to achieve the same outcome.

Is that something you've observed?

[Alexander Jeglic]

Yes, absolutely. That is what we term “restrictive criteria”. When it's overly restrictive, we look at several criteria.

One of the obvious criteria is whether other suppliers that are involved in the process have identified the overly restrictive criteria. If the answer is yes, has the contracting authority done anything to modify the requirements?

If the answer is no and you end up with a sole compliant bidder, it leaves the question that perhaps the criteria were overly restrictive.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

What was the top complaint you received in 2022?

[Alexander Jeglic]

In 2022, in our last annual report, the top complaint that was reported was that restrictive criteria were biased in nature. I can actually quote it exactly to make sure it's on the record, “The stakeholder felt the evaluation criteria were unfair, overly restrictive or biased.” We had 61 total issues reported.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Do you have any insight on why someone drafting the scope of the RFP would do that?

[Alexander Jeglic]

I do. There are a few reasons one could think of.

One is that there's a lack of a vendor performance regime, so you're trying ultimately to find a result in outcome, which isn't something that is very positive in nature. That's the most dire characterization of why that might happen.

On the other side, there are also instances in which it's perhaps someone who doesn't necessarily have a skill in understanding how that criterion would be restrictive in nature. Without knowing that it's restrictive in nature, the person drafts it in the initial attempt, only to learn that it won't actually lead to many suppliers being able to comply.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

How long have you been the procurement ombudsman?

[Alexander Jeglic]

I've been the procurement ombudsman for almost five years.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

How many recommendations have you made to the government during your tenure?

[Alexander Jeglic]

I'll have to table that. I don't actually have that number offhand, but it's a combination, because it's both procurement practice reviews and reviews of complaint.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

How many of your recommendations has the government implemented? Perhaps this is another number you might know offhand, and if not, I'd ask you to table that information as well.

[Alexander Jeglic]

Again, I'll segregate by the difference between reviews of complaint and procurement practice reviews. In procurement practice reviews, we've done a follow-up. There's only been one follow-up.

I need to take one second to explain the process. When we do a procurement practice review, we're looking at the practices of that specific federal department. When we make recommendations, we allow the department two years to implement those recommendations, and then we return with a follow-up examination.

In that follow-up examination, we've actually developed a report card. We're now almost there in terms of finishing the five-year review. After two years, upon the review of each systemic review, we'll be issuing a report card on overall compliance with all recommendations. The first review has found compliance with the recommendations.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Do you have any visibility on the procurement integrity regime?

[Alexander Jeglic]

I actually started thinking about that through watching some of the live OGGO committee proceedings.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

It's recommended watching for all Canadians, yes.