Government Operations Committee on Feb. 13th, 2023

[Alexander Jeglic]

It actually drew my attention to the fact that I wasn't sure if I had the jurisdiction, but it's a question that I'm going to ask our legal counsel. In the way we're structured, we have to be able to have jurisdiction over that specific policy in order to opine.

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

I would be interested if you'd be able to report the outcome of that advice back to OGGO. If you'd be willing to do that, that would be very helpful.

There are some real questions that have been raised. Looking back at 2015, we see that this was in place then. Looking at some of the media reporting on some of the contractors, like McKinsey now, I think that another set of eyes on that integrity regime would be very worthwhile.

Thanks, Chair.

Thank you, sir.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Barrett.

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

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

Thank you, Mr. Chair, and welcome back to committee.

Could you tell us how the Office of the Procurement Ombudsman, as a national organization, is independent of the Government of Canada?

[Alexander Jeglic]

I'd be glad to.

In essence, I operate independently of the minister. My interaction with the minister is that I report to the minister by formulating an annual report that is tabled in Parliament. The statute and the regulations dictate how I am to communicate with the minister, and whenever I operate in a regulatory capacity, that's absolutely how I communicate with the minister's office.

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

Does this mean that you and your office are able to give an unbiased and completely independent assessment of the McKinsey contracts?

[Alexander Jeglic]

I would say so, yes.

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

Does this also mean that you're a separate and independent entity and that the Minister of PSPC and the minister's staff in the PSPC department have no influence in the conclusions and recommendations of this review?

[Alexander Jeglic]

I would agree with that assessment, yes.

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

Thank you.

Could you share the process that you and your team follow during a procurement practice review? Then could you share examples of how that process moves through your department and then back to the minister's office?

[Alexander Jeglic]

Sure. It's a pretty lengthy answer, but if you will bear with me, I will provide it.

We establish the criteria for the five-year review based on the issues brought to my office. One of the members of the committee identified the top issue. We looked at those issues, and they seemed to be repetitive in nature.

When I first joined the office I said that just reporting about these issues was insufficient. What more could we do as an office? As a result, we leveraged our mandate by converting those issues into lines of inquiry. We hoped to review the top 20 departments and agencies within the federal department in terms of value and volume by looking at those top 10 issues.

Unfortunately or fortunately, the Treasury Board contracting policy was sunsetted during that time frame, so the rules changed and it no longer made sense to pursue the final three. We have done 17 reviews now of these departments and agencies.

In terms of methodology, our scope is relatively clear, so it's competitive contracts that we have been looking at. There are exclusions: Any directed contract, acquisition card activity or activity in which the department is not the contracting authority would be immediately be out of our scope.

We looked at a sample of 40 files in those instances. In those 40 files, we took the top 10 in terms of value and we took the bottom 10 in terms of value. We took some that used PSPC methods of supply and then we had it randomized, so it was a judgmental sample. Once we finished with the judgmental sample, we would ask to receive documentation from the department. Then the sample would be identified from the documentation provided.

The next step would be that after we reviewed each file meticulously, we would offer preliminary observations to the departments themselves. The department would then have the opportunity to explain some of those preliminary observations and provide additional material if necessary, and then we would continue on with the review.

The next phase would be a 30-working-day period during which the department can comment on any recommendation. We often divide that 30-working-day period into two parts, with a 20-day review period and a 10-day review period to allow the working level to receive the first draft in the first 20 days. Then in the final 10-day period, it goes to the deputy for comment.

Once those comments are received, we then finalize the report. Once the report is finalized, it will be shared with the minister pursuant to the legislation and the regulations. Then we publish the report on our website and we push out the information in our reports on our social media account.

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

Thank you. I appreciate your clarifying that process.

It's my understanding that the procurement ombudsman looks at the fairness of contracts. Can you share with us and provide clarity on what the focus is and what is being assessed when reviewing the McKinsey contracts?

[Alexander Jeglic]

It's a fair question, and I anticipated the question.

Obviously, we don't have a defined scope yet, but we have planned methodologies and some criteria. Some of the aspects we have discussed internally are a mixed methodology of document review and also meeting with departmental officials. We're going to look at both competitive and directed contracts.

On the sample size, again, I have been listening to the testimony. Our anticipated sample size is in line with what we have heard, but we're not going to rely on the information that's produced to that office; we're only going to rely on information that's provided to our office. If the sample size is larger, that's the sample size we will deal with. If it's not sufficient as a smaller sample, we will actually review all of the files.

In terms of the years, I know the OAG has been tasked with 2011 onward, but 2011 would be longer than the retention period of the documentation, so whether we would consider going back to 2011 is something we will look at.

Also, there are rules that apply. The rules shift during that period of time, and there are a number of rules that apply. Again, there are likely multiple departments that are implicated.

Then there is the aspect of resources as well. That's a significant issue, and it's something I highlighted to the minister in my response after she wrote to me on February 3. I responded on February 8, identifying the existing cadre of files we're currently working on, including four systemic reviews, three reviews of complaints and multiple follow-up exams. I identified that resources are an issue and that we wouldn't be able to provide a comprehensive review unless additional resources were provided, and the minister assured us that those resources would be provided. We have met with departmental officials who have assured us that those resources will be forthcoming.

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

Thank you.

Am I out of time?

[The Chair, Conservative, Kelly McCauley]

You are.

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

Thank you so much.

[The Chair, Conservative, Kelly McCauley]

Thank you, Ms. Thompson.

Go ahead for six minutes, please, Mr. Garon.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair.

Welcome, Mr. Jeglic.

If I understood correctly, your mandate is usually limited to contracts for goods valued at $30,300 or less, and service contracts valued at $121,000 or less.

Is that correct?

[Alexander Jeglic]

Yes, indeed.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Therefore, contracts the size of those awarded to McKinsey do not, generally speaking, come under your office's mandate.

[Alexander Jeglic]

I'll answer it twofold.

In procurement practice reviews, there are no dollar value limitations. The limitations you mentioned are only when we're reviewing complaints. The reason is that there's a complementary organization by the name of the Canadian International Trade Tribunal, which has jurisdiction over values at or greater than those dollar values. That's where we have to be somewhat careful with the procurement practice review and not turn it into a review of a complaint in an area where we don't have jurisdiction.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Right.

If I understood correctly, the minister contacted you to review the entire procurement process for contracts awarded to the McKinsey firm.

What is the total worth of the contracts that you will be reviewing?

[Alexander Jeglic]

I'm sorry, but I didn't understand the last part of your question.

[Jean-Denis Garon, Bloc, Mirabel, QC]

What is the total worth of the contracts that fall under the special mandate given to you by the minister?

[Alexander Jeglic]

Are you asking how much money the minister is going to give us to do the review?