Government Operations Committee on March 6th, 2023

[The Chair, Conservative, Kelly McCauley]

I call this meeting to order. Good afternoon, everyone.

Welcome to meeting number 54 of the House of Commons Standing Committee on Government Operations and Estimates, a.k.a. “the mighty OGGO” or the only committee that matters.

Pursuant to the motion adopted by the committee on Wednesday, January 18, 2023, the committee is meeting on the study of the federal government consulting contracts awarded to McKinsey & Company.

We have with us Mr. Mendicino. I understand you have a five-minute opening statement. Welcome to OGGO, sir. You have five minutes.

I'm sorry. Before he starts, colleagues, we are very short of time today. I'm going to be ruthless with our time, so if you could, please watch your clock so that I'm not being rude and interrupting you. Thank you very much.

I'm sorry, Minister. Go ahead for five minutes, please.

[Marco Mendicino, Liberal, Minister of Public Safety]

Thank you very much, Mr. Chair.

I want to begin by thanking the members of this committee for their study of this important issue.

I'm joined by Erin O'Gorman, who is the president of the Canada Border Services Agency, and Ted Gallivan, who is the CBSA's executive vice-president.

Today I will provide an overview of the Canada Border Services Agency's operating context and its work with McKinsey.

Service contracts are widely used by governments in Canada and around the world. They're used to complement the work of Canada's public service, and our government is committed to making sure that the public service operates in a way that best serves Canadians.

The growth in the use of consultants in the public service is an important topic, and that's why the Prime Minister has asked my colleagues, ministers Fortier and Jaczek, to review the government's practices and conduct a review of all procurements with McKinsey & Company Canada.

Additionally, Minister Jaczek has written to the Office of the Procurement Ombudsman to ask for a review of the procurement processes associated with the awarding of contracts to McKinsey by all federal departments.

Let's turn to the agency we are here to focus on: the CBSA.

The CBSA operates in a challenging and fast-paced environment. The agency manages the flow of approximately 80 million travellers per year, as well as goods, at 117 land border ports of entry, 207 airports and 213 marine facilities, and it enforces more than 100 acts and regulations that keep Canadians safe.

To ensure the ongoing integrity of our borders and the safety and prosperity of our communities, the CBSA strives to be proactive, adaptive and innovative.

As other large organizations do, the agency seeks outside expertise to fill knowledge gaps or to complement its own efforts. The work done by McKinsey has informed some of the largest digital and organizational renewal efforts at the CBSA.

McKinsey has been paid $4,337,610 against three contracts since 2016. Mr. Chair, a fourth contract was ended before work began, as it was determined that this work could be performed with in-house resources. Therefore, no funds were spent against it.

All contracts over $10,000 are published online in the agency's proactive disclosure report protocol on a quarterly basis.

The CBSA's first contract with McKinsey took place between May and October 2016. That contract value was $1.9 million, of which $1.7 million was spent. This initial contract was established to review and validate the options, risks and impacts associated with the CBSA's assessment and revenue management project, also known as CARM. McKinsey brought global experience to augment the CBSA's operational capacity.

Their expertise was used to plan for this major business transformation, which aims to reduce the burden on Canadian importers and improve revenue management for goods imported into Canada.

Once fully implemented, CARM will significantly improve how the agency collects duties and taxes on imported goods.

The CBSA's second contract with McKinsey was from October 2017 to October 2018, and that work was done to support analysis on border modernization. The original value of the contract was $791,000, and it included the option of a one-year extension. In January 2018, the contract was amended to include additional requirements, which brought the total contract value to $1.7 million. That contract ended in October 2018, with a total of $1.5 million spent.

The third contract was established through a PSPC contract for up to $1.3 million between October 2018 and 2019.

The fourth and final contract was initiated in October 2022 for a total value of $1.9 million, but there was no money spent against it.

In summary, these contracts aided the CBSA to support the independent, non-partisan public service in fulfilling its duties.

I will now be happy to respond to any questions you may have.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you, Minister.

Mrs. Kusie, you have six minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair, and thank you very much, Minister, for being here today.

Minister, do you believe that the work McKinsey did for the Immigration and Customs Enforcement in the United States was a good thing?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

Let me return to the remarks that I just made, and that is that any decision with regard to the retention of outside consultancy agency advice was done by our independent, non-partisan professional public servants. Therefore, it was a decision made on the basis of business needs set against objective criteria, and evaluated in a transparent manner towards—

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Do you, yourself, believe that the work that McKinsey did for your counterpart in the United States, also known as ICE, was a good thing? Do you think it had positive consequences, Minister?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

Mrs. Kusie, I'm here to speak with regard to the contracts that were awarded to McKinsey by the Canada Border Services Agency. I have laid out those contracts in a very transparent manner, and I am happy to take questions about them.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Minister, do you know that McKinsey, the same corporation that your organization hired, was also responsible for suggesting to ICE in the United States to limit food for refugees and to cut back on expenses for detainees? Were you aware of that?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

Mrs. Kusie, I am aware of the contracts that I am here to brief this committee on and to take questions about them and the manner in which those contracts were awarded.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Were you aware, Minister, that the consulting firm that your agency hired also recommended to your counterpart in the United States to cut back on costs for medical aid for detainees in the United States? Are you aware that the same organization, which your organization chose, made that decision for your counterpart in the United States?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

Mrs. Kusie, I appreciate the question, but, again, I am here to brief this committee on the CBSA contracts that were awarded to McKinsey by the independent, non-partisan public service.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Minister, it was your organization that hired McKinsey, an organization that recommended to your counterpart in the United States to cut back on supervision. Are you aware of that, as well? It recommended that ICE cut back on food for detainees and medical assistance for detainees as well as on supervision for detainees. Are you aware of any of that?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

I appreciate the question, Mrs. Kusie.

Again, I am here to brief you and other members of the committee on the contracts that were awarded by CBSA to McKinsey. I have laid out the instances in which that occurred, and the amounts and the time frames. I'm happy to take questions about that.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Minister, are you also aware that a 19-month-old girl named Mariee Juarez died after being in a detainee environment as a result of the implementation of the McKinsey recommendations to your counterpart in the U.S.? Once again, it's a firm that your organization hired to make recommendations. Are you aware that a 19-month-old girl died?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

Naturally, I would express my condolences to that individual's family.

Again, we are here to discuss the contracts that were awarded to McKinsey by the CBSA. I have provided some detail and substance with regard to those four contracts.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Minister, your government has talked a lot about Trump and has compared this side of the House to the Trump administration.

Is that what your organization was trying to do, to emulate and implement a similar policy direction that the Trump administration took with ICE, your counterpart of the CBSA? Was that what the organization was trying to do?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

The Canada Border Services Agency does issue contracts when internal resources are not able to meet the business case needs of the organization. Throughout the course of my introductory remarks, I laid out the process by which those needs are articulated, through which objective criteria are set and through which external bidders are able to compete for that contract for which there are appropriate protocols and processes in place to ensure transparency.

That is a process that is not carried out in a partisan way but rather by our independent, non-partisan professional public servants. Today I'm here to answer questions about those four contracts awarded to McKinsey by the CBSA.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

That's right. They awarded them to McKinsey, an organization that also provided advice to Immigration and Customs Enforcement with horrific results. You knew that and your organization knew that, yet you still hired them as recently as six months ago, Minister. I think that's shameful.

Minister, are you aware that this committee passed a motion on January 18 requesting that all documents around McKinsey be provided to this committee in an unredacted form?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

I'd like to offer two points.

First, you've imbued the CBSA with knowledge which I'm sure—and I will let Ms. O'Gorman add—they did not have with regard to the very tragic and unfortunate circumstances that you've described abroad.

Second, I am aware of the motion. I am aware that there has been a request for as much information as possible to be provided to his committee in a transparent manner. That is something this government believes in fundamentally.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Then why are resumés redacted? Why are projects that McKinsey worked on in other countries redacted? Why are per diems redacted? What are you trying to hide, Minister?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

Absolutely nothing, Ms. Kusie, and that is because we follow the laws that relate to privacy and the charter.

[The Chair, Conservative, Kelly McCauley]

I'm afraid that's our time.

Mr. Bains, welcome in person to OGGO. It is fantastic to see you, sir. You have six minutes, please.

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

Thank you, Mr. Chair.

Thank you, Minister, for joining us today.

Do you have reason to believe anything was done incorrectly from a procurement process perspective by awarding those contracts?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

No. In fact, I am assured by the briefings I have received from the CBSA that in each and every one of the four contracts, business case needs were articulated after an assessment of the internal resources of the CBSA established that some additional support was required, that as a result of those business case needs, objective criteria were set both within the CBSA as well as with the support of Public Services and Procurement Canada, or PSPC, and finally that a competitive bid process was set up all in a manner that was consistent with the protocols in a transparent way.

As I've outlined in my remarks, I believe that is all there for this committee to now study and debate as you produce your report.

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

You mentioned that CBSA, like many federal government agencies and portfolios, often pursues contracts with a variety of private sector companies. How is the contract winner determined per CBSA's specific needs?