Government Operations Committee on March 6th, 2023

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

McKinsey has other clients, yes.

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

I'm here to answer questions about the four contracts that were awarded to CBSA. We've been upfront. We've been transparent. There's a process that we follow and adhere to—

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

Yes, but, Minister, it's highly germane to McKinsey's work for CBSA whether they were also working in the security and intelligence space for organizations that are hostile to Canada's interests. Can you at least assure this committee that none of the specific individual analysts who were working for you at CBSA were also simultaneously working for Rostec, China Communications Construction Company or other clients that have affiliations with states that are hostile to Canada's interests?

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

Mr. Genuis, I can assure you that these contracts were awarded in accordance with the policies and procedures and laws that are there to safeguard the manner in which these contracts were awarded, and—

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

This is not an answer, Minister. It's not fooling anyone. My question was very specific: Are there mechanisms in place to ensure that specific analysts who are doing work for CBSA are not simultaneously doing work for Rostec, the China Communications Construction Company or other McKinsey clients who have interests that are hostile to Canada? Do you have those mechanisms in place?

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

Mr. Genuis, as I have endeavoured to explain to you and to the members of this committee, we have the appropriate security protocols put into place to ensure that Canada's interests—

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

Minister, you can't answer whether you have a client list and whether you know about clients that are contrary to Canada's interests. You're unaware of clients who have been reported in the news as being ones that McKinsey is working for that have interests hostile to Canada. You have no mechanisms you can report to us on whether analysts are working both sides of the fence here.

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

In fairness, Mr. Chair—

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

You haven't answered a single question.

[The Chair, Conservative, Kelly McCauley]

I'm sorry; I have to interrupt. That is our time. However, Mr. Jowhari is up next. Perhaps he can allow you some of his time to respond.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

Minister, I'd like to welcome you and your staff to this committee.

Minister, right off the bat in your opening remarks you broke down the four projects. Many of our colleagues have asked various questions about the scope of this project, the length of this project, what it was focused on and so on. What I'd like to give Canadians a sense of is really one level higher, if I can. This is about the overall direction that the CBSA is embarking on.

As you know, CBSA is embarking on an ambitious renewal agenda. There are three very specific goals highlighted in there—improving clients' compliance; automating, optimizing and harnessing the power of analytics; and very close collaboration with some of our colleagues.

Minister or any other participants here, can you put into perspective how these three projects fit specifically into that agenda? How does your renewal agenda bring us to the level at which we could be a strong partner for our other alliances in the world?

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

I want to thank you very much for the question, Mr. Jowhari. I'll allow Ms. O'Gorman to elaborate on that question.

Again, I want to assure you that as we contemplate partnerships beyond government, we do set it against the business needs of the CBSA when they cannot be met internally. Those criteria then drive competitions that are based on those criteria, and those competitions are transparent and done in a manner that follows the law.

Most importantly, Mr. Chair, this does come back to Mr. Genuis's last question, which is one that I think does bear some clarification from you, because it does misstate the information that was provided by me.

I want to provide Ms. O'Gorman with an opportunity to complete her answer to Mr. Jowhari's question.

[Erin O'Gorman]

Sure. I'll speak briefly about the border of the future, and Ted can speak about our revenue assessment.

The work on the border of the future that stems from the second contract that was awarded to McKinsey relates to how we will be able to implement a digital experience for travellers. We are looking at what other countries are doing and at some that have started to be rolled out in the air mode, looking at what we can do next in the land mode, looking to make better use of data and improving our infrastructure so that in our busy ports of entry we can streamline and move people across faster, and also looking at the experience of our border service officers and making that a bit more seamless. Just anecdotally, that means not having to go back and forth between a lot of screens while people are waiting to be able to pass through the port of entry. On the traveller side, that's some of the work.

Then there's the revenue assessment side.

[Ted Gallivan]

I think we were going to a global consulting firm because these projects tend to be expensive. They have a significant impact on our own employees.

To go back to the earlier question, we're trying to reassure them that we're freeing them up to do more secondary inspections and look in more trucks and spend less time with paperwork. They have a big impact on Canadians, on small importers and small businesses that aren't familiar with the rules.

When we reach out to a global firm, it's when we're changing something to make sure we're as efficient as possible and we don't mess up our own employees, our trade chain partners and both small and large-sized businesses. That's the advice we were looking for.

[Majid Jowhari, Liberal, Richmond Hill, ON]

For project number two and project number three, it looks like we're really dealing with some sort of knowledge gap when it comes to benchmarking and being able to figure out best practices across the board when it comes to customer experience and all of those things. Did that knowledge exist in-house, or are you trying to get the sense from across the world and from our partners? That data might not have been readily available in-house.

[Ted Gallivan]

Well, again, government is notorious for red tape. That's why it's called “red tape”, but when we want to eliminate things down to the minimum, we have to make judgments about what we should ask, how we should ask it and in how much detail, and whether we ask it up front or after the fact.

A global firm that has seen this in dozens of jurisdictions or in a commercial context can help inform the decision. I think that's an important point to make. They just give us advice. The ultimate decision rests with CBSA, but I think that before making decisions that affect billions of dollars or millions of people, it's useful to get the benefit of some outside advice.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Very quickly, it looks like the first project dealt with the skills gap and was very much needed on a short-term basis. The other two projects dealt with the knowledge gap, and that was very much aligned with the goals that were set out by the department. On the fourth one, when we needed it, we in-housed it. Internal resources were tasked with the execution of what an organization should do.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Jowhari.

Mrs. Block, you have five minutes, please.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Mr. Chair.

Thank you to all of you for being here today.

I am going to pick up on some of the questioning of Mr. Jowhari and perhaps others who have asked about this contract that was cancelled. I think that it's not quite as cut and dried as your answers would suggest.

In response to our committee's motion, a letter from Ms. O'Gorman dated February 22 informed the committee that a fourth contract was cancelled. It is my understanding that during the contracting process, you need to justify outsourcing to the department and you must be able to demonstrate that the work cannot be done in-house, so you would have gone through that whole process.

This contract was awarded to McKinsey. It was set to start on October 21 of 2022 and then was cancelled less than two months later—on December 19, to be exact. What changed? You had awarded the contract, and in two short months you suddenly no longer needed it. I'm going to speculate that perhaps the mounting interest both by the media and perhaps by the official opposition through their order paper questions may have had something to do with that, but what changed?

[Ted Gallivan]

The decision was made in October at a meeting that I chaired personally, and through three conversations. I would say that what changed was....

Junior-level staff were following a plan that had been made several years in advance. There had been an intention to bring in a third party to evaluate this project, and they proceeded under that assumption.

When it was brought to senior public officials, we looked at the nearness to the go-live date for this project and we looked at the strategic need to have public servants doing this forever. In other words, we didn't want just a one-time benchmarking. We wanted to be in the business of benchmarking this project on an ongoing basis, so we made the decision to develop that capacity in-house. We created an organization within CBSA that is going to be running this program and this IT system in perpetuity.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Who signed off on the contract to begin with? I'm hearing that it was junior officials, not senior officials, who would have signed off on this contract with McKinsey.

[Ted Gallivan]

It was a more junior.... It was at the director general's level, who was pursuing a plan that had been established by more senior officials a long time ago, but when it became known that the contract was imminent and we were going to be outsourcing it, there were a series of conversations. Again, I think our focus was on the ongoing value and the need to have somebody watching this full time—not having somebody flitting in and flitting out to give us advice, but watching the ball full time.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Perhaps you could define “a long time ago”. When was the contract first signed off?

[Ted Gallivan]

I would say the plan to have this work done was at least a year in advance, and so the people who actually let the contract in October were following through on that intent. In governance over our expenditures, things go to more senior levels. When more senior levels, including me and our CFO, had a chance to discuss it, we questioned whether public servants shouldn't be doing it, because we needed to be doing this into 2024, 2025, 2026, 2027 and onwards and we didn't want to be perpetually contracting out work when we anticipated an ongoing need for this kind of work.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

That's interesting, given the amount that the government has been paying annually for outsourcing.

Would it have been that same junior official who would have determined that this should have been a sole-sourced contract and wouldn't be open to a competitive bidding process?