Government Operations Committee on March 20th, 2023

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you again for being here.

I agree with Mrs. Block about the redaction concerns. We have invoices with only total charges. The quantities and unit prices are blocked out. It doesn't make any sense.

Minister, McKinsey was also awarded a contract for a workshop relating to the navy's digital transformation. I'm going to quote a letter from the document submissions that we received. The letter requests a sole-source requisition of this contract because, it says, McKinsey clearly indicated the cost of the one and a half day workshop would be less than $25,000, including taxes. It then says that, as the estimated expenditure did not exceed the threshold laid out at reference C, a sole-source contract was being requested.

That contract was indeed awarded to McKinsey with no competition. The contract ended up costing $24,999.98. That's two cents below the threshold that the letter appears to reference. My concern is that we have procurement regulations for a reason, and it's not the first time we've seen contracts built very close to the limit. This is two cents from the limit. As per the letter, McKinsey agreed to keep the contract below $25,000.

Do you think they priced the contract that way so that they would not have to compete for it and that this represents a problem with integrity in procurement by evading the intention of the regulations?

[Anita Anand, Liberal, Oakville, ON]

Thank you for the questions.

On the first point, relating to redactions, I understand the basis of the point, and I will offer to have my department take a second look to ensure consistency among departments.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you.

[Anita Anand, Liberal, Oakville, ON]

I appreciate the point of Mrs. Block on this particular matter, so I will ask the department to do that for the redactions.

In terms of the spirit of the regulations and the issue you raised, I'm going to turn to Admiral Topshee, because he has direct jurisdiction over this particular matter.

[The Chair, Conservative, Kelly McCauley]

Give a very brief answer, Admiral.

[VAdm Angus Topshee]

The number I have is $24,860, so I agree that it is just under $25,000. To be perfectly honest, I don't know if that.... Most companies are aware of our contracting thresholds, but I have no specific knowledge of that contract. It was before my time.

[The Chair, Conservative, Kelly McCauley]

Thank you, gentlemen.

Mr. Genuis, you have five minutes, please.

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

Thank you, Chair.

Just to summarize some of the things we've heard, we've asked you questions, Minister, about whether you're aware of McKinsey's contracts with other defence departments. You did not or weren't able to provide that information. You said that you're only here to answer questions about contracting with the Government of Canada, but of course contracts with other defence departments are, I think, highly relevant, and I would still appreciate it if you could provide any information you have in that regard in writing.

Even when we've asked questions about work for the Canadian defence department, there's been a great deal of information you have refused to provide, as my colleagues have highlighted in terms of the significant redactions. It's important to say that, when a parliamentary committee requests information, it's not the same standard as a citizen using ATIP. Parliamentary committees have the status of a court, and if a court requests documents, I believe you would provide them.

Speaker Rota has been very clear—and this is a convention that goes back a hundred years—that parliamentary committees have a right to unfettered access to documents, yet repeatedly your government, across departments, has not applied that standard, including in very basic, simple cases. We're not talking about a potential threat to national security. We're talking about commercial information that would be provided to the committee in camera so that we would be able to review it.

Very specifically on the issue of redactions, will you apply the standard of Speaker Rota's ruling?

[Anita Anand, Liberal, Oakville, ON]

As I just mentioned, I'm here now asking my department to make sure that we take a second look to ensure consistency amongst departments—

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

I'm not looking for consistency among departments. I'm looking for consistency with the law as articulated by the lawful authority, who, in this case, is the Speaker. Will you apply the standard of Speaker Rota's ruling?

[Anita Anand, Liberal, Oakville, ON]

I will say that there are a wide variety of reasons that a redaction may be needed, and we are committed to balancing transparency with these needs overall.

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

Minister, a redaction would be in violation of the Speaker's ruling. Are you telling us today that you are going to continue to defy the Speaker's ruling on this?

[Anita Anand, Liberal, Oakville, ON]

What I am saying is that we are doing our very best to balance the need for transparency with the—

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

Minister, it's a legal requirement. It's not for you to tell the Speaker, “I'm sorry. I'm going to strike a balance that's outside of the law.” The Speaker has said that parliamentary committees have a right to order documents. I would submit to you that, if you went before another court, and the court said that you must hand over the documents, you would hand over the documents, yet you're treating a parliamentary committee that has the established constitutional right to order these documents in a different way. I would ask you to take that back and consider it, because you have a legal obligation.

[Anita Anand, Liberal, Oakville, ON]

I will, and as I've previously indicated, I believe strongly in the important work of OGGO, and I know it—

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

Thank you, and I hope we'll see it in the provision of the documents.

[Anita Anand, Liberal, Oakville, ON]

—very well, and we will do our very best to respond to that.

Thank you.

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

Minister, in the further time that I have, we have also asked you questions about the issue of culture, and you've talked about the need to go outside for information that's going to inform cultural change. That's, I think, potentially a valid argument in principle, but it comes down to where you're going for that information.

You've dismissed questions about the ethical conduct of McKinsey, but if you're relying on McKinsey for information about how to change and shape the culture of National Defence, don't you think that the culture of McKinsey, the ethical conduct of McKinsey and the advice they've given to, for instance, the Saudi government around the treatment of dissidents is relevant to the advice they're going to give you about shaping the culture of the Canadian Armed Forces?

[Anita Anand, Liberal, Oakville, ON]

I want to clarify that justices Deschamps, Arbour and Fish have provided numerous recommendations over numerous years that the Department of National Defence is working diligently on to implement. That is part of the place where we are receiving advice on how to make change. As you mentioned—

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

That's great, but we're talking about McKinsey. Is McKinsey advising you on culture change?

[Anita Anand, Liberal, Oakville, ON]

McKinsey is not advising us on the substantive policies that we should be implementing regarding culture change—not at all. It is an operational source of advice, not a policy source of advice.

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

You were using the challenges of culture as a justification for going outside. This is what you said earlier in your testimony. You said that you need to bring in third parties like McKinsey because we can't solve our own problems ourselves. Now, you're saying that we're actually not really going to McKinsey for that. We're going to them for something else.

[Anita Anand, Liberal, Oakville, ON]

Actually, I'm not inconsistent in what I'm saying. I'm saying that, in terms of implementing the 500 recommendations of three previous justices, we benefited in a specific, targeted way from utilizing the resources of this third party expert, but this third party expert did not in any way inform our policy decisions.

[The Chair, Conservative, Kelly McCauley]

Thank you, Minister.

Mr. Housefather, go ahead please.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you, Mr. Chair. I'm last, but not least.

Minister and generals, thank you very much for being here today, and thank you for your service to our country. It is greatly appreciated.

Minister, I'm going to start with you.

You have one of the unique positions in this government as Minister of National Defence but also having served previously as minister of procurement. A lot of the questions that were flying at you today related to whether or not we should be doing business, as a government, with McKinsey. It's a legitimate question related to which companies should be excluded from doing business with the Government of Canada.

Currently, we have a policy related to who is excluded and who is not under our integrity regime. We may want to one day propose changes to that integrity regime. Again, that's something that this committee could look at. We could propose things, and I know that you would have your mind open to those changes. However, do you have the power in the defence department to exclude from bidding on contracts companies that are not excluded under the integrity regime?