Government Operations Committee on March 20th, 2023

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

You don't have that information.

[Gen Wayne D. Eyre]

No, I don't, but when these companies work with our allies, we can garner that sort of expertise to help us out, ourselves.

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

Exactly, but these companies don't just work for our allies. That's the problem. We know from media reports that they're doing work with state-affiliated entities in Russia and China. In the case of Russia, they've been doing work with entities under sanctions.

Actually, Minister, I'll put the question to you.

Are you aware of McKinsey doing work for sanctioned entities in Russia or elsewhere, and do you have a problem with that?

[Anita Anand, Liberal, Oakville, ON]

As I said, we have no reason to believe unethical conduct occurred in the execution of the contracts with the Department of National Defence, and—

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

Do you accept that the work they do for other clients, and the information they learn from Canada and apply elsewhere, matters for our security?

[Anita Anand, Liberal, Oakville, ON]

Information is provided to these companies on a need-to-know basis. It's limited. There are security screens in place, as well as conflict of interest mechanisms, and we have—

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

Do those screens ensure that the same analysts who work for the Canadian defence department are not also working for foreign departments of defence? Do you know that? Can you tell us, for sure, that analysts who work for the Canadian department of defence aren't also working for the department of defence in Beijing or Moscow?

[Anita Anand, Liberal, Oakville, ON]

As I said, we take the processes and screening for—

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

That's a yes or no.

[Anita Anand, Liberal, Oakville, ON]

—conflicts of interest very seriously. We will always work to improve our processes.

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

Do you have a mechanism to ensure those individuals aren't working for Moscow or Beijing?

[Bill Matthews]

Mr. Chair, I'll try a different approach.

The nature of the work that McKinsey—

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

It's just a yes or no. I'm not looking for a different approach.

Actually, I am looking for a different approach. That would be an answer.

[Bill Matthews]

I will give an answer if I can have 15 seconds.

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

Is it yes or no, sir?

[Bill Matthews]

The nature of the work is not sensitive. It's HR, benchmarking and data. We're not talking about sophisticated, sensitive—

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

I totally reject the idea that an organization coming in and doing operational work, one that is resisting providing unredacted documents to this committee, is somehow not sensitive. I don't know—

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Genuis.

Mr. Jowhari, please go ahead.

[Majid Jowhari, Liberal, Richmond Hill, ON]

I would like to welcome the minister and officials.

Once again, thank you to the women and men of the Canadian Armed Forces for doing amazing work keeping Canada and Canadians safe, and lending a hand in making sure the world is a safe place.

I want to focus on where we think there might be an opportunity for us to be able to demystify why McKinsey was here, and if McKinsey somehow, through whatever means, had access to any type of operational intelligence that is now going to be gathered and used against Canada by partnering with some sort of anti-Canadians. To demystify that and put it into perspective, I'm going to ask this of the minister, and probably Mr. Matthews, as I believe you're in the best position to answer this question.

When I looked at all the documents McKinsey and DND sent in, I personally categorized all the services around three main areas. One was conducting a cultural assessment. Another one was improving modern digital and agile practices, and the third one was around implementing an AI-driven fleet personnel management.

I cross-referenced that with the $20 million that was spent by different departments. I know CJOC spent $2.4 million, CPCC spent $2.5 million, RCN spent about $5 million, and VCDS spent about $10 million.

Can you explain how benchmarking can be done by a consulting firm that only dedicates its services to one client, and how the data from that one client can somehow serve as a base for best practices? That boggles me. I've been in management consulting for 30 years, and I've never seen a management consulting firm do benchmarking when it only has one client. It basically limits the data.

Before I ask my next question, the floor is yours. Either the minister or Mr. Matthews, can you please explain?

[Anita Anand, Liberal, Oakville, ON]

First of all, I want to build on the point that the deputy minister was trying to make. All of the subject matters of the contracts were in relation to corporate improvement, improvements in the way in which the institutions function. This was not a matter of state secrets being provided.

What types of activities were at the heart of these agreements? They were benchmarking data, HR and culture, and digitization of resources. In particular, I think this would be a useful moment to ask Admiral Topshee if he could explain. This might elucidate the point we're trying to make here: that this is in terms of improving the functionality of an organization that has been criticized for not functioning efficiently and for not functioning well.

The services that were contracted for were complementary in nature, where conflicts of interest screens were in place and where measures were being taken at all times to ensure the confidentiality of secret information.

[Vice-Admiral Angus Topshee, Commander, Royal Canadian Navy, Department of National Defence]

Thank you, Mr. Chair and Minister, for the question.

The navy's example is a good one to explain how we leveraged McKinsey's experience in this case. In 2019, one of my predecessors issued a digital navy strategy, explaining how the navy would embark with digital at the core of everything we do, because that was essential to our operational effectiveness.

We released a strategy that set the broad guidance for what we needed to do and how we wanted to do it, but operationalizing that was not something in which, in the navy, we had a lot of expertise. There were a total of four contracts with McKinsey. One was for less than $25,000, so I won't touch on that one.

Effectively, the first contract was, how do we take this strategy and translate that into tangible, meaningful things that we can practically do that will deliver the best value for money? Once we settled on that, it was clear to us that, in HR management, a tool that would digitize our process for assigning sailors to the places where they were needed, maximizing their operational tempo, would help a lot.

We embarked on the second contract to establish that process. We realized the value of that—

[The Chair, Conservative, Kelly McCauley]

I'm sorry. I'm afraid that's our time. Perhaps you can provide the rest of your thoughts in writing to the committee.

We have Ms. Vignola for two and a half minutes, please.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

Minister, my first question is about the French Senate's report on McKinsey and another consulting firm. It referred to the same problems we have here, which is to say that McKinsey uses the foot-in-the-door technique or, as we call it, pro bono work, to interfere in the workings of government.

Do you find it appropriate or ethical for a company that is not a registered lobbyist to be able to work within a department like National Defence?

[Anita Anand, Liberal, Oakville, ON]

Thank you for the question.

That's not at all the case in our department under these contracts. As I previously explained, the provider rendered the services needed to achieve our goals as soon as possible.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

Is it usual for a company that is not a registered lobbyist to have access to the department and to various data, including those pertaining to its internal operations? I understand that the intent is to improve the situation, but is it customary for the company not to be registered?