Evidence of meeting #59 for Government Operations and Estimates in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was work.
A video is available from Parliament.
Senior Partner, McKinsey & Company
I have a couple of thoughts.
First of all, my deepest sympathies go to anybody who has had to deal with the opioid crisis. It is tragic.
Second, I want to clarify, Mr. Chair, that McKinsey has done no work on opioids promotion in Canada. The work in the United States was below our standards.
Conservative
NDP
Gord Johns NDP Courtenay—Alberni, BC
I think it was far below anyone's standards. I really hope that in the future your company is going to answer in terms of where the bar is on what you're going to do and whom you're going to work with and take on as clients, especially when it flies in the face of public policy.
Conservative
The Chair Conservative Kelly McCauley
Thank you, Mr. Johns.
We have Mrs. Kusie for five-ish minutes.
Conservative
Stephanie Kusie Conservative Calgary Midnapore, AB
Thank you, Chair.
Mr. Palter, I'm holding the internal audit of federal government consulting contracts ordered to McKinsey & Company, which, as we indicated, was released on Friday, strangely, during Biden's visit. The timing of that was very odd.
I'm looking at “Findings for Objective 2: Fairness, Openness, and Transparency”. It says here, “This objective was partially met.” That's not great, that it was partially met. The report goes on to state that “there were issues with the accuracy of the Statement of Work”. The report then goes on to say, “the contract may not have been in place before the vendor commenced work.”
Is that McKinsey's normal practice, to begin work before the contract is signed?
Senior Partner, McKinsey & Company
Mr. Chair, I have not seen that interim report. This is the first that I have heard of the specifics on this.
What I can say is that McKinsey works to follow all the policies and procurement procedures as dictated by the federal government.
Conservative
Stephanie Kusie Conservative Calgary Midnapore, AB
I would think that any serious business organization, certainly one of the standard of McKinsey, would have had a contract in place prior to beginning work. Yet, here it states in this report that this is one criterion that was not met. In addition, “given the contract date was less than 24 hours earlier than the deliverable date, with no vendor signature on the contract to establish the start date, there is a risk that the work began before the contract was in place”, as we've determined here.
The report also states, “The terms of the contract were not met, because only one of the four presentations stipulated in the contract was provided by the vendor, and yet the vendor was paid the full contract amount.” We've seen the bonuses handed out to civil servants recently, despite having met their objectives less than 60% of the time. Is this the normal practice of McKinsey, that you would complete a quarter of the work, 25%, and yet take the entire amount that was awarded to you?
Senior Partner, McKinsey & Company
Mr. Chair, again, I don't know what the specifics of that situation are. I would say McKinsey follows the procurement policies—the rules, the regulations, the process—for how these contracts get awarded.
Conservative
Stephanie Kusie Conservative Calgary Midnapore, AB
It goes on to say, “The Project Authority needs to conduct effective monitoring to ensure that the delivery of services meets the provisions of the contract, including its Statement of Work, in terms of quality, standards and service levels.”
As I indicated in my last round, we're clearly missing some information here, either from one of the two ministers responsible to this committee or from your organization.
It also says here, “The vendor did not provide the deliverables in accordance with the contract's Statement of Work.” I just alluded to that in my last question. The report says, “First, the deck did not address all the technologies outlined in the Statement of Work (i.e., it did not cover Virtual reality and Biometrics). Second, there was no evidence on file”—this will be important to Canadians—“that the vendor submitted the presentation in French as well as English. Third, only one presentation was delivered, not four as outlined in the Statement of Work.”
We addressed already the 25% of the deliverables being there. But now that the vendor submitted the presentation, there was no evidence that this was submitted in French as well as English. Were you aware of that? Is that of concern to you, since it was for the Government of Canada, where all work should comply with the rules as to our official languages?
Senior Partner, McKinsey & Company
Mr. Chair, again, this is the first I've heard of this. Given that this is an interim report, I have neither seen it nor received a copy of it, so I'm not in a position to comment.
What I can say is that we abide by the rules, the policies and the procedures that are required by the federal government on all contracts.
Conservative
Stephanie Kusie Conservative Calgary Midnapore, AB
I would suggest you read it.
With that, I'll pass some time back to Mr. Genuis.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Thank you.
Thank you, Chair.
You know, McKinsey is an ethical dumpster fire, and you, sir, are supposed to answer questions about it. There are so many things that you're unaware of. You're unaware of the work done in Russia and China. You're unaware of the fact that rules weren't followed in these contracts. You're unaware of the internal audit report that my colleague brought out. You're unable to answer questions about whether or not there was a conflict of interest when Andrew Pickersgill, your predecessor, was supplying analysis to the Prime Minister's growth council at the same time that he was pitching the government on contracts, while McKinsey, the whole time, was not on the lobbying registry.
I would like to know, just as we wrap up today, if Andrew Pickersgill will be prepared to testify before the committee, since he was managing partner during most of the period we're covering. Perhaps he can shed some light on the things you have been unable or unwilling to answer.
Is Mr. Pickersgill available to testify before this committee?
Senior Partner, McKinsey & Company
Mr. Chair, I'm here as the managing partner of McKinsey & Company, in compliance with the request of the committee. I'm here to answer the questions that are being asked to the best of my ability. I'm happy to try to continue answering the questions from the committee.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Right, but we do need to have answers from McKinsey, and there are clearly a lot of things that you've said you can't answer or that you won't or are not able to answer. So if you can bring the message back that this committee does have the power to subpoena witnesses, we want to hear from Mr. Pickersgill specifically about the work he did for the growth council at the same time that he was working on paid government contracts.
We will have Andrew Pickersgill testify before the committee by whatever means necessary, so I hope he will make himself available to testify before the committee. I think he has important things to share with us.
Conservative
The Chair Conservative Kelly McCauley
Thank you, Mr. Genuis.
It's now over to Mr. Housefather to finish this off.
Liberal
Anthony Housefather Liberal Mount Royal, QC
Thank you, Mr. Chair.
Thank you very much, Mr. Palter, for being here. Thank you for the fact that you shared so much information with the committee.
I think it is absolutely important to state that McKinsey actually complied completely with what the committee asked. I would also note that Mr. Pickersgill has not been summoned here by the majority of the members of the committee, at this point. He's not been asked to be a witness by anybody other than one person, at this point. We'll see whether or not we need to hear from him.
At this point, I believe this is about the ninth meeting the committee has had about McKinsey. We've diverted ourselves away from the larger, more important subject about whether or not the federal government is doing too much outsourcing and how we would reduce that outsourcing. The budget yesterday actually talked about reducing the amount we spend on outsourcing by billions of dollars, so we're going to have to.
Some people have tried to create a narrative that because Dominic Barton was somehow a close friend to the Prime Minister, McKinsey got all this business. As you heard, of course, when Mr. Barton was here—you said his testimony could speak for itself—we recognized that he is not a friend of the Prime Minister's. He's not even one of his 50 best friends. They've never socialized. He doesn't have his phone number. In fact, we've also noted that McKinsey's business with the Government of Canada drastically increased after Mr. Barton left McKinsey and divested all his shares. If he was trying to get business for McKinsey, he did a terrible job.
You've been subject to some real criticism, I think, of your company that was directed in a very unfair way, so I want to ask a couple of brief questions.
Can you talk about some of the volunteer stuff you do for UJA and other organizations?
Senior Partner, McKinsey & Company
I'd be happy to.
I have been involved with the United Jewish Appeal of Greater Toronto for about 15 years, with a specific focus on education and helping to support our Jewish education to strengthen the Jewish community in the city of Toronto. I was for a long time the co-chair of the centre for Jewish education, which oversaw the Jewish day school system in Toronto.
Liberal
Senior Partner, McKinsey & Company
We have several competitors. It's a very competitive marketplace. These organizations are the Boston Consulting Group, Bain, Deloitte, KPMG, Ernst & Young, PwC, Accenture and the like.
Liberal
Anthony Housefather Liberal Mount Royal, QC
I know you can't be aware of the internal policies of all these different companies, but do you have any inkling that these companies have better policies related to ethics or better policies related to compliance than McKinsey does?
Senior Partner, McKinsey & Company
I have no specific information on it. My best guess is that it's probably not better than McKinsey's. We've invested a lot.
Liberal
Anthony Housefather Liberal Mount Royal, QC
I'm going to come back to the compliance question in a second to talk about how you do compliance.
However, can I just reiterate the percentage of your business that you do with government in the Canadian branch of McKinsey? You said it's 5% to 7%.
Liberal
Anthony Housefather Liberal Mount Royal, QC
So, in the event that you had not gotten that business—and I imagine that business is not only from the Government of Canada but also from various provinces, such as Quebec—you would have been able to, I think, relatively easily replace that business with private companies or others to make up that 5% to 7%. Is that correct?