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
Again, our pricing, according to the procurement rules of the federal government, is firm fixed-priced contracts. We are paid on the basis of delivering the deliverables stipulated in the contract at a price agreed to by a competitive process.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Okay.
Sir, you said in your opening statement that McKinsey followed all the rules and that these were competitive contracts assessed by public servants. All the rules were followed. That's a similar line we received from ministers.
The problem is that your talking points aren't up to date, because the government released a press release on Friday that said, “there are indications that certain administrative requirements and procedures were not consistently followed”. I don't think the government would issue a press release admitting that they didn't follow all of the rules in their procurement with McKinsey if they weren't sure that they hadn't followed the rules. The government wouldn't release a press release like that, saying that they had failed to follow the rules if they had been following all the rules.
Do you want to acknowledge that certain administrative requirements and procedures weren't consistently followed, and do you want to share with us why that happened?
Conservative
The Chair Conservative Kelly McCauley
I'm afraid you're not going to get an opportunity this round. Perhaps you will in the next round, or perhaps you can address it in someone else's round.
We'll go to Mr. Kusmierczyk, please, for five minutes.
Liberal
Irek Kusmierczyk Liberal Windsor—Tecumseh, ON
Thank you, Mr. Chair.
A colleague across the table questioned the integrity and ethics of McKinsey. I just wanted to provide you, Mr. Palter, with an opportunity to answer that charge and that question.
Senior Partner, McKinsey & Company
Thank you for the opportunity.
As I said, McKinsey is an ethical company. Part of being an ethical company, as I alluded to, is that we acknowledge we've made mistakes and we've learned from them. I think the consequence of that is that we have made dramatic changes in our firm over the last 10 years in relation to ensuring compliance with all policies and all procedures for all of our clients, everywhere, around the world.
As I've said, we've invested $600 million in building first-class systems, training people and changing our compliance processes, whereby people have to undertake compliance training before they can receive their bonuses. It's all core to our DNA.
The second thing I would say is that, as a company globally, we take great care in trying to improve the communities in which we operate and adding value back to the communities in which we operate. For example, in Canada last year, McKinsey did over 7,000 hours of pro bono work for a variety of organizations. Most of our partners sit on the boards of hospitals, food banks and the like, trying to make the communities better where we operate.
As I said, everybody wakes up every morning knowing that we are an ethical, values-driven company with very high integrity.
Liberal
Irek Kusmierczyk Liberal Windsor—Tecumseh, ON
I know it's a tough question, but can you give us a sense in some way of how many contracts McKinsey won in 2022? Are we talking hundreds? Are we talking thousands or tens of thousands?
Can you provide us with a bit of an understanding?
Senior Partner, McKinsey & Company
Is that a question about contracts with the federal government or...?
Senior Partner, McKinsey & Company
I don't know, but as I alluded to, at any given time, McKinsey has 4,000 to 4,500 client teams working. Does that translate to 4,000 to 4,500 contracts? No, I can't say that, but that's roughly the scale of our firm.
Liberal
Irek Kusmierczyk Liberal Windsor—Tecumseh, ON
You mentioned thousands. Is that fair to say in any one year?
Liberal
Irek Kusmierczyk Liberal Windsor—Tecumseh, ON
How many times has McKinsey relied on the intervention of elected officials to win those contracts, in your opinion?
Liberal
Irek Kusmierczyk Liberal Windsor—Tecumseh, ON
It's zero. Okay, great.
My colleagues across the aisle have suggested that the government shouldn't do any business with McKinsey at all. Can you tell us what countries have a blanket ban on business with McKinsey? How many countries have that?
Liberal
Irek Kusmierczyk Liberal Windsor—Tecumseh, ON
It's zero.
What would be the consequences of such a position, for example, in terms of the skills or value that McKinsey brings to governments like the Government of Canada?
Senior Partner, McKinsey & Company
As I alluded to, McKinsey has global expertise on a variety of issues that I think are quite important as the government tries to execute its ambitious and complex agenda. I think the government could benefit from the access to that expertise.
Liberal
Irek Kusmierczyk Liberal Windsor—Tecumseh, ON
There are over a hundred countries that use McKinsey's services, as I understand it, and McKinsey has worked with a number of Canadian departments. Defence and IRCC are some of the larger ones.
The world, of course, is changing quickly. It's becoming much more complex. What common challenges do you see that are facing ministries and departments—not just Canadian ones but American ones, Australian ones and others around the world?
What are some of those key challenges that McKinsey can help with?
Senior Partner, McKinsey & Company
I think there are probably two significant challenges among many. The list could be long. I'm going to focus on two.
The first one is this rapid evolution of technology. The private sector, as everyone appreciates—be it banks, insurance companies, retailers, consumer packaged goods companies or energy companies—is rapidly evolving technology. ChatGPT is the latest example of that. That's going to upend just about all of our lives.
Related to that is digitization. How do you take services and digitize them in a world where we have people with very diverse needs? We have language issues. We have issues with disabilities, time zones and broadband access. Trying to solve all of those problems is core to what McKinsey does as a firm and core to the issues that the government faces. That's one.
The second is trying to find a way to do more with less. Every organization is trying to figure out how to do more with less. The demands always go up.
Liberal
Irek Kusmierczyk Liberal Windsor—Tecumseh, ON
You don't replicate, replace or duplicate the work of the public service—do you?
Conservative
The Chair Conservative Kelly McCauley
I was going to say give just a brief answer, but thank you for being ahead of me.
It's back to you, Mr. Genuis, for five minutes.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Thank you, Mr. Chair.
Of course, we know you work with governments around the world. You work with the Government of Russia, the Government of Saudi Arabia, the Government of China and entities that are affiliated with them.
You told your employees not to attend a pro-democracy protest in support of Mr. Navalny in Russia. Again, you may not be aware of those things, sir, but those things are of course matters of public record.
I want to follow up on the end of the last round of questions I was asking. You say all of the rules were followed. The government admitted in a press release on Friday that all of the rules were not followed. Were all of the rules followed or not, sir?
Senior Partner, McKinsey & Company
As I stated previously, McKinsey takes its obligation to adhere to the rules very seriously. I also wanted to clarify about the record—
Conservative