Public Accounts Committee on June 4th, 2024

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Yes.

[Karen Hogan]

I think it was more that Innovation, Science and Economic Development Canada, the department responsible for monitoring the compliance with the contribution agreement between the government and the foundation, made changes very quickly. They clarified the role of an observer who might sit on the board of directors of a foundation, and they improved their information requests from this foundation and others in order to have better information to monitor the use of public funds and the management of conflicts of interest.

[The Chair, Conservative, John Williamson]

Thank you very much.

Ms. Sinclair‑Desgagné, you have the floor for one minute.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you, Mr. Chair.

Organizations seem to think that any means are justified to award contracts to the company of their choice. You note several examples of this in your report on professional services contracts.

In fact, when it comes to some Crown corporations, we use the expression “contract chains”. In the case of Canada Post, for example, these contracts are used quite blatantly. For the same mission, which is to find ways of diversifying its revenues, seven contracts were awarded over several years to the McKinsey firm, for a total of $16.5 million.

Finally, could it be said that this is the same $16.5-million contract spread over several contracts, which was obviously awarded non-competitively?

[Karen Hogan]

When there are such chains of contracts over a short period for work that is very similar, the risks are increased. So I wonder about that.

I wonder a lot about the reasons behind such practices. In this case, it has led to several important findings.

At the beginning of a process, you have to determine why you need a contract and what kind of contract you need. After that, you have to choose the right mechanism for awarding the contract. At this stage, you need to take a step back before making a decision.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

I would add that, in this particular case, it is quite easy to know whether McKinsey has fulfilled its mandate. In fact, all you have to do is ask yourself whether Canada Post's revenues have increased and whether Canada Post is more profitable. The answer is no.

After awarding the McKinsey firm contracts totalling $16.5 million—I stress the fact that this is public money—Canada Post is not really more profitable. There is a problem there. There are other ways—

[The Chair, Conservative, John Williamson]

Ms. Sinclair-Desgagné, I'm sorry to interrupt you, but your time is up.

Mr. Desjarlais, you have the floor for just a minute, please.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I want to focus again on this pattern that's very evident. It's important to name the problem.

The problem, in my mind, and I think it's referenced in your report and there's credible evidence to suggest that these professional fees.... In your report here, McKinsey & Company represents 0.27% of all professional fees across all of those buckets you mentioned. Is that correct?

[Karen Hogan]

Over the period audited...yes.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Over the period audited, 2011 to 2023, McKinsey & Company received 0.27% of all professional fees. Is that another way of saying that truth?

[Karen Hogan]

For the services that McKinsey provides...yes.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

The other 99% went to like companies?

[Karen Hogan]

That's correct.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

The issue you're mentioning is an issue not of rules or regulations, but of following those rules and regulations. Is that correct?

[Karen Hogan]

Absolutely, and I think I want to recognize that procurement officers in the public service have a great will and desire to follow the rules. I question whether there are just too many or they're complicated, because the frequency of the disregard that we saw here makes you question.

I think the most important part is to recognize that, when you're issuing a non-competitive contract, there are a lot of rules that you really do need to follow. It starts with justifying why you're selecting that vendor or what exception you're applying. When you start off by not respecting one of the most important rules, then, you know, it's probably a little easier to see how it repeats itself.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Is it fair to say it's a tradition?

[The Chair, Conservative, John Williamson]

Thank you very much. I'm afraid that is the time, unless the auditor has a quick answer.

[Karen Hogan]

It's a concern.

[The Chair, Conservative, John Williamson]

Very good. Thank you.

Ms. Kusie, you have the floor for two minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much, Mr. Chair.

Madam Auditor General, can you please fill Canadians in as to the nature of the Trans Mountain contract, please?

[Karen Hogan]

There was a contract issued by Trans Mountain Corporation to McKinsey & Company to provide advice on operations, sort of monthly—how to be more efficient and how to save money. That contract was issued on a non-competitive basis. It did not have a limit, but they expected that they would spend about $19 million. To date, they have spent $32 million on that contract.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

Who is the minister who signed that contract, please?

[Karen Hogan]

I don't believe that contract was signed by a minister. We only saw one contract where a minister had to authorize the approval of it, given that it exceeded the threshold that the public service could authorize, but that was not this contract.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

I will pass my time to Mr. Perkins.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Auditor General, you mentioned the issue of adhering to standard conflicts of...real and perceived conflicts. Five of the seven NDP-Liberal appointees to the green slush fund board, as a group, voted themselves money for—