The federal procurement watchdog said the government created a “strong perception of favoritism” by awarding certain contracts to consulting firm McKinsey & Company.
a report A report released last month by Canada’s procurement ombudsman, Alexander Jeglic, examined government contracts awarded to McKinsey between April 2011 and March 2023.
Jeglic found that McKinsey won dozens of contracts totaling $117 million during that period.
CBC News reports that the total amount of public funding Ottawa gave to McKinsey was The number has sharply increased since the Liberal Party came to power. Jeglic’s report echoes the CBC’s findings.
“The value of contracts awarded to McKinsey began to increase in 2018, and a significant increase was observed from 2019 to 2022,” the report states.
Mr. Jeglic also noted that most of the contracts signed with McKinsey are sole procurement, primarily “standing offers,” or contracts between governments and contractors that provide goods or services under preset terms and costs. It was pointed out that this was done through a contract between the parties. The government can then issue “call-up” contracts to contractors to provide the services specified in the offer when the need arises.
Jeglic’s report says that McKinsey, through Public Services and Procurement Canada (PSPC), “consists of functional tools, databases, and expert support to measure its performance relative to similar Canadian and international organizations.” The company has received a permanent offer to provide a “benchmarking service”.
Onbud reports concerns about documentation
Mr Jeglic said the standing offer was independently procured, although PSPC had not provided adequate justification for the non-competitive process.
”[McKinsey’s standing offer] was improperly established on a non-competitive basis, given that the sole source justification document provided did not contain the necessary information to justify this sole source standing offer. “Possible,” the report states.
Mr. Jeglic also concluded that most of the calls issued under the standing offer “completely lacked any explanation of the requirements-specific work to be performed by McKinsey and, by extension, the appropriate oversight of the PSPC.”
Mr. Jeglic also expressed concern about how McKinsey obtains competitive contracts.
He said he found two cases in which the procurement process was changed to allow McKinsey to bid on contracts it was not otherwise able to participate in.
In another case, Mr. Jeglic said that after an initial evaluation of two bids, McKinsey was deemed the only compliant bidder and was disqualified as the original “first bidder.” It was discovered that a re-evaluation had taken place. Jeglic said there was a lack of documentation explaining why the second evaluation was conducted.
“Taken together, these observations lead to strong positive perceptions of McKinsey,” Jeglic wrote of some of the competitive contracting processes.
Jeglic’s report on McKinsey comes as the federal government faces increased scrutiny of the contracting process.
In February, Auditor General Karen Hogan released a report into the controversial ArriveCan application. Hogan said in his report that the project’s cost inflated was the result of the government’s over-reliance on third-party contractors.
Hogan estimates ArriveCan’s final cost to be just under $60 million, but says poor financial record-keeping makes it impossible to determine the exact cost.
Jeglic noted in the McKinsey report that “common documentation deficiencies observed are an ongoing area of concern” in government procurement.
”[The ombudsman] “Numerous procurement practice reviews conducted over the past several years involving more than a dozen departments and agencies have identified similar issues,” the report states.
“Without documentation to support the decision to award a contract, departments cannot demonstrate that the contracting process complies with applicable laws and policies.”
