Auditor General Discovers Ongoing Noncompliance with Procurement Guidelines Involving McKinsey & Company
An auditor general report has revealed widespread disregard for procurement policies in various government departments and agencies, resulting in $209 million in contracts being awarded to a global consulting firm.
“We found that the organizations’ awarding of the contracts showed a frequent disregard for federal contracting and procurement policies and guidance,” stated Auditor General Karen Hogan during her opening statement before the Public Accounts Committee on June 4. “We also found that each organization’s own practices often did not demonstrate value for money.”
In an audit conducted by the Office of the Auditor General, it was found that nine out of 10 departments and agencies, as well as eight out of 10 Crown corporations, failed to adhere to all aspects of their procurement policies and guidance on at least one contract, according to Ms. Hogan’s report.
The report highlighted that out of the 28 contracts awarded to consulting firm McKinsey & Company through a competitive process, 10 bid evaluations lacked sufficient information to justify why the company was chosen as the winning bidder.
Furthermore, for 18 out of the 19 contracts issued under the national master standing offer with the company, organizations did not provide the required justification for opting for a non‑competitive process. A standing offer is an offer from a potential supplier to provide goods and services at pre-arranged prices and under set terms and conditions.
The report also identified instances where organizations awarded additional non‑competitive contracts for related work after initially awarding a contract to McKinsey & Company without competition. In some cases, only the initial contract was awarded competitively, while subsequent contracts were non-competitive, amounting to $58 million in total.
Related Stories
The report made a single recommendation, urging agencies to ensure that officials involved in the procurement process do not have conflicts of interest.
“In other areas, our audit confirms gaps and weaknesses that have been raised in other internal and external reviews of government procurement processes,” the report acknowledged.
Ms. Hogan highlighted that payments to McKinsey & Company significantly increased after the Liberals took office, rising from $8.6 million before 2015 to $191 million in the subsequent nine years.
She also pointed out that six out of 97 contracts appeared to be tailored to benefit McKinsey, and in four out of 28 competitive contracts, there was a shift in strategy that favored the company’s selection.
“We’re not saying that you can’t change your procurement strategy. But you need to really justify why you are changing strategy to award a contract to a specific vendor,” Ms. Hogan added.
The Auditor General Report aligned with findings from an April 2023 report by Canada’s Office of the Procurement Ombud, which highlighted issues with Public Services and Procurement Canada awarding projects to McKinsey & Company without proper justification, leading to perceptions of favoritism and inadequate oversight by departments.
The Ombud’s report indicated changes in procurement strategies to engage the company in government projects, yet lacked adequate documentation to support these decisions.
Minister of Public Services and Procurement Jean-Yves Duclos declared efforts to enhance contract management within his department, emphasizing the preservation of procurement integrity and the obligation to prioritize value for Canadians.
Mr. Duclos outlined plans to mandate the retention of contract-related documents and enhance the criteria for standing offers within his department.
In response to the auditor general’s report, the Conservative Party criticized the Liberal government for allegedly favoring McKinsey & Company with contracts, referring to the findings as “damning.”
The Tories accused Prime Minister Justin Trudeau of having a close relationship with McKinsey’s former leader, Dominic Barton, and pledged to address corruption and fiscal issues by terminating high-priced consulting contracts.
Additionally, Mr. Barton denied discussing government contracts with Mr. Trudeau during his testimony before the government operations committee in early 2023.
McKinsey & Company did not respond immediately to The Epoch Times’ request for comment.
