Federal government may have flouted rules when awarding McKinsey contracts: AG report

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The Auditor General of Canada has indicated that the federal government flouted proper contracting policies and was unable to show it got value for money when it awarded $209 million in contracts to consulting firm McKinsey & Company. Auditor General Karen Hogan delivered a report highlighting these issues, examining contracts awarded between January 1, 2011, and February 7, 2023.

Hogan’s audit revealed a frequent disregard for federal contracting and procurement policies by organizations awarding the contracts.

The audit was unable to determine if the contracts delivered value for money due to insufficient documentation and non-compliance with procurement rules.

The audit found a substantial increase in the value of contracts awarded to McKinsey & Company after Prime Minister Justin Trudeau came to power in 2015. Contracts awarded annually rose from less than $3 million before 2015 to over $55 million by 2021-22. But perhaps more distiburbing:

  • Only 28 of the 97 contracts, worth about $91 million, were awarded through a competitive process.
  • In six of the 28 competitive contracts, the bid appeared to be structured to favor McKinsey.
  • There was insufficient documentation to support awarding 10 of the 28 competitive contracts, worth $13.7 million.
  • 69 contracts, worth $117.7 million, were awarded on a non-competitive basis.

Public Service and Procurement Canada set up a standing offer in 2021, allowing departments and agencies to award non-competitive contracts. Twenty of these non-competitive contracts were awarded using this mechanism.

The audit struggled to determine value for money in 19 of the 33 sampled contracts due to:

  • Lack of justification for the contract’s necessity.
  • No clear statement of deliverables.
  • Lack of confirmation that all expected deliverables were received.

Minister of Public Services and Procurement Jean-Yves Duclos acknowledged the audit’s findings and stated that the department is working to improve contract management. Measures include ensuring all contract-related documents are kept on file and improving criteria for standing offers.

A spokesperson for McKinsey said the company acted appropriately and delivered value for money, stating confidence in having met the needs of their government clients.


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