Photo: Spencer Colby The Canadian Press Auditor General of Canada Karen Hogan
Federal organizations frequently violated their own procurement policies when awarding nearly a hundred contracts to U.S. consulting firm McKinsey & Company between 2011 and 2023.
In her report released Tuesday morning, Auditor General of Canada Karen Hogan revealed that she found “frequent non-compliance” across all 97 contracts awarded to the firm during that 12-year period.
Ten federal departments and agencies and ten Crown corporations have awarded contracts to McKinsey for professional services, such as management consulting services and information technology consulting services.
“The extent of these instances of non-compliance varied from organization to organization. That being said, 9 of 10 departments and agencies, and 8 of 10 Crown corporations, had failed in one aspect or another of their procurement policies and directives for at least one contract,” the report reads. .
The value of contracts during this period totals $209 million, of which $200 million has been spent.
Organizations have also adapted certain procurement processes depending on the contractor, confirms the Auditor General's investigation.
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Following media reports which noted the rapid growth in the value of contracts concluded between the federal government and the consulting firm published last year, a parliamentary committee asked the Office of the Auditor General of Canada to conduct an investigation into the contracts.
The audit is the first public review of contracts awarded to McKinsey&Company by Crown corporations.
McKinsey had also made headlines in Quebec for its services provided to the CAQ government during the COVID-19 pandemic.
Insufficient evaluations
Ms. Hogan’s investigation also reveals that the bid evaluation documentation was not sufficient to justify McKinsey’s choice as a supplier.
For example, the bid for a contract awarded by the Business Development Bank of Canada did not receive the highest score.
For two other contracts awarded by the Canada Infrastructure Bank, no evaluation criteria had been defined in the request for tenders or used in the bid evaluation. No explanation had been documented to justify the choice of McKinsey.
“In the absence of documentation supporting the selection of the bidder or explaining the reasons why the outcome of the procurement process did not meet the evaluation criteria, it is impossible to conclude that the organizations had made a good business decision or promoted value for money by awarding the contract to McKinsey & Company,” she notes.
Only one recommendation
The Auditor Hogan makes only one recommendation in her report, but she suggests the list could be long.
She therefore recommends that all federal organizations implement a proactive process to identify conflicts of interest in the procurement process and keep a copy in the file accompanying the purchase with the conflict of interest declarations. The organizations have all indicated to her office that they accept the recommendation.
Last year, internal audits already showed that federal departments did not systematically follow certain administrative rules and procedures.
Vulnerable to cyberattacks
Auditor Karen Hogan concludes, in a second report published Tuesday morning, that the federal government has neither the capacity nor the tools required to effectively combat cyberattacks, while they are becoming more frequent and sophisticated.
The audit found deficiencies in response, coordination, monitoring and information sharing both within and between organizations responsible for protecting Canadians from cybercrime.
The Royal Canadian Mounted Police (RCMP) has notably experienced delays in implementing its National Cybercrime Solution. As of January 2024, nearly 30% of positions across all teams were vacant.
In a third report, Ms. Hogan also reveals that there were significant failures in the governance and management of public funds provided by Sustainable Development Technology Canada.