Government organizations showed “frequent disregard” for federal contracting and procurement rules when awarding contracts to consulting firm McKinsey & Company, the auditor general concluded in a report released Tuesday.
At the request of the House of Commons, auditor general Karen Hogan probed 97 contracts awarded to McKinsey between 2011 and 2023, with a total value of $209 million.
“These contracts spanned 20 federal organizations, including 10 Crown corporations. The total value of contracts awarded to McKinsey & Company during the period we reviewed totaled $209 million, of which about $200 million was spent,” Hogan said while tabling the report.
She added, “We found that organizations awarding the contracts showed a frequent disregard for federal contracting and procurement policies and guidance.”
Public Services and Procurement Minister Jean-Yves Duclos said the federal government was already putting in place many of the AG’s recommendations.
“We have created a new position of chief contract quality assurance and Records Compliance office. That action will ensure that critical elements of decision making throughout the procurement process are properly documented, that guidelines and tools are put in place and that quality is being actively monitored,” he said.
Duclos said they “expect public service and all departments to operate at the higher standard and prioritize value for money for Canadians.”
Federal contracts with McKinsey came under scrutiny last year after media reports highlighted the rapid growth of the company’s work under Prime Minister Justin Trudeau’s Liberal government.
The audit found nine out of 10 departments and agencies, as well as eight out of 10 Crown corporations, failed to follow all aspects of their own procurement policies and guidelines on at least one contract.
Organizations also didn’t justify the reason contracts were awarded without a competitive process for 18 out of 19 contracts that went directly to the consulting firm, the auditor found.
The government may not be getting value for its money, the auditor flagged, noting that in a sample of 33 contracts, the cost was not estimated in advance for 30 of those contracts.
She offered one recommendation on strengthening conflict-of-interest rules, but otherwise said government organizations should adopt recommendations she’s made previously to strengthen procurement practices. The federal government accepted the recommendation.
“While this audit focuses on contracts awarded to McKinsey & Company, it highlights basic requirements and good practices that all federal organizations should follow when procuring professional services on behalf of the Government of Canada,” said Hogan in a news release.
The federal funds that went to McKinsey amounts to only 0.27 per cent of the total amount spend on consultants for similar services, the auditor said.
In a statement, Procurement Minister Jean-Yves Duclos highlighted some of the steps the government has taken to strengthen its contracting processes, including increasing scrutiny on contracts awarded as part of a non-competitive process.
The Treasury Board released a report last year that reviewed contracts awarded to McKinsey.
The departmental audits found no evidence of political interference and no evidence that the integrity of the procurement process was not maintained, the Treasury Board’s final report said last year.
But they did find some administrative requirements and procedures were not consistently followed.
–With files from Canadian Press