Internal audits of McKinsey federal contracts raise fairness concerns

30 March 2023 3 min. read
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Internal audits released on Friday pertaining to McKinsey & Company’s federal government contracts raised concerns about fairness, transparency, and conflict of interest, but no conclusive evidence of political interference.

“Based on TBS’ preliminary observations of audit results from departments, the audits reveal no evidence of political interference, and broad compliance with values and ethics commitments,” said Mona Fortier, president of the Treasury Board Secretariat.

Fortier admitted, however, that “certain administrative requirements and procedures were not consistently followed.”

Internal audit reports from nine federal departments were released on Friday to a House of Commons committee on government operations, which is investigating spending on contracts with consultants including McKinsey, Accenture, and the Big Four accountancies. A final report from the government is expected on June 30, 2023.

The federal Liberal government has since 2015 awarded more than $100-million in consulting contracts to McKinsey. The previous Conservative government under Stephen Harper spent $2.2 million on contracts with the New York-headquartered management consultancy.

Internal audits of McKinsey federal contracts raise fairness concerns

Internal auditors at the Canada Border Services Agency found McKinsey was under consideration before a request-for-proposals was even initiated, highlighting questions of fairness. Management also could not produce evidence it monitored the performance of McKinsey contractors.

The Department of National Defense (DND) internal audit, meanwhile, found the department was only “partially compliant” with conflict of interest regulations, due to a lack of provided information. Several reservists were employed by McKinsey at the time of the department’s contracts, while three former DND or Canadian Forces members were employed at McKinsey.

The audit also found the DND failed to follow rules about pro-actively disclosing contracts with a value exceeding $10,000, and mislabeled non-competitive contracts as being competitive.

Opposition members of parliament have criticized the ballooning dollar value of consulting contracts with McKinsey and the Liberals’ close relationship with Dominic Barton, the firm’s former global head. Barton led McKinsey from 2009 to 2018 and was appointed Canada’s ambassador to China in 2019, stepping down in 2021. He also previously chaired an advisory council on economic growth for former finance minister Bill Morneau.

When called for questioning before the house committee in February, Barton denied having a close relationship with PM Justin Trudeau. Barton also said he had never been in a room alone with the prime minister and had never exercised with him.

Conservative critics have questioned the usefulness of internal audits from government departments in uncovering wrongdoing, instead asking for an investigation from the auditor general.

Auditor General Karen Hogan in late February said her office would investigate federal contracts awarded to McKinsey.

McKinsey this week initiated a rare round of layoffs, targeting 1,400 jobs primarily in non-client-facing roles.