Federal procurement watchdog finds ‘perception of favoritism’ toward McKinsey

18 April 2024 Consulting.ca 2 min. read
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A March report from Alexander Jeglic, Canada’s procurement ombudsman, found a “strong perception of favoritism” in its awarding of contracts to consulting firm McKinsey & Company.

The ombudsman examined federal government contracts awarded to McKinsey between April 2011 and March 2023. Jeglic says McKinsey won dozens of contracts worth $117 million in the time period, with significant increases observed between 2019 and 2022.

Many management consultants, including large players like McKinsey and Deloitte, won a large amount of contracts helping governments manage the Covid-19 pandemic, including healthcare response, loan programs, and unemployment programs.

Federal procurement watchdog finds ‘perception of favoritism’ toward McKinsey

Previous CBC News reporting found McKinsey has won over $100-million in consulting contracts since the Liberals took office in 2015. The prior Conservative government under Stephen Harper spent a comparatively paltry $2.2 million on contracts with the New York-headquartered management consultancy.

Jeglic’s report states most of the McKinsey contracts were of the sole-sourced and standing offer variety – meaning the government and contractor made an agreement to provide services under pre-established prices and the government could then make “call-up” contracts for further projects.

Although Public Services and Procurement Canada’s standing offer for McKinsey was sole-sourced, Jeglic says the PSPC’s sole-source justification documents did not contain the required information to justify the non-competitive process.

Furthermore, most of the call-up documents did not have any description of the requirement-specific work that would be performed by McKinsey.

Jeglic also found issues with some of the competitive contracts McKinsey won, citing two cases where the procurement process was altered to enable a McKinsey bid where the consulting firm would not have otherwise qualified.

The procurement ombudsman highlighted that a “general deficiency of documentation is an ongoing area of concern” in government procurement.

In February, Auditor General Karen Hogan submitted her report on the ArriveCan application, saying the cost overrun of the nearly $60-million project were the result of an overreliance on third-party contractors.