Editorial | McKinsey, the tip of the iceberg

Is Canada getting value for its money when it comes to awarding contracts to private firms? After the Auditor General of Canada’s analysis on the consulting firm McKinsey & Company revealed widespread incompetence and laziness within many federal ministries, agencies, and Crown corporations, it seems the answer is no. The use of resources is far from optimal, and Canada is disregarding its own contract awarding rules.

The report released last week by Auditor Karen Hogan is alarming. In a federal government where the public service continues to grow, citizens are left wondering why they are paying twice: once to private companies and once to the government! If ministries and federal agencies need to use the professional services of private firms to assist in resource management, good governance rules require that the need be clearly established, contract awarding rules be followed, and money be spent for intended purposes.

After examining the contractual links between the American firm McKinsey & Company and the federal government, Karen Hogan concludes that there are frequent violations of these basic rules. Furthermore, there is no evidence to suggest that this non-compliance with policies is not widespread across all contracts. With McKinsey receiving $209 million in contracts between 2011 and 2023, accounting for only 0.27% of the total amount paid to all service providers, it seems this is just the tip of the iceberg.

This report sheds light on the laziness of federal agencies and ministries, which have sometimes tailored the rules to suit McKinsey. Necessary justifications for tender calls were not always present. Evaluations to support the choice of McKinsey were not always convincing. Professional service allocation policies were not always followed.

The Auditor made only one recommendation at the end of the report, focusing on conflicts of interest. She urges the targeted organizations to implement the suggestions outlined in other internal reviews, including those from the Office of the Comptroller General of Canada, five of the ten Crown corporations, and the Office of the Procurement Ombudsman. The federal government’s actions in public finance management have been characterized by laziness, as it seems to neither follow its own rules nor comply with the requirements imposed on it. Reports repeatedly highlight this issue, yet nothing changes.

McKinsey has attracted a lot of attention as its services have significantly increased under Justin Trudeau’s administration. The former head of the firm, Dominic Barton, had to establish his lack of privileged links with the Prime Minister. Like the Treasury Board concluded before her, the Auditor did not detect political interference in the McKinsey case.

In addition to the federal government’s negligence in managing private contracts, it is concerning that 110,000 employees have been added to federal ministries and agencies since Justin Trudeau came into power in 2015. This marks a 42% increase, according to Treasury Board data published by La Presse in early May. The Parliamentary Budget Officer expressed surprise at the “continuous and sustained increase in the size of the public service” and the rise in personnel expenses. Meanwhile, the use of professional and special services has reached a “record level of $21.6 billion,” noted in the Supplementary Estimates for 2023-2024. Both spending categories are on the rise, yet effective services to citizens and government productivity do not make headlines.

Are we getting value for our money? If the answer was yes, there wouldn’t be scandals like We Charity and ArriveCAN, or federal administrative failures constantly reported by the media, putting citizens in unacceptable positions despite the proliferation of federal employees meant to provide essential services. Spending does not guarantee efficiency. Auditor Karen Hogan’s audit provides enough material for Justin Trudeau’s Liberals to review their internal management practices and adhere to their own policies. Effective public finance management seems to bore this government to the point of flouting the rules, but voters have the right to expect optimized use of the public funds they contribute to.

This text is part of our Opinion section. It is an editorial and, as such, reflects the values and position of Le Devoir as defined by its editor in collaboration with the editorial team.