McKinsey contracts show Trudeau ignored concerns on ‘broken’ procurement system

Federal procurement does not hand out contracts in a fair and accountable manner, said Alexander Jeglic, the Procurement Ombudsman.

Jeglic told the Senate National Finance Committee on Tuesday that a litany of government contracts are ripe with sweetheart dealings, which is characteristic of a “broken system.”

Following a plethora of contract reviews, including those given to McKinsey & Company, he told Senators “it’s time to replace the car.”

Earlier this year, the Ombudsman audited McKinsey contracts worth $117 million, collectively. 

His audit followed an April 15 report, Procurement Practice Review Of Contracts Awarded To McKinsey & Company, revealing departments bent rules to benefit the consulting practice. “There was favouritism towards McKinsey,” Jeglic said at the time.

In April, Auditor General, Karen Hogan, presented evidence of “favouritism” in awarding millions to McKinsey in federal contracts. In particular, it revealed suspicious ties between a former executive and Chrystia Freeland, the Finance Minister.

Hogan counted 97 contracts for McKinsey, totalling $200.4 million. Their value started increasing in 2018, with further increases observed through 2022.

Dominic Barton, McKinsey’s former managing director, previously testified that he dined at Freeland’s Toronto home, and personally introduced Prime Minister Justin Trudeau to businesspeople at the 2016 World Economic Forum.

The Prime Minister appointed Barton as ambassador to Beijing in 2019. “I think he respects me,” said Barton.

Ombudsman Jeglic testified that McKinsey’s preferential treatment was symptomatic of a “broken system” that identifies many of the same problems “year after year, report after report.” 

“To put it plainly, the federal procurement system requires urgent reform,” Jeglic said. “The Canadian system is kind of near the bottom tier,” he added.

Only 28 McKinsey's contracts were awarded through a competitive process, Blacklock’s previously reported. Public Services and Procurement Canada (PSPC) never explained its decision not to entertain a competitive process.

The Procurement Ombudsman previously urged “significant rethinking” on federal contracts moving forward, reported Blacklock’s. 

These contracts often lack a “clear statement of what the contract delivered” and “no confirmation the government received all expected deliverables,” Auditor Hogan said in April. Ombudsman Jeglic was the first to allege the contract irregularities.

On August 16, 2022, Employment and Social Development Canada (ESDC) formalized a non-competitive contract worth $5.7 million to McKinsey and Company. It was a call-up against a Public Services and Procurement Canada (PSPC) procurement tool.

Former PSPC minister Filomena Tassi signed off on the contract against the recommendation of department staff. Her tenure ended two weeks later.

“Given circumstances combined with the absence of any documentation on file to otherwise support the legitimacy of this decision,” said Auditor Hogan, “efforts … to ensure McKinsey could participate [created] a strong perception of favouritism.”

Annual contracts, approved by the Department of Public Works, amount to roughly $25 billion in value.

Alex Dhaliwal

Calgary Based Journalist

Alex Dhaliwal is a Political Science graduate from the University of Calgary. He has actively written on relevant Canadian issues with several prominent interviews under his belt.