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Federal government flouted rules when awarding McKinsey contracts: AG report

The Auditor General of Canada says the federal government flouted proper contracting policies and was unable to show it got value for money when awarding $209 million in contracts to consulting firm McKinsey & Company.

Auditor General Karen Hogan's audit couldn't determine if contracts delivered value for money

A sign which says "McKinsey & Company" in black on a grey background.

The Auditor General of Canada says the federal government flouted proper contracting policies and was unable to show it got value for money when awarding $209 million in contracts to consulting firm McKinsey & Company.

"Across the 97 contracts awarded to McKinsey & Company, we found frequent disregard for procurement policies and guidance and that contracting practices often did not demonstrate value for money," Auditor General Karen Hogan said in her spring report.

Hogan's office looked at all of the contracts awarded to the American consulting company by federal departments, agencies and Crown corporations between Jan. 1, 2011, and Feb. 7, 2023.

Last year, a Radio-Canada investigation found that the amount of money McKinsey & Company earns from federal contracts exploded since Prime Minister Justin Trudeau came to power.

The audit of those contracts by Hogan's office found that from 2011-12 until 2014-14, the company was awarded less than $5 million a year for professional services. That started rising in 2015-16, when it hit $10 million, before steadily increasing to more than $55 million a year by 2021-22.

When the audit strips out the contracts awarded by Crown corporations to focus solely on government departments and federal agencies, the value of contracts given to the U.S. consulting firm in 2021-22 is just above $32 million a year.

Fraction of government spending on contracting

While that number is still dramatically larger than what the company received before the Liberal government came to power, it represents a tiny fraction of the total spending on government contracting.

In 2015-16, when the Liberals came to office, federal agencies and departments awarded about $4.5 billion in professional service contracts, but by 2021-22 that had risen to more than $8.4 billion.

The audit says that nine out of 10 departments and agencies and eight out of 10 Crown corporations failed to properly follow proper procurement policies on at least one of the contracts they awarded.

The audit looked closely at a sample of 28 contracts and found that the bid evaluations did not properly support the reasoning for awarding them to McKinsey & Company for 10 of the contracts.

Hogan's office also looked at a sample of 33 contracts in an effort to determine whether the government got value for money. The audit found that in 19 of those contracts, there were issues preventing Hogan's office from working out whether the federal government got what it paid for.

The audit said issues preventing Hogan's office from determining whether the federal government got value for money include: a failure to show why a contract was necessary; no clear statement of what the contract would deliver; and a lack of confirmation the government received all expected deliverables.

"Federal contracting and procurement policies exist to ensure fairness, transparency and value for Canadians — but they only work if they are followed," Hogan said in a statement.

ABOUT THE AUTHOR

Peter Zimonjic

Senior writer

Peter Zimonjic is a senior writer for CBC News. He has worked as a reporter and columnist in London, England, for the Daily Mail, Sunday Times and Daily Telegraph and in Canada for Sun Media and the Ottawa Citizen. He is the author of Into The Darkness: An Account of 7/7, published by Random House.

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