2024 Reports 5 to 7 of the Auditor General of Canada to the Parliament of Canada
Report 5—Professional Services Contracts
At a Glance
Between 2011 and 2023, 10 federal departments and agencies, and 10 Crown corporations awarded 97 contracts to McKinsey & Company for professional services that included benchmarking, management consulting, and information technology consulting. The value of these contracts was $209 million, and $200 million was spent.
Overall, 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. The extent of non‑compliance varied across organizations. However, 9 out of 10 departments and agencies and 8 out of 10 Crown corporations failed to properly follow all aspects of their procurement policies and guidance on at least 1 contract.
In 10 of the 28 contracts that were awarded through a competitive process, we found that bid evaluations did not include enough information to support the selection of McKinsey & Company as the winning bidder. In addition, in 18 of the 19 contracts issued under the national master standing offer with McKinsey & Company, organizations did not provide the required justification for using a non‑competitive process. We also found 4 series of contracts where, after awarding an initial contract to McKinsey & Company with no competition, organizations subsequently awarded additional non‑competitive contracts for related work. For 4 other series, only the initial contract was awarded competitively. In total, these 8 series represent 30 contracts with a total value of approximately $58 million.
In 19 of the 33 contracts included in our representative sample, we found one or more issues that prevented organizations from demonstrating that the contracts had delivered value for the money. The risks to value for money varied across federal organizations, and issues included a failure to show why a contract was necessary, no clear statement of what the contract would deliver, or no confirmation that the government received all expected deliverables.
As the central purchasing and contracting agent and subject matter expert for the Government of Canada, Public Services and Procurement Canada did not challenge federal organizations when awarding some contracts on their behalf. For example, in instances where multiple contracts were awarded on behalf of the same organization to the same vendor for a similar purpose and within a short period of time, Public Services and Procurement Canada did not challenge the organization requesting the contract about whether the procurement strategy used was appropriate.
While this audit focused on contracts awarded to McKinsey & Company, it highlights basic requirements and good practices that all federal organizations should follow when procuring professional services on behalf of the Government of Canada. Federal contracting and procurement policies exist to ensure fairness, transparency, and value for Canadians—but they only work if they are followed.
Key facts and findings
- In January 2023, the House of Commons Standing Committee on Government Operations and Estimates requested the Auditor General of Canada to conduct a performance and value-for-money audit of the contracts awarded to McKinsey & Company since 1 January 2011 by any department, agency, or Crown corporation. The House of Commons unanimously passed a motion to move forward with this request on 7 February 2023.
- This report provides a single recommendation on conflicts of interest. In other areas, our audit confirms gaps and weaknesses that have been raised in other internal and external reviews of government procurement processes. Rather than repeat recommendations, we encourage departments, agencies, and Crown corporations to implement the recommendations resulting from these previous audits and reviews.
- About 70% of the 97 contracts, representing a total maximum contract value of approximately $118 million, were awarded to McKinsey & Company as non‑competitive contracts.
- In 4 of 28 competitive contracts, the procurement strategy appeared to be designed and implemented to suit McKinsey & Company.
- For 13 out of 17 contracts with security requirements, departments and agencies were not able to demonstrate whether all the individual consultants had the required security clearance to work on their contracts.
- We found that organizations did not receive all deliverables listed in the contracts for 6 (18%) out of 33 contracts. For 5 other contracts, we found that the statement of work was not specific enough for us to assess whether what was delivered was consistent with the contract requirements.
Why we did this audit
- The federal public sector spends billions of dollars of public funds on contracting each year.
- Following procedures increases the probability that needed services will be delivered effectively while providing value for money.
- Procurement policies are intended to ensure that contracts are awarded in a manner that demonstrates fairness, openness, transparency, sound stewardship, and value for money.
- Federal organizations need to ensure that public funds are spent with due regard for value for money, including in decisions about the procurement of professional services contracts.
Recommendation
- To effectively monitor and ensure that officials involved in the procurement process do not have conflicts of interest, all federal organizations that have not already done so should implement a proactive process to identify actual or perceived conflicts of interest in the procurement process and should retain the result of such a process and completed conflict-of-interest declarations in the procurement file.
Please see the full report to read our complete findings, analysis, recommendation and the audited organizations’ responses.
Exhibit highlights
Departments, agencies, and Crown corporations awarded 97 contracts to McKinsey & Company from 1 January 2011 to 7 February 2023
Departments and agencies
| Organization | Value of awarded contracts (before taxes) | Total amount spent (before taxes) as of 30 September 2023 | Total number of contracts | Number of competitive contracts | Number of non‑competitive contracts |
|---|---|---|---|---|---|
|
Canada Border Services Agency |
$6,256,671 |
$4,337,610 |
4 |
3 |
1 |
|
Employment and Social Development Canada |
$5,775,290 |
$5,775,290 |
4 |
0 |
4 |
|
Department of Finance Canada |
$657,522 |
$642,431 |
1 |
1 |
0 |
|
Immigration, Refugees and Citizenship Canada |
$24,548,250 |
$24,536,693 |
2 |
2 |
0 |
|
Innovation, Science and Economic Development Canada |
$3,398,670 |
$3,398,670 |
3 |
3 |
0 |
|
National Defence |
$25,799,500 |
$23,637,000 |
15 |
2 |
13 |
|
Natural Resources Canada |
$797,000 |
$797,000 |
2 |
1 |
1 |
|
Privy Council Office |
$21,900 |
$21,900 |
1 |
0 |
1 |
|
Public Services and Procurement Canada |
$26,234,625 |
$26,234,625 |
3 |
1 |
2 |
|
Veterans Affairs Canada |
$22,000 |
$22,000 |
1 |
0 |
1 |
|
Subtotal |
$93,511,428 |
$89,403,219 |
36 |
13 |
23 |
Crown corporations
| Organization | Value of awarded contracts (before taxes) | Total amount spent (before taxes) as of 30 September 2023 | Total number of contracts | Number of competitive contracts | Number of non‑competitive contracts |
|---|---|---|---|---|---|
|
Atomic Energy of Canada Limited |
$540,000 |
$540,000 |
1 |
0 |
1 |
|
Bank of Canada |
$150,000 |
$150,000 |
1 |
0 |
1 |
|
Business Development Bank of Canada |
$21,838,000 |
$20,960,701 |
11 |
5 |
6 |
|
Canada Development Investment Corporation |
$1,350,000 |
$1,350,000 |
1 |
1 |
0 |
|
Canada Infrastructure Bank |
$1,720,000 |
$1,430,000 |
3 |
2 |
1 |
|
Canada Post |
$26,630,813 |
$26,630,813 |
14 |
5 |
9 |
|
Destination Canada |
$2,795,000 |
$2,795,000 |
1 |
1 |
0 |
|
Export Development Canada |
$12,366,761 |
$12,326,000 |
10 |
1 |
9 |
|
Public Sector Pension Investment Board |
$14,908,520 |
$12,484,183 |
18 |
0 |
18 |
|
Trans Mountain Corporation |
$32,900,000 |
$32,213,000 |
1 |
0 |
1 |
|
Subtotal |
$115,199,094 |
$110,879,697 |
61 |
15 |
46 |
|
Total |
$208,710,522 |
$200,282,916 |
97 |
28 |
69 |
Spending by departments and agencies on contracts awarded to all professional service providers *
* The data comprises only categories that included contracts awarded to McKinsey & Company: health and welfare services, informatics services, management consulting, scientific and research services, temporary help services, and other services.
Source: Public Accounts of Canada information, which includes only departments and agencies. It does not include Crown corporations.
Text version
This exhibit shows the spending in billions of dollars by departments and agencies on contracts awarded to all professional service providers for 12 fiscal years from 2011–12 to 2022–23. The data comprises only categories that included contracts awarded to McKinsey & Company: health and welfare services, informatics services, management consulting, scientific and research services, temporary help services, and other services.
Overall, spending was steady at about 4.6 billion dollars from the 2011–12 fiscal year until the 2015–16 fiscal year, when spending started to increase. It reached 8.4 billion dollars in the 2021–22 fiscal year and then decreased to 8.3 billion dollars in 2022–23.
- In the 2011–12 fiscal year, departments and agencies spent $4,891,249,690 on professional services contracts.
- In the 2012–13 fiscal year, departments and agencies spent $4,513,735,896 on professional services contracts.
- In the 2013–14 fiscal year, departments and agencies spent $4,627,925,618 on professional services contracts.
- In the 2014–15 fiscal year, departments and agencies spent $4,639,706,616 on professional services contracts.
- In the 2015–16 fiscal year, departments and agencies spent $4,518,955,624 on professional services contracts.
- In the 2016–17 fiscal year, departments and agencies spent $4,909,160,856 on professional services contracts.
- In the 2017–18 fiscal year, departments and agencies spent $5,094,232,989 on professional services contracts.
- In the 2018–19 fiscal year, departments and agencies spent $5,525,569,877 on professional services contracts.
- In the 2019–20 fiscal year, departments and agencies spent $5,966,705,116 on professional services contracts.
- In the 2020–21 fiscal year, departments and agencies spent $6,643,298,128 on professional services contracts.
- In the 2021–22 fiscal year, departments and agencies spent $8,411,135,985 on professional services contracts.
- In the 2022–23 fiscal year, departments and agencies spent $8,316,502,952 on professional services contracts.
Spending by departments and agencies and spending by departments, agencies, and Crown corporations on contracts awarded to McKinsey & Company
Source: Public Accounts of Canada information for spending by departments and agencies and our office for spending by Crown corporations
Text version
This exhibit compares the spending in millions of dollars on contracts awarded to McKinsey & Company for 12 fiscal years from the 2011–12 fiscal year to the 2022–23 fiscal year. The comparison is of spending by departments and agencies with spending by departments, agencies, and Crown corporations.
Overall, the spending by departments and agencies and by departments, agencies, and Crown corporations increased from the 2017–18 fiscal year to the 2022–23 fiscal year, with the highest amounts spent in the 2021–22 fiscal year. The spending by departments and agencies increased from 642 thousand dollars in the 2011–12 fiscal year to a high of 32.5 million dollars in the 2021–22 fiscal year and then decreased to 19.6 million dollars in the 2022–23 fiscal year. In comparison, the spending by departments, agencies, and Crown corporations increased from 817 thousand dollars in the 2011–12 fiscal year to a high of 55.1 million dollars in the 2021–22 fiscal year and then decreased to about 46.8 million in the 2022–23 fiscal year.
Spending by departments and agencies per fiscal year:
- In the 2011–12 fiscal year, departments and agencies spent $642,431 on contracts awarded to McKinsey & Company.
- In the 2012–13 fiscal year, departments and agencies spent $1,093,584 on contracts awarded to McKinsey & Company.
- In the 2013–14 fiscal year, departments and agencies spent $500,000 on contracts awarded to McKinsey & Company.
- In the 2014–15 fiscal year, departments and agencies spent no money on contracts awarded to McKinsey & Company.
- In the 2015–16 fiscal year, departments and agencies spent no money on contracts awarded to McKinsey & Company.
- In the 2016–17 fiscal year, departments and agencies spent $1,769,910 on contracts awarded to McKinsey & Company.
- In the 2017–18 fiscal year, departments and agencies spent $1,953,000 on contracts awarded to McKinsey & Company.
- In the 2018–19 fiscal year, departments and agencies spent $3,389,700 on contracts awarded to McKinsey & Company.
- In the 2019–20 fiscal year, departments and agencies spent $9,327,880 on contracts awarded to McKinsey & Company.
- In the 2020–21 fiscal year, departments and agencies spent $17,184,670 on contracts awarded to McKinsey & Company.
- In the 2021–22 fiscal year, departments and agencies spent $32,534,706 on contracts awarded to McKinsey & Company.
- In the 2022–23 fiscal year, departments and agencies spent $19,569,875 on contracts awarded to McKinsey & Company.
Spending by departments, agencies, and Crown corporations per fiscal year:
- In the 2011–12 fiscal year, departments, agencies, and Crown corporations spent $817,431 on contracts awarded to McKinsey & Company.
- In the 2012–13 fiscal year, departments, agencies, and Crown corporations spent $2,831,940 on contracts awarded to McKinsey & Company.
- In the 2013–14 fiscal year, departments, agencies, and Crown corporations spent $2,912,972 on contracts awarded to McKinsey & Company.
- In the 2014–15 fiscal year, departments, agencies, and Crown corporations spent $2,028,968 on contracts awarded to McKinsey & Company.
- In the 2015–16 fiscal year, departments, agencies, and Crown corporations spent $9,476,420 on contracts awarded to McKinsey & Company.
- In the 2016–17 fiscal year, departments, agencies, and Crown corporations spent $2,604,757 on contracts awarded to McKinsey & Company.
- In the 2017–18 fiscal year, departments, agencies, and Crown corporations spent $3,338,000 on contracts awarded to McKinsey & Company.
- In the 2018–19 fiscal year, departments, agencies, and Crown corporations spent $8,604,933 on contracts awarded to McKinsey & Company.
- In the 2019–20 fiscal year, departments, agencies, and Crown corporations spent $16,479,772 on contracts awarded to McKinsey & Company.
- In the 2020–21 fiscal year, departments, agencies, and Crown corporations spent $31,485,962 on contracts awarded to McKinsey & Company.
- In the 2021–22 fiscal year, departments, agencies, and Crown corporations spent $55,069,526 on contracts awarded to McKinsey & Company.
- In the 2022–23 fiscal year, departments, agencies, and Crown corporations spent $46,779,382 on contracts awarded to McKinsey & Company.
Several organizations awarded chains of non‑competitive contracts
Departments and agencies
| Organization | Value of original competitive contract (before taxes) | Value of original non‑competitive contract (before taxes) | Approximate total value of chain of contracts (before taxes) | Number of non‑competitive contracts following the initial contract | Time period |
|---|---|---|---|---|---|
|
Employment and Social Development Canada |
Not applicable |
$35,000 |
$5.8 million |
3 |
August 2020 to June 2022 |
|
National Defence |
Not applicable |
$22,000 |
$5.0 million |
3 |
August 2019 to February 2022 |
|
National Defence |
Not applicable |
$2.2 million |
$8.9 million |
3 |
August 2021 to March 2023 |
|
National Defence |
Not applicable |
$1.4 million |
$9.1 million |
2 |
August 2021 to April 2023 |
|
Subtotal |
Not applicable |
$3.7 million |
$28.8 million |
11 |
Not applicable |
Crown corporations
| Organization | Value of original competitive contract (before taxes) | Value of original non‑competitive contract (before taxes) | Approximate total value of chain of contracts (before taxes) | Number of non‑competitive contracts following the initial contract | Time period |
|---|---|---|---|---|---|
|
Business Development Bank of Canada |
$2.1 million |
Not applicable |
$2.7 million |
1 |
November 2018 to April 2019 |
|
Business Development Bank of Canada |
$2.8 million |
Not applicable |
$5.7 million |
1 |
August 2021 to September 2022 |
|
Canada Post |
$3.7 million |
Not applicable |
$16.5 million |
7 |
January 2020 to July 2022 |
|
Export Development Canada |
$2.0 million |
Not applicable |
$4.2 million |
2 |
August 2020 to April 2021 |
|
Subtotal |
$10.6 million |
Not applicable |
$29.1 million |
11 |
Not applicable |
|
Total |
$10.6 million |
$3.7 million |
$57.9 million |
22 |
Not applicable |
Related information
Entities
- Atomic Energy of Canada Limited
- Bank of Canada
- Business Development Bank of Canada
- Canada Border Services Agency
- Canada Development Investment Corporation
- Canada Infrastructure Bank
- Canada Post Corporation
- Destination Canada
- Employment and Social Development Canada
- Export Development Canada
- Finance Canada
- Immigration, Refugees and Citizenship Canada
- Innovation, Science and Economic Development Canada
- National Defence
- Natural Resources Canada
- Privy Council Office
- Public Sector Pension Investment Board
- Public Services and Procurement Canada
- Trans Mountain Corporation
- Treasury Board of Canada Secretariat
- Veterans Affairs Canada
Tabling date
- 4 June 2024
Related audits
- 2024 Reports of the Auditor General of Canada to the Parliament of Canada
Report 1—ArriveCAN
Parliamentary hearings