Government organizations frequently disregarded federal contracting and procurement rules when awarding contracts to consulting firm McKinsey & Company, the auditor general concluded in a report released Tuesday.
At the request of the House of Commons, auditor general Karen Hogan probed 97 contracts awarded to McKinsey between 2011 and 2023, with a total value of $209 million.
Federal contracts with McKinsey came under scrutiny last year after media reports highlighted the rapid growth of the company’s work under Prime Minister Justin Trudeau’s Liberal government.
The audit found nine out of 10 departments and agencies, as well as eight out of 10 Crown corporations, failed to follow all aspects of their own procurement policies and guidelines on at least one contract.
Organizations also didn’t justify the reason contracts were awarded without a competitive process for 18 out of 19 contracts that went directly to the consulting firm, the auditor found.
The government may not be getting value for its money, the auditor flagged, noting that in a sample of 33 contracts, the cost was not estimated in advance for 30 of them.
She offered one recommendation on strengthening conflict-of-interest rules, but otherwise said government organizations should adopt recommendations she’s made previously to strengthen procurement practices. The federal government accepted the recommendation.
“While this audit focuses 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,” said Hogan in a news release.
The federal funds that went to McKinsey amount to only 0.27 per cent of the total amount spent on consultants for similar services, the auditor said.
In a statement, Procurement Minister Jean-Yves Duclos highlighted some of the steps the government has taken to strengthen its contracting processes, including increasing scrutiny on contracts awarded as part of a non-competitive process.
The Treasury Board released a report last year that reviewed contracts awarded to McKinsey.
The departmental audits found no evidence of political interference and no evidence that the integrity of the procurement process was not maintained, the Treasury Board’s final report said last year.
But they did find some administrative requirements and procedures were not consistently followed.
In a separate audit released Tuesday, Hogan found an arm’s-length foundation that’s supposed to award funds to develop new climate-change technology handed out money for ineligible projects.
Of the 58 Sustainable Development Technology Canada projects the auditor looked at, 10 were ineligible but got funding anyway. Those 10 projects received a total of $59 million.
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