A former Liberal procurement minister ignored the advice of her department to approve a costly $5.7 million contract to consulting firm McKinsey and Company.

On August 16, 2022, Employment and Social Development Canada (ESDC) formalized a non-competitive contract worth $5,742,857.53 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.

“To approve the contracts, PSPC had the Minister of Procurement personally sign off on this $5.7 million contract, is that correct?” asked Conservative MP Stephanie Kusie. “Yes,” replied Procurement Ombudsman Alexander Jeglic.

“Which minister signed off on this contract?” pressed the member of Parliament. “Minister [Filomena] Tassi,” he replied.

CORRUPTION: A $5.7 million dollar McKinsey contract that did not meet the proper requirements was personally approved by Liberal MP Filomena Tasse when she was the Minister of Procurement.

She overrode her officials, who told her the contract did not pass the sniff test. pic.twitter.com/PqJomkfdBr

— Sheila Gunn Reid (@SheilaGunnReid) April 29, 2024

“Is it standard practice for a minister to approve a contract that their own officials challenge?” asked MP Kusie. 

“In this circumstance, we did look for the rationale as to why the minister signed off on this specific contract,” replied Jeglic. “There is an internal delegation instrument within the department associated with the dollar value of the contract, requiring minister approval.”

The Commons government operations committee previously ordered an investigation after uncovering “a strong perception of favouritism” in McKinsey contracts, reported Blacklock’s Reporter.

Dominic Barton, McKinsey’s former managing director, testified last year he had dined at Deputy Prime Minister Chrystia Freeland’s Toronto home. “She actually convened for dinner at her house,” said Barton.

Ombudsman Jeglic reviewed dozens of contracts in excess of $10,000, from April 2011 to March 2023. Their collective worth is $117 million. 

"The value of contracts awarded to McKinsey started to increase in 2018 with significant increases observed in 2019 through 2022," reads the April 15 report Procurement Practice Review Of Contracts Awarded To McKinsey & Company.

Except for the EDSC contract, the federal government suffered from “significant” irregularities that could not adequately justify their McKinsey contracts.

“Without documentation to support contract award decisions, departments cannot demonstrate that the contracting process was compliant with applicable legislation and policy,” wrote the Ombudsman.

“The Procurement Ombudsman found the government actually bent the rules to favour McKinsey,” MP Kusie earlier told the committee. “Once again we see this Liberal government favouring its friends and insiders,” she said.

“PSPC has established standing offers and supply arrangements to enable federal departments to award contracts to pre-qualified suppliers using a streamlined process,” reads the report. A standing offer is a non-binding agreement.

Rather than use a supply method to determine which pre-qualified supplier would provide the required services to ESDC, the contract was awarded through a non-competitive process. 

“The required exemptions were not sought and obtained from PSPC,” reads Procurement Practice.

The only contract that received a justification was challenged by PSPC, MP Kusie told the committee on Monday. “I believe the term they used specifically was ‘take issue’ because it was not accurate and did not justify the exception,” she said.

“Did ESDC respond with the proper justification, or did they maintain their original justification?” she asked. 

“The justification that's cited in the report is the only one we saw in the report,” replied Ombudsman Jeglic. “It provided inadequate justification in our view.”

According to the report, McKinsey was “not a qualified supplier” and would not have been awarded [non-competitive] contracts.”

“Can you think of a justification that would be legitimate to personally override their officials?” inquired MP Kusie. “The implication of any political actor in the procurement process is not ideal,” he replied. “It puts the political actor in a difficult position.”

“That being said, the signature was provided on the recommendation, and it was in line with the required delegations within the department. Beyond that, we have no additional insight.”