Opposition parties call on Auditor-General to investigate McKinsey outsourcing contracts

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The three main opposition parties are calling on Auditor-General Karen Hogan to investigate the Liberal government’s relationship with McKinsey and Company after The Globe and Mail reported a sharp rise in federal outsourcing contracts to the global consulting firm.

Conservative MPs John Brassard and Pierre Paul-Hus sent the formal request in writing Tuesday and NDP and Bloc Québécois MPs say they are supportive of the Official Opposition’s proposal to the Auditor-General.

Federal spending on outsourcing contracts with McKinsey rose from nearly zero in the final years of the former Conservative government to $17.2-million during the 2020-21 fiscal year.

That figure is likely to be even higher for the current fiscal year, based on recent contract announcements, including a decision to increase the value of a contract to help fix the government’s Phoenix payroll system to $27.7-million from $4.9-million.

Ottawa turns to consulting firm McKinsey to fix Phoenix pay system, doubling spending

The Globe also reported this week that federal spending on outsourcing contracts in the category of professional and special services increased by more than 40 per cent since the Liberals formed government in 2015, reaching $11.8-billion in the previous fiscal year. The Liberal Party’s 2015 platform promised to cut back on the use of external consultants.

As the use of outsourcing increased, so too did the size of the federal public service. It grew from 257,034 to 319,601 between 2015 and 2021, a 24-per-cent rise.

In their letter, the two Conservative MPs state that “there are several close ties between McKinsey and the Trudeau government,” including that in the early years of the Liberal government, Dominic Barton served as both chair of a federal advisory council on economic growth while also leading McKinsey. The letter highlights the fact that Prime Minister Justin Trudeau’s former head of policy, Mike McNair, joined McKinsey as an associate partner in 2021.

The company said in a statement this week that Mr. McNair was not involved in the awarding of any McKinsey contracts during his time in government.

The Conservative letter says the Auditor-General should review whether any safeguards are in place related to the role of political staff in outsourcing decisions.

“When the companies which are receiving the contracts are like McKinsey, tightly tied to the Trudeau Liberals, it raises important questions that need to be addressed,” the letter states. “Does the government have in place an appropriate mechanism to prevent political staffers from directing money to McKinsey or similar friendly firms?

“Is the government getting good value for money with the skyrocketing spending on contractor work? Are taxpayers interests being served by this spending?”

NDP MP Gord Johns said in an interview that his party supports asking the Auditor-General to review federal outsourcing. Mr. Johns said the NDP is also preparing a letter to Treasury Board President Mona Fortier, asking the government to look into the NDP’s concerns.

Mr. Johns noted that one of the McKinsey contracts was to help fix the government’s problem-plagued Phoenix payroll system, which itself is based on work outsourced to the private sector. Mr. Johns said unionized public servants should be able to do most of the work that is being outsourced.

“The inefficiency of the government’s spending is costing a fortune,” he said. “The federal government really should be able to pay their employees and operate effectively without needing to spend taxpayers’ dollars on expensive consulting firms. So I guess the question is: What’s going on here and why can’t they manage their own affairs?”

Bloc MP Julie Vignola said that in addition to asking the Auditor-General for a review, she’d like to see a House of Commons committee look deeper into outsourcing issues when sittings resume later this month.

“I cannot believe that there is no one in the federal public service who could do this work,” she said. “If we don’t rely on our public service, we’ll lose their expertise and we are wasting their talents. It’s completely unacceptable.”

When asked to respond to the opposition’s concerns, Isabella Brisson, a spokesperson for Ms. Fortier, said in an e-mail that the government is committed to providing high-quality services to Canadians while ensuring best value for taxpayers, “which is why contracts are issued in a fair way in accordance with Treasury Board policies.”

Former parliamentary budget officer Kevin Page said the growth in federal outsourcing raises several questions that warrant a formal review.

“The government is committed to policy reviews. We should add outsourcing to the list,” he said.

Mr. Page is currently the founding president and CEO of the Institute of Fiscal Studies and Democracy at the University of Ottawa. Prior to his time as PBO, he was a senior federal government official.

“As a former public servant, I often thought the use of outsourcing undermined the capacity of the public service,” he said, in reference to contracts related to IT support or policy advice.

“As an outsider, and someone who will compete for government contracts [on behalf of the university], I do think there are some policy and operation files where the current capacity of the public service may not be deemed sufficient to bring about timely change. The policy review can explore this balance.”

Scotiabank economist Rebekah Young, who is director of fiscal and provincial economics, noted there was a time when federal governments regularly launched internal spending reviews to determine whether any existing spending could be cut or shifted to new priorities.

“As we get to the other side of the pandemic, the government should carefully examine its expenditures in a way that looks through the current economic cycle – and health crisis – with a view to underpinning longer term priorities,” she said in an e-mail Tuesday.

“It has been almost a decade since the federal government has undertaken an extensive expenditure review. Done in the right way and at the right time, these exercises can be growth-enhancing if they redirect resources towards higher priorities with stronger outcomes and greater accountabilities. It may be time to dust off this playbook.”

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