Procurement Practice Review of Contracts Awarded to McKinsey & Company

Procurement strategies were changed to allow for McKinsey's participation in procurement processes

25. In general terms, a procurement strategy defines how a good, service, or construction will be procured and takes into consideration the contracting method to be used. Contracting methods include the use of a standing offer, a supply arrangement, a government-wide or multi-departmental contract, or a normal contract. Per the PSPC Supply Manual, the procurement strategy “must satisfy the client's operational requirements and comply with legal requirements, while achieving best value, and advancing national objectives.”

26. Of the 7 competitive contract files reviewed, 2 files showed that the procurement strategy was changed after it was discovered that McKinsey would have been ineligible to bid had the department issued the solicitation under the first method (i.e., supply arrangement) chosen. Without these changes, it would have been impossible for McKinsey to be awarded these 2 contracts.

1. For 1 CBSA file for Executive Transformation Services with an amended value of $1,796,700 – during the procurement planning process, the business owner (i.e., CBSA client) asked the CBSA Contracting Authority for a list of qualified suppliers on the supply arrangement they were planning to use. The client later noted that McKinsey was not on the supplier list and the Contracting Authority confirmed that this was because McKinsey was only pre-qualified under the TSPS solution-based supply arrangement – not the task-based supply arrangement. Shortly thereafter, the client notified the Contracting Authority that the Statement of Work (SOW) had been revised as a solution-based requirement rather than a task-based requirement, thereby permitting McKinsey the opportunity to bid. There was no documentation on file to explain why this change was made. The TSPS solution-based supply arrangement was used and McKinsey was selected for contract award as its bid was the only one received and it was deemed compliant.
2. For 1 ISED file for International Economic Analysis and Growth Studies with a value of $452,000 – prior to the issuance of a competitive request for proposal (RFP), ISED had considered issuing a contract directly to McKinsey using a process known as an Advance Contract Award Notice (ACAN). As part of ISED’s procurement governance process, the proposed contract was presented to an internal review board where ISED senior management challenged the ACAN approach. As a result, the procurement strategy shifted to a competitive solicitation process. The business owner (i.e., ISED client) and ISED Contracting Authority prepared the documents necessary to issue a competitive RFP to pre-qualified suppliers under the TSPS task-based supply arrangement. ISED contacted McKinsey to confirm which resource categories they were qualified under and provided them with a link to the TSPS task-based supply arrangement streams and categories listing for reference. In response, McKinsey confirmed that they were pre-qualified under the TSPS solution-based supply arrangement, but – not the task-based supply arrangement. Shortly thereafter, the client asked the Contracting Authority for assistance in “revising the evaluation grid given that McKinsey is registered on the TSPS Solutions-based Supply Arrangement…”. The RFP was then issued under the TSPS solution-based supply arrangement. Three bids were received and following the evaluation process, McKinsey was selected for contract award as its bid was the only one deemed compliant.

27. There can be legitimate reasons for changing a procurement strategy. For example, for the ISED contract cited above, the strategy initially changed from a non-competitive ACAN to a competitive process, thereby enhancing transparency and openness. More generally, a contracting authority may advise their client that the nature of the requirement is better suited for one procurement tool over another, leading to a change in the procurement strategy. However, in these CBSA and ISED procurements, after identifying a task-based approach as appropriate, the requirement was changed to accommodate a solution-based approach upon learning that McKinsey would not be eligible to participate in the procurement process. The difference between these two methods is significant. Each method covers a different scope of work and requires a different means of delivery. Task-based requirements are finite work assignments, with specific start and end dates and set deliverables. In contrast, solution-based requirements are not related to specific tasks. They are used when a department is unable to resolve a business problem and requires a solution from a supplier as to how to resolve the business problem from start to finish. Given these circumstances combined with the absence of any documentation on file to otherwise support the legitimacy of this decision, the efforts on the part of CBSA and ISED to ensure McKinsey could participate create a strong perception of favoritism. Though these procurements ultimately “fit” within the TSPS solution-based supply arrangement, these examples demonstrate the importance of robust controls and oversight of procurement as a process may appear to follow the applicable rules but not result in a process that was fair, open and transparent.

Centralized Professional Services System e-portal search results

28. When using the TSPS method of supply, the Contracting Authority is required to conduct an initial CPSS search using criteria based on the operational requirement (e.g., resource categories and security requirements) to identify a pool of potential suppliers that are qualified under the method. For procurements valued at $100,000 up to $3,750,000, a second CPSS search is conducted to identify specific suppliers (minimum 15 is standard) that will be invited to bid. Contracting Authorities must retain records of searches conducted to demonstrate that CPSS e-portal common business rules have been applied.

29. A CPSS search was required for the 5 contracts that were issued under the TSPS solution-based supply arrangement. For 4 of the 5 contracts, file documentation demonstrated that the CPSS search results had been properly retained in the file.

30. However, for 1 contract where the procurement was conducted by CBSA, CPSS search results were missing from the file. Per the requirements of the supply arrangement, the solicitation was to be issued to 15 TSPS supply arrangement holders. However, since there were no CPSS search results retained, it was not possible to confirm whether the 15 invited suppliers were qualified to bid.

31. The consequence of not documenting CPSS search results is that Contracting Authorities cannot demonstrate that invited suppliers were qualified supply arrangement holders at the time of solicitation or that they were appropriately selected in accordance with CPSS rules.

Evaluation of bids and contract award

32. In order to ensure the fairness and defensibility of evaluation processes, both the former Treasury Board Contracting Policy and the current Directive on the Management of Procurement require due diligence in the evaluation of bids. This includes strict adherence to evaluation criteria and equal application of criteria for all bidders. When proposals are evaluated in a consistent manner, the selection process will result in the award of the contract to the most suitable bidder and maintain the integrity of the procurement process. The Directive also underscores the importance of proper documentation by stating Contracting Authorities are responsible for ensuring that accurate and comprehensive procurement records are created and maintained on the contract file to facilitate management oversight and audit, including but not limited to individual assessments, consensus evaluations, relevant decisions, approvals, communications, and dates.

Bid evaluation records

33. Bid responses from all suppliers must be maintained on the contract file by either the Contracting Authority or the business owner (i.e., client) or a combination of the two. Responses from suppliers should include all required elements as specified in the bid solicitation (e.g., technical bid, financial bid, and certifications) that will allow for the evaluation of each accepted proposal against all evaluation requirements.

34. For the 7 competitive contracts reviewed, OPO reviewed the client department files and PSPC contract files, when applicable, to assess the completeness of documentation to support and demonstrate fairness in the evaluation of bids.

• In 4 files awarded by ISED (2), and PSPC (2) (1 on behalf of IRCC and 1 on behalf of itself), conflict of interest declarations completed by the individuals who performed the technical evaluation of bids were not present. Conflict of interest declarations are an important tool to protect the integrity of the evaluation process and represent a tangible record that evaluators were informed of and acknowledged their duties and obligations with respect to potential conflicts of interest that may arise in the course of the bid evaluation process.
• In 3 files awarded by ISED (2) and PSPC on its own behalf (1), evaluation documentation was lacking signatures and/or dates.
• In 3 files awarded by CBSA (1), ISED (1) and PSPC on behalf of IRCC (1), records of the evaluation of bids were deficient as documentation regarding individual and consensus bid evaluations were incomplete or absent from the file. When present and appropriately documented, evaluators’ worksheets are an integral part of the evaluation process as they constitute part of the complete record, form the basis for debriefing unsuccessful bidders and provide justification for evaluation results.

35. The following are descriptions of what OPO observed with respect to the 3 files with deficient records of evaluations:

1. For 1 CBSA file for Executive Transformation Services with an amended value of $1,796,000 – CBSA awarded a contract to McKinsey under the TSPS solution-based supply arrangement. McKinsey’s bid was the only bid received. The file contained no documentation for the individual or consensus evaluations.
2. For 1 IRCC file for Transformation Services with an amended value of $24,848,700 – PSPC awarded a contract to McKinsey on behalf of IRCC under the TSPS solution-based supply arrangement. McKinsey’s bid was the only bid received. The file contained only one individual evaluation (there were 3 evaluators), no documentation for the consensus (i.e., final) evaluation and no signed conflict of interest forms from evaluators.
3. For 1 ISED file for Global Analysis of Economic Stabilization and Recovery in High Growth Sectors with an amended value of $2,988,497 – ISED awarded a contract to McKinsey under the TSPS solution-based supply arrangement. Two bids were received. The file contained ambiguous and incomplete evaluation documentation. For example, there were several different evaluation documents on file, with no clarity as to which was considered for determining the award of the contract. There were two documents on file referred to as "consensus evaluation form" and "consensus evaluation form – McKinsey;" however, both of these documents were unsigned. The "consensus evaluation form - McKinsey" document only included an assessment for one of the mandatory criteria and left the other criteria unassessed. Additionally, OPO noted there were no conflict of interest forms from evaluators on file.

36. The general deficiency of documentation observed is an ongoing area of concern for OPO that extends beyond the parameters of this review. OPO has identified this same issue in numerous procurement practice reviews conducted over the past few years involving more than a dozen departments and agencies. While some of the contracts reviewed were entered into during the COVID-19 pandemic when there was a rapid shift from the use of paper-based to electronic procurement records, this does not explain the constant occurrence of this issue across multiple departments and time ranges. Without documentation to support contract award decisions, departments cannot demonstrate that the contracting process was compliant with applicable legislation and policy.

Contract award decisions and resulting contracts

37. When evaluation documentation was included in the procurement file, there were several instances where evaluations were not done as per the planned approach, jeopardizing the integrity of the procurement process. OPO reviewed the 7 competitive contract files to assess how compliant bids were ranked and whether the selection methodology, as stated in the bid solicitation document, was applied correctly.

38. OPO’s observations included instances of: evaluations not demonstrating that bids were evaluated against all criteria in the solicitation (1 contract); deviations in the evaluation process (1 contract); and consensus evaluations not appropriately documenting the rationale for points assigned (2 contracts). Below are descriptions of these observations:

1. For 1 IRCC file for a Service Transformation Strategy with an amended value of $2,890,822 – the evaluation did not demonstrate that all bids were evaluated against all mandatory criteria in the solicitation. One of the mandatory criteria stated “The Bidder must propose a team of resources” and that “all proposed resources must meet the minimum score of the flexible grid under TSPS for their respective levels of expertise and categories.”^{Footnote 1} However, there was no evidence on file to demonstrate that proposed resources were assessed against the TSPS flexible grids during the evaluation of bids. While the consensus evaluation document included comments stating the flexible grid minimum scores were met, there was no record of the assessment of the flexible grids on file to support this conclusion.
2. For 1 ISED file for Global Analysis of Economic Stabilization and Recovery in High Growth Sectors with an amended value of $2,988,497 – deviations to normal procedures were observed in the bid evaluation process.^{Footnote 2} In this case, 2 bids had been received and both were deemed compliant following the technical evaluation. The Contracting Authority then conducted the financial evaluation and determined the lower ranked technical bid was ranked 1st overall based on its lower price and superior financial score. However, after the results were shared with the bid evaluation team, the business owner expressed concern that the evaluation team may have overlooked something in the mandatory criteria and wanted to re-evaluate the 1st overall ranked bid. The Contracting Authority advised that this would not be possible given the fact that the financial evaluation had been completed. The response from the business owner stated he would be “happy to delete the financial evaluation email.” The deletion of records in the manner suggested would raise significant concerns about the fairness of the process. ISED ultimately did revise its evaluation of the 1st ranked bidder and deemed it non-compliant for not meeting all mandatory criteria. McKinsey was then awarded the contract as the only compliant bidder. While some aspects of this procurement process were well documented, there was a significant shortcoming with respect to documentation of the decision to allow the evaluators to change their evaluation of the 1st ranked bid after they learned the results of the process. The actions taken in this evaluation process lead OPO to conclude that this contract was not awarded in a fair and transparent manner.
3. For 1 PSPC file for Accelerator Services to Support the Public Service Pay Centre with an amended value of $29,620,266 and 1 ISED file for International Economic Analysis and Growth Studies with a value of $452,000 – the consensus evaluations did not appropriately document the rationale for points assigned to point rated criteria. In both cases, points were deducted from bidders without a documented rationale for these decisions.
4. For the same PSPC file noted immediately above – a bid was incorrectly deemed responsive, however, it did not affect the outcome of the procurement. The solicitation was a competitive RFP that was preceded by an Invitation to Qualify (ITQ).^{Footnote 3} At the ITQ stage, OPO observed that one of the bidders (not McKinsey) was identified as non-responsive to a mandatory requirement based on the results of the consensus evaluation. However, this supplier was advised that their bid was deemed responsive and it was one of the two suppliers invited to submit a bid for the subsequent RFP (the other being McKinsey). Once evaluated at the RFP stage the supplier was deemed non-compliant for the same reasons it was identified as being non-compliant during the consensus evaluation at the ITQ stage. The supplier may have unnecessarily incurred costs related to the preparation of their bid since it appears unlikely that they had a chance of being deemed compliant at the RFP stage.

39. It is important for evaluators to demonstrate that they have considered all aspects of a bidder’s proposal and have assessed all bids fairly against the criteria. Deviations from established evaluation processes threaten the fairness of a competitive procurement process and should be avoided.

Security clearances

40. OPO reviewed contract files to verify that security requirements identified in the solicitation had been confirmed with appropriate documentation on the file. As part of this review, OPO reviewed file documentation for evidence that personnel security requirements, e.g., Secret or Reliability status, were verified before proposed resources were authorized to work on the contract in question. Secret clearance is required by a resource working on a sensitive government contract to access Secret information and assets. Reliability status is required by a resource working on a sensitive government contract to access information and assets up to the Protected B level.^{Footnote 4} As well, OPO reviewed files to confirm that contractual documents were sent to PSPC’s Contract Security Program (CSP), when applicable.

Validation of resource security clearances

41. Of the 7 competitive contracts reviewed, 6 had personnel security requirements. For those 6 contracts, there were 2 files with missing documentation or insufficient documentation to confirm the validity of the required personnel security clearances at the level of Reliability status. These included 1 contract awarded by ISED and 1 contract awarded by PSPC on behalf of itself.

42. For the contract awarded by ISED, the file did not include confirmation of security clearance information for the 7 resources included in McKinsey’s bid.

43. For the contract awarded by PSPC on behalf of itself, resources were added through task authorizations that were issued after contract award. As such, security clearances were to be validated at the time of the task authorization. PSPC documentation confirmed that 4 of the 5 resources added through task authorization had the appropriate security clearance. The 1 remaining resource did not have the required Reliability status security clearance; nonetheless, this individual was included on the approved task authorization. PSPC informed OPO that a security clearance request had been initiated but it was never completed.

44. In absence of documented confirmations of personnel security requirements, resources may have worked on these contracts and had access to sensitive information and assets without having the required security level.

Verification of contract sent to PSPC’s Contract Security Program

45. All government departments that award contracts with security requirements under their respective delegated contract authority and who used the PSPC Contract Security Program’s contract security services must send a copy of their contract to the Contract Security Program, including copies of any subsequent contract amendments. This would apply, for example, when a contract with a security requirement was awarded under a PSPC method of supply. This is done to ensure the integrity of the contract security process, as well as the timely and efficient delivery of security screening services to suppliers, their personnel and their subcontractors.

46. Of the 6 competitive contracts with security clauses, 2 files, including 1 contract awarded by PSPC on behalf of CBSA, and 1 contract awarded by PSPC on behalf of itself, included evidence that a copy of the contract had been provided to the CSP. For the remaining 4 contracts, the file did not have a record (i.e., email) showing that the contract with a PSPC security clause had been provided to the CSP. These 4 contracts were awarded by CBSA, ISED, IRCC, and PSPC on behalf of IRCC. In response to OPO’s observation, PSPC confirmed with the CSP the submission status of these 4 contracts. PSPC confirmed the contract awarded by PSPC on behalf of IRCC had been provided to the CSP, however, the CSP did not have any records for the remaining 3 contracts that had been awarded by CBSA, ISED and IRCC.

Sole-source contracts

52. The 6 low dollar value sole-source contracts were awarded to McKinsey by federal departments between November 9, 2017 and August 3, 2020. For these contracts, the estimated cost for each did not exceed the $25,000 or $40,000 threshold that was in effect at the time of the procurement. For this reason, the use of non-competitive processes for awarding these contracts was consistent with the low dollar value exception to the GCR requirement to solicit bids.

Establishment of estimated cost

53. The GCR do not state at what point during the procurement process cost estimates need to be established; however, the Treasury Board Contracting Policy did stipulate when this should occur. Section 10.5.1 of the Policy stated in part, “requirements should be defined and specifications and estimates established before bids are solicited and contracts let, so that all prospective contractors are treated equally.”

54. Files for 2 of the 6 low dollar value sole-source contracts, awarded by NRCan and PSPC on behalf of itself, included appropriately documented estimates. In the other 4 files, for contracts awarded by VAC, DND, ESDC and PCO, the documentation did not clearly show that an estimated cost was established before the department contacted McKinsey about its requirement.

55. The estimated cost of 2 of these contracts was significantly below the threshold amount specified in section 6(b) of the GCR, at the time of the procurement.

• For the VAC file for Business Consultant/Change Management Consultant services valued at $24,860 – VAC contracted this requirement on behalf of the Office of the Veterans Ombud (OVO). The earliest reference on file by the OVO regarding the estimated cost of $25,000 was during email communications between the OVO and McKinsey discussing the requirement. The threshold limit at the time of the procurement was $40,000.
• For the DND file for the Royal Canadian Navy (RCN) Digital Use Case Workshop valued at $24,860 – the earliest reference by DND on file regarding the estimated cost of less than $25,000 was in an e-mail communication between the business owner and DND procurement. Prior discussions between the business owner and McKinsey had taken place regarding this requirement. The threshold limit at the time of the procurement was $40,000.

56. The estimated cost of the remaining 2 contracts was absent or was just below the $25,000 or $40,000 GCR threshold for non-competitive contracting in effect at the time of the procurement.

• For the ESDC file for Advisory Services to the Chief Operating Officer valued at $40,000 – there was no estimated cost identified on the file. The threshold limit at the time of the procurement was $40,000.
• For the PCO file for Planning and Presentation Services on Disruptive Technologies valued at $24,747 – it appeared the estimated cost of $24,747 (including tax) was established after the quote was received from McKinsey. The threshold limit at the time of the procurement was $25,000.

57. This result is not unique to contracting practices with McKinsey and was identified by OPO in a previous procurement practice review looking at low dollar value contracts. Directly contacting a prospective supplier, sharing information about an upcoming requirement with that supplier, and requesting pricing information from that supplier before establishing and documenting the estimated cost of a contract represents a threat to the fairness of the procurement process and should not be repeated. In the event the supplier’s proposed price exceeds the threshold for non-competitive contracts set forth in the GCR, the department may be required to run a competitive process before awarding the contract. In this situation, not all prospective suppliers would be treated equally, as the supplier that was previously contacted for pricing information would have an unfair advantage over other potential suppliers because it received information about the requirement before anyone else. Alternatively, the department may decide to remove some of the goods or services it required to get the estimated cost below the threshold amount primarily for the purpose of avoiding competition or targeting a particular supplier. This action could be perceived as a manipulation of the exception to competition permitted by the GCR.

58. The practice of directly contacting a prospective supplier to request pricing information prior to establishing and documenting the estimated price of a contract should be avoided to ensure the fairness of the procurement process. However, if information is required from suppliers to assist with program planning or for budgetary purposes, a formal pre-solicitation process, such as a Price and Availability (P&A) enquiry or a Request for Information, should be issued so that all potential suppliers are given information about the requirement at the same time and have the opportunity to respond.

Justification for not using a mandatory method of supply & changes to the procurement strategy

59. PSPC has established standing offers and supply arrangements to enable federal departments to award contracts to pre-qualified suppliers using a streamlined process. The use of standing offers and supply arrangements is mandatory for certain commodity groups listed in the former Treasury Board Contracting Policy and in the current Directive on the Management of Procurement. When considering a new contract, departments must verify whether a mandatory standing offer or supply arrangement exists that meets their requirements. If one does, the contracting department must use it. Exemptions to this rule are possible, but must be obtained from PSPC prior to proceeding with the procurement. If an exemption is not granted, the client department may proceed under their own authority and in so doing, assume any associated risks with this business decision. This decision must be recorded on the contract file.

60. For 4 of the 6 sole-source contracts reviewed, the task-based services acquired fell within a commodity class for which the use of the PSPC ProServices supply arrangement was mandatory. However, rather than using this method of supply to select a pre-qualified supplier to provide the required services, contracts were awarded by ESDC, PCO, NRCan and DND to McKinsey through non-competitive processes. In all of these cases, the required exemptions were not sought and obtained from PSPC. It was also noted that at the time of these procurements, McKinsey was not a qualified supplier under ProServices and had this method of supply been used, McKinsey would not have been eligible to be awarded these contracts.

61. Furthermore, in 3 of the 6 sole-source contracts reviewed, there was evidence that the procurement strategy was changed to allow for McKinsey’s participation.

• For the ESDC file for Advisory Services to the Chief Operating Officer with a value of $40,000 – the use of ProServices was considered and acknowledged by ESDC to be the appropriate method of supply for the services sought. However, ESDC noted that McKinsey was not a qualified supplier under ProServices and instead directed the contract to McKinsey outside the ProServices method of supply.
• For the VAC file for Business Consultant/Change Management Consultant services valued at $24,860 – the use of ProServices was acknowledged by VAC to be the appropriate method of supply for the services sought. The VAC Contracting Authority discovered that McKinsey was not a qualified supplier under ProServices but was qualified under the TSPS solution-based supply arrangement and sought the guidance of the PSPC TSPS group to confirm if they could still contract with McKinsey. The PSPC TSPS group advised that VAC would need to stay within the list of vendors for each supply arrangement but could use the TSPS solution-based supply arrangement if their requirement was seeking a solution. Following this, the SOW was re-written from a task-based requirement (i.e., subject to ProServices) to a solution-based requirement and VAC directed the contract to McKinsey under the TSPS solution-based supply arrangement.
• For the PSPC file for an Independent Review of HR-To-Pay valued at $24,860 – the requisition that was sent to the PSPC procurement group made specific reference to the use of the ProServices supply arrangement. Along with the requisition was an attached file named “Statement of Work – McKinsey – 2019-05-02”. McKinsey, however, was not pre-qualified under the ProServices supply arrangement and would have been ineligible for contract award if the ProServices method of supply was used. The contract was ultimately awarded under the TSPS solution-based supply arrangement under which McKinsey was a qualified supplier. There was no documentation on file detailing the reasoning for the use of the TSPS solution-based supply arrangement rather than ProServices. In response to OPO’s observation, PSPC stated that upon their review of the statement of work, the use of TSPS was justified for this requirement and speculated that this may have been the reason for changing the method of supply. However, without documentation on file, the perception remains that this decision may have been motivated by the fact that McKinsey was not a qualified supplier under ProServices.

62. These actions run counter to the principles of fairness and openness in government contracting by removing a potential contracting opportunity from pre-qualified suppliers that had been identified through an open process advertised on the Government Electronic Tendering System without proper justification for doing so. In cases where the use of mandatory methods of supply were avoided altogether, it potentially resulted in the department paying more for the services due to the lack of competitive influence on the price charged.

Verification of resource security clearances

63. As was done for competitive contracts reviewed under LOE 1, OPO reviewed the 6 low dollar value sole-source contract files to verify that security requirements, when applicable, had been confirmed with appropriate documentation on the file. Of the 6 files reviewed, 2 had security requirements, including 1 contract awarded by ESDC and 1 contract awarded by PSPC on behalf of itself. While the ESDC contract file contained appropriate documentation to demonstrate the security requirement had been met, the PSPC contract file did not have evidence confirming the validity of the resource’s required Reliability status security clearance.

Establishment of the McKinsey Benchmarking Services National Master Standing Offer

Call-ups issued against the McKinsey Benchmarking Services NMSO

82. The 19 non-competitive call-ups issued against the McKinsey Benchmarking Services NMSO were awarded to McKinsey between March 22, 2021 and January 9, 2023. The total initial contract value of the call-ups was $47.0 million (total amended value was $48.8 million). OPO noted that 97.5% ($45.8 million) of the initial value of call-ups issued against the NMSO was for expert support services (i.e., the delivery model for the benchmarking solutions), while only 2.5% ($1.2 million) was for the proprietary benchmarking solution fee (i.e., Digital 20/20 suite and OrgSolutions: Organizational Health Index).

Overall, contract amendments were appropriate and were in line with policy and guidelines

98. Of the 32 applicable contracts reviewed, 10 had been amended. These amendments fell into one of four categories. Note that some of these 10 contracts had more than one amendment and are counted under multiple categories:

1. administrative amendments (5 contracts)
2. unplanned amendments to extend the contract period with no increase in contract value (4 contracts)
3. planned amendments to exercise previously contemplated option periods (3 contracts)
4. unplanned amendments that increased the contract value (5 contracts)

99. OPO identified issues with 3 contracts that had been amended. In the first case, for a DND contract, as discussed in paragraph 94, the amendment to a call-up for McKinsey benchmarking services was not sufficiently justified. In the second case, for a CBSA contract, the contract amendment was not on file and it could not be confirmed that work under the amendment was consistent with the scope of the original contract. In the third case, for a VAC contract, the contract amendment was not issued prior to the contract expiry date. The latter two examples are described below:

1. In October 2017, CBSA awarded a contract with task authorizations to McKinsey for executive support services for various CBSA transformation initiatives valued at $791,000. In January 2018, a contract amendment request was prepared to increase the contract value by $1,000,000 to cover the cost of additional work. However, the executed contract amendment was not on file nor were copies of properly executed task authorizations. Thus it is unclear if work performed was consistent with the scope of the contract.
2. In February 2020, VAC awarded a non-competitive contract valued at $24,860 to McKinsey for business consulting and change management services. The contract end date was September 30, 2020, however, the work was not completed by this time due to the COVID-19 pandemic and work continued after this period following verbal instruction to McKinsey from VAC. An amendment was later issued on February 9, 2021 to extend the end date of the contract (i.e., 4 months after it had expired).

100. Continuing work without a written contract places both parties at risk. For the supplier, work outside of a contract could result in non-payment and assumption of risks that would no longer be covered by covenants and insurance. It is always advisable to document all decisions related to the procurement and save them to the contracting file. Parties should not perform work in circumstances when the written contract is not effective whether before or after the stated effectivity period.

Contracts proactively published, but information was inaccurate

101. Under the former Treasury Board Contracting Policy and the current Directive on the Management of Procurement, departments are required to proactively publish contract information. The Treasury Board Secretariat Guide to the Proactive Publication of Contracts, formerly titled the Guidelines on the Proactive Disclosure of Contracts, provides guidance to departments on the identification, collection, reporting and proactive publication of contract information. Government policy requires quarterly proactive publication of information on the following:

• A contract when its value is over $10,000
• A positive or negative amendment when its value is over $10,000
• A positive amendment when it modifies the initial value of a contract to an amended contract value that is over $10,000

102. Of the 32 contracts reviewed, 28 were required to be proactively published. For applicable contracts, OPO searched proactively published contract information on the Open Government web site (open.canada.ca) to determine if all 28 contracts and applicable amendments were proactively published. With the exception of 1 contract, proactive disclosure information was publicly posted to the Open Government web site. Furthermore, all applicable amendments were publicly disclosed.

103. For the 27 contracts that were proactively published, OPO found that 19 contained one or more inaccuracies in the published information, with the most notable centering around trade agreement applicability, solicitation procedure, and limited tendering reason.

• The proactive publication website allows for the identification of applicable trade agreements. In 17 instances, the published information contained inaccuracies, either not identifying trade agreements that applied at the time of the procurement or identifying additional trade agreements that did not apply at the time of the procurement.
• In 10 instances, the published information contained inaccuracies for the solicitation procedure. The solicitation procedure intends to account for whether the procurement in question was done under a competitive versus a non-competitive method. All contracts under this finding were call-ups issued against the NMSO, and inaccurately described the method as “traditional competitive” when in fact the method was non-competitive.
• In 14 instances, the published information contained inaccuracies for the limited tendering reason. All contracts under this finding were call-ups issued against the NMSO and the Open Government web site stated that no limited tendering reason applied, implying open competition when in fact it should have stated “exclusive rights” had been used to justify awarding contracts without competition.

104. The accurate disclosure of information related to government contracts is a critical element of the Government’s commitment to transparency in procurement. Proactive publication of information plays a key role in informing Canadians about these contracts. Clarity on the government’s spending practices is important for the supplier community as it enables them to make well-informed business decisions related to their participation in procurement processes. It is crucial the information inputted into these systems accurately reflects the procurement process without exception.