The federal government has awarded $200-million in contracts to consulting firm McKinsey & Company since 2011.THOMAS COEX/AFP/Getty Images
Sarah Niedoba is acting director of outreach at Code for Canada, a tech non-profit.
The federal government’s contracting practices made headline news again with Auditor-General Karen Hogan finding frequent rule violations in the $200-million in contracts awarded to consulting firm McKinsey & Company since 2011.
Ms. Hogan’s report went on to state that many of the contracts “did not demonstrate value for money.”
Sound familiar? The government is already battling months of bad press over the development of its much-criticized $54-million COVID-19 travel app, ArriveCan.
Both stories highlight the federal government’s broken approach to procurement and working with outside vendors. But both have also spurred public conversations that are at risk of missing the forest for the trees.
Canadians should be concerned about a lack of competition for government contracts. And they should be concerned about the government’s growing reliance on outside vendors.
But McKinsey itself, hard as it is to believe, is a relatively small player in the world of government contractors. In fact, research by Carleton University has found that the federal government spent a startling $22.2-billion on contracts in the 2021-22 fiscal year.
That number comprises figures that make McKinsey’s $200-million in contracts over more than a decade look quaint. For instance, from 2018 to 2022, Brookfield Global Integrated Solutions had an annual contract total of more than $1-billion. Deloitte received $171.95-million in contracts from in 2021-22 alone, while PricewaterhouseCoopers received $115.60-million and Accenture $93.81-million that year. McKinsey received only $17.06-million in contracts in 2021-22.
This doesn’t mean the problem of government contracting isn’t real. In fact, it’s one of the most pressing threats facing the federal government. But the issue is so much bigger than a single vendor, even when that vendor has been awarded work in ways it shouldn’t have.
We must ask ourselves why our government and elected officials fixate on single vendors and projects instead of tackling a broken procurement system.
The Auditor-General highlighted that 71 per cent of McKinsey’s contracts since 2011 were awarded without open competition. As we’ve noted before, this is a direct result of a procurement system that few companies have the time, resources or knowledge to work with, incentivizing public servants to cut corners and all but guaranteeing that the same big-name vendors continue to be awarded contracts.
The procurement process needs to be modernized and simplified so that smaller vendors willing to charge less and work in the public interest can compete for this work.
And then there is the question of why the government is so reliant on outside contractors to begin with.
Of course, there are areas where the federal government will always need to work with outside vendors – Brookfield’s commercial real estate management is a crucial example. But the increased reliance on outside partners for critical elements of government work that used to be, and should be, conducted internally should worry Canadians.
What does it mean when our government asks outside parties to do everything from craft policy to develop essential public-facing digital products and services?
For months, opposition MPs have been asking why contract spending continues to balloon at a time when the public service is also adding to its head count.
The answer is deceptively simple: the government must invest in its internal capacity. That can take many forms – training and upskilling existing staff and leaders, changing its approach to recruiting and retaining talent and updating outdated job titles and salaries being a few key examples.
It will be a major undertaking but without it, the federal government will remain trapped in a cycle of its own making, lacking the talent and leadership it needs to deliver the services Canadians deserve.
The fact that ArriveCan has spent so long in the news cycle is no coincidence. The federal government spent $4.7-billion on IT contracts in the last year alone and is desperately lacking when it comes to internal digital knowledge and skills. Canadians who are used to seamless digital services from the private sector will have little patience for a federal government that can’t meet the moment.
And while it may be politically convenient for the current opposition to frame this issue as directly tied to the existing leadership, this problem has been slowly growing for decades. There is no easy fix – the only way out is a significant overhaul of the existing status quo. Without it, Canadians will continue to lose trust in a government that relinquishes its responsibility to the public to outside parties.