Report study: Standing Committee on Public Accounts: Auditor General Report 5, Professional Services Contracts (December 11, 2025)

Question period note – OAG Report 5 (June 2024)

Issue: The Office of the Auditor General (OAG) is set to table its Report 5 - Professional Services Contracts (McKinsey & Company) on June 4.

Proposed response

The CBSA accepts the findings and recommendations made by the OAG and has already implemented corrective actions to improve its procurement processes, including implementing a mandatory proactive process to identify actual or perceived conflicts of interest.

Changes include ensuring there is proper information management on procurement files, ensuring procurement authorities have re-taken procurement training courses, and increasing oversight on the use of standing offers and supply arrangements.

A new CBSA Procurement Review Committee is reviewing and approving contracts and task authorizations. Conflict of interest declarations are required for both competitive and non-competitive procurement processes.

The CBSA recognizes the need to ensure sound stewardship of public funds and that Canadians receive value for money.

McKinsey brought global experience to augment the CBSA's operational capacity. Their expertise was used to plan for major business transformation (CARM) and to support border modernization analysis.

Background

The objective of this audit was to determine whether professional services contracts were awarded to McKinsey & Company in accordance with applicable policies and whether the federal public sector obtained value for money. To reach its conclusions, the Office of the Auditor General (OAG) relied in part on the internal audits of McKinsey contracts conducted in 2023.

The Canada Border Services Agency (CBSA) is one of 20 departments, agencies, and Crown corporations that had contracts with McKinsey & Company (McKinsey contracts) between January 1, 2011 to September 30, 2023. A total of 97 professional services contracts were awarded during this period. Of this total, the CBSA awarded a total of four contracts for a total final value of $6,256,671, under which a total of $4,337,610 was spent (amounts excluding taxes).

The OAG found that the CBSA is one of the organizations that:

• displayed a disregard for policies and for managing risks to value for money
• did not always follow procurement policies when awarding contracts
• has not awarded contracts in a transparent manner; and
• displayed weaknesses in conflict of interest procedures

Prior to receiving the results of the OAG review, the CBSA had already taken a number of corrective measures resulting from its own internal review of contracts awarded to McKinsey published in March 2023, as well as following the recommendations made in March 2024 by the Office of the Procurement Ombud (OPO) on contracts awarded to McKinsey by the CBSA.

Overall, the OAG found that contracting weaknesses were common across departments, agencies and Crown corporations, including the CBSA. All corrective measures as recommended by the OAG have already been implemented by the CBSA.

The audit made one recommendation to all implicated federal organizations, including the CBSA, regarding the proactive disclosure of conflicts of interest. The Treasury Board Secretariat has responded to this recommendation on behalf of all implicated organizations. As committed on March 20, 2024, and reiterated in Budget 2024, the Treasury Board Directive on the Management of Procurement has been amended to strengthen the management and oversight of government procurement with new mandatory procedures when contracting professional services. These new mandatory procedures will include a proactive process requiring business owners (managers) to certify that they acknowledge their responsibilities in managing the contract, they do not have a conflict of interest, that they have not directed which resources should be working under the contract, and that the contractor did not assist in or have unfair access to the solicitation process. All federal organizations subject to the Directive on the Management of Procurement are required to comply with this new procedure by no later than September 30, 2024.

Questions and answers - Contracts

CARM

1. Who made the Decision to outsource CARM to Deloitte?

In 2014, in consultation with other departments such as TBS, the CBSA decided to adopt an outsourcing approach.

The experience gained from the early phases of CARM (where IT expertise was being acquired through Staff Augmentation contracts and in-house resources) was not the right procurement strategy for something as big as CARM.

2. Does CBSA own the IP – does the government own the Portal?

Yes. While the contract experts from PSPC are working to update language in the actual contract, CBSAs position remains that we are the IP owners of the data, the business requirements, and the Portal.

There are assets that Deloitte brought to CARM that form part of their proprietary toolbox - they own those.

Think of it as a contractor that comes to install new windows in your home – when they leave they take their tools with them – you keep the windows.

3. Why didn't the CBSA use its own resources – why did you need Deloitte? Further, going forward, why doesn't the CBSA now take ownership and use its own resources?

CBSA did use it's own resources for many elements of the project and the ongoing Managed Service.

Deloitte was used as a systems integrator to deploy the CARM system on a new IT platform – SAP S4/Hana and other SAP components.

Mr. Leahy's current role is to Manage CARM – and his team oversees it's performance, changes that we may wish to make to it and the support services provided like the Help Desk.

4. How much of this work could be done by public servants?

As mentioned, the CBSA has public servants Managing CARM. The IT support provided by Deloitte is a specialized skill (managing a SAP platform hosted in the cloud).

There is an option to have CBSA assume ownership and support CARM in-house.

5. Are you saying that public servants can't support CARM?

Our IT resources already support over 100 systems. To minimize the risk of adding CARM and a new IT platform (SAP Hana/Cloud), the decision was taken to have the service managed by Deloitte.

6. Stakeholders have told this committee how complicated it is to onboard onto the CARM Client Portal.

As of this month there are over 200,000 businesses using CARM.

We have heard from the stakeholder community that the process is complicated – I have had correspondence from stakeholders and have been tracking what we are doing to support clients through this process.

Creating a CARM account is like opening a bank account. It's a one time process - critical that we get it right to protect a company's identity.

That's why the questions we ask during onboarding may seem like a lot – but we need to protect against fraud by someone assuming an identity.

Our help desk team has a dedicated service for onboarding, we have worked with stakeholders to prepare for the onboarding questions – communications materials, website, and dedicated onboarding webinars. We have also brought clarity to the initial onboarding screens to ensure businesses are following the appropriate steps.

7. Can you tell the committee why the USTR views CARM as a trade irritant?

USTR reported concerns with systems availability and changes to the Non Resident Importer requirements – whereby a US company must obtain a business number, register in CARM and obtain financial security if they want to have goods released prior to payment.

We are also aware of the submissions made by the Express Association of America regarding CARM. A general concern under Chapter 7 "increasing customs formalities" by requiring US companies to register in CARM and hold financial security.

8. Do you think it's OK to make someone wait over an hour to get help?

No. And we are evolving the service. We have dedicated options for those calling for onboarding. We created a broker line. We continue to prompt callers about where they can find information – if you sent in a help desk ticket in "onboarding" you automatically get a "how to".

9. Did you receive positive feedback from the business community?

Coming through a major business change – with elements of transformation touching most business sectors – I would say we are still in our transition period.

Direct quote: "The CARM system is an excellent innovation by CBSA that enables direct interaction between businesses and the agency. It promotes greater compliance and encourages proper business practices while reducing the administrative burden on CBSA staff. This allows officers to focus their efforts at physical border points where they are most needed, rather than spending time on clerical tasks in offices across different cities. We believe each CBSA office can adjust staffing levels based on import/export volumes to optimize efficiency."

10. Do you view CARM as a success?

Yes, it's most obvious benefit is how it has reduced the risk of having a 35 year old system hold up in todays environment – the fact that CARM is operational and responding to the trade environment (surtaxes) and that it is now managing $42 billion in duties and taxes revenue is a measure of success.

11. How did McKinsey's work contribute to the CARM project? What did they recommend?

In 2016 McKinsey provided professional services to review and validate the options, risks and impacts associated with CARM – they provided analysis on how CARM could drive efficiency, revenue and reduce administrative burden.

A recurring message was how CARM should be viewed as a business change project rather than an IT implementation; which remained our focus in terms of working to manage the change.

In 2018 McKinsey was provided a contract to perform the role a Vendor Management Office – similar to a project management office – focused on ensuring that the CBSA was managing to outcomes. This role was eventually assumed by CBSA staff.

In 2022 McKinsey was contracted through a standing offer to perform a review of the CARM benefits. This contract was cancelled with no work performed and the review was performed by CBSA internal resources.
We had the CARM team look at international comparisons in terms of cost and approach – and we had our internal audit team review that the planed outcomes of CARM could be measured.

Use of Pro Services

Has CBSA reduced it's reliance on consultants?

Yes, the CBSA has seen a consistent decline in their use of consultants. As of the end of the second quarter, there are 21 consultants working with us. This is a 75% reduction when comparing with the end of the second quarter last year.

How many consultants did the CBSA have when they began their effort?

• In June 2023, the CBSA had 242 IT consultants.

How did the CBSA manage this change?

• The CBSA took and continues to take steps to build sustainable internal capacity through initiatives to attract, retain, develop and maximize digital talent. Recent progress includes:
• Communication and awareness activities to promote the GC Digital Talent Platform to employees (for training and skills development) and hiring managers (to fill gaps)
• A Digital Talent Learning and Development Framework has been finalized to ensure employees have the right skills and competencies to succeed and adapt to evolving digital needs
• The CBSA CIO also undertaken cost, function, and workforce reviews, with the goal of reassigning resources from completed, cancelled or re-profiled projects and operational activities to emerging priorities

How have you achieved this reduction that quickly?

• Our Information Science and Technology Branch has taken a resolute turn towards moving expertise in-house and launched initiatives to support this change
• As a rule, use of professional services contracts are limited to the delivery of specific deliverables, and aren't used as resource augmentation
• If they are required to augment staff, this discussion takes place along the governance continuum, only once focused effort has been made to build the expertise

Can you assure you won't increase the number of consultants?

• Any contracts that will be awarded by the CBSA will go through the same process, where professional services will be tied to a specific deliverable, and will be costed accordingly
• Should there be an increase, value for money will be ensured through costing of the specific deliverable against the contract; this will allow the CBSA to tie costs of contracts to specific projects and timelines

McKinsey Contracts

What's the total amount the CBSA has spent on contracts with McKinsey & Company?

Since 2016 the CBSA has contracted with McKinsey & Company on three separate contracts (a fourth was ended before work began) at a combined value of $4.53 million. All of the work initiated under the CBSA's contracts with McKinsey & Company since 2016 has been completed. There are no additional costs pending for any of the contracts entered into with McKinsey & Company by the CBSA.

What expertise was provided by McKinsey for these contracts?

Like a number of companies the CBSA has contracted with, McKinsey & Company offered expertise that is not easily replicated with in-house resources. As a provider of specialized services in global trends and international standards and comparators, McKinsey & Company utilized proprietary tools and data unavailable to in-house resources to supplement and inform decision making.

However, the Agency will be looking into training staff to reduce its reliance on contractors. For example, whenever a contractor would be hired to complete a task on a project that requires a specific skill, the contractor would also cross-train in-house staff which will allow them to take over and complete the project instead of retaining that contractor long term.

How was McKinsey & Company selected for this work?

The CBSA's contracts with McKinsey & Company were awarded via competitive processes. In the case of the contracts for Business Consulting/Change Management Services and for Executive Transformation Services the Agency leveraged a Public Services and Procurement Canada (PSPC) supply arrangement. For the contract for a Value Management Office, a competitive process, run by PSPC, was used.

Did the CBSA change its procurement strategy in order to allow for McKinsey & Company's participation in the procurement process for contract 2018001129?

Contract 2018001129 – a contract for executive transformation services – was awarded following a competitive procurement process in which more than twenty companies were invited to submit bids during the request for proposal process. Upon the conclusion of the request for proposal process, McKinsey & Company was the only company to submit a bid. While documentation on file does not conclusively indicate that the CBSA changed its procurement strategy in order to allow for McKinsey's participation in the procurement process for contract 2018001129, it does raise concerns that McKinsey & Company could have been favoured by the CBSA during the procurement process.

As identified by both the Office of the Procurement Ombud and the CBSA's own internal audit function, documentation on file suggests that senior officials in the CBSA's then Chief Transformation Officer Branch had expressed a clear desire to ensure that McKinsey & Company was included in the request for proposal process. After having learned that McKinsey & Company was only pre-qualified under a solution-based supply arrangement and not a task-based supply arrangement, the Statement of Work was revised from a task-based requirement to a solution-based requirement. Documents outlining specifically why this change was made could not been located. The CBSA recognizes that the appearance of favouritism can undermine the perception of a fair, open, and transparent contractor selection process and acknowledges that there were shortcomings in the manner in which contract 2018001129 was managed.

Was all work completed under contract 2018001129 authorized via the use of a task authorization?

No, some of the work completed under contract 2018001129 was completed following receipt of instructions from representatives of the CBSA's project authority rather than following the issuance of a task authorization. This does not align with the standards outlined in the contract which required that work only be commenced following the issuance of a task authorization.

Concerns regarding this approach and poor recordkeeping with respect to the issuances of task authorizations under contract 2018001129 have been noted by both the Office of the Procurement Ombud and the CBSA's internal audit function. As of this year, the CBSA's Procurement Directorate has begun regular risk-based assurance reviews of procurement files in order to ensure that files are being maintained in a complete and consistent manner. This is one of a number of initiatives being undertaken to strengthen the Agency's procurement processes.

Summary Sheet of McKinsey Contracts

McKinsey Contracts Breakdown

Procurement

1. Does the CBSA always use competitive processes?

CBSA prioritizes the use of competitive contracting processes. Approximately 80% of the CBSA's contracts each quarter are competitive.

In accordance with Section 6 of the Government of Canada's contracting regulations, non-competitive contracts can be issued for one of four following reasons:

1. (a) the need is one of pressing emergency in which delay would be injurious to the public interest
2. (b) the estimated expenditure does not exceed:
   1. (i) in the case of a goods contract, $25,000,
   2. (ii) in the case of a contract to be entered into by the Minister for International Development for the acquisition of architectural, engineering or other services required in respect of the planning, design, preparation or supervision of an international development assistance program or project, $100,000,
   3. (iii) in the case of a contract for the acquisition of architectural, engineering or other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work, $100,000, and
   4. (iv) in the case of any other contract to which these Regulations apply, $40,000
3. (b) the nature of the work to be contracted for is such that it would not be in the public interest to solicit bids (e.g., national security); or
4. (d) only one person is capable of performing the contract

2. The Audit report states: "For contracts, McKinsey & Company was the only service provider to submit a bid. Other potential bidders raised concerns that the criteria were overly restrictive. We found no evidence in files maintained by the Canada Border Services Agency to support the rationale of not addressing bidders' concerns." Were the criteria too restrictive for bidders? Why did you not address the bidder's concerns?

The CBSA undertook its own Internal Audit of Contracts Issued to McKinsey and found no evidence to suggest that the bidding criteria were overly restrictive.

During the contracting process, bidders' concerns are addressed; however, this does not always result in modifications to bidding criteria (e.g., revised Statement of Work).

In the case of the McKinsey contracts, the files contain insufficient detail to demonstrate any action taken to address bidders' concerns. In response to this deficiency, the Agency has improved its contract filing processes. Contract files now include a full history of all relevant correspondence related to the contract, from initiation to close-out.

3. Audit report states: "For 2 of the 4 contracts, the Canada Border Services Agency and Innovation, Science and Economic Development Canada modified their procurement strategy once informed that McKinsey & Company was not a pre qualified vendor under the supply arrangement originally considered. As a result, the department and the agency modified the contract requirements to be able to use a different supply arrangement." How do you justify that? How is that following government guidelines?

The contract files are not detailed enough to provide a justification for the change in approach. In response to this deficiency, the Agency has improved its contract filing practices. Additionally, guidance has been developed and shared with Contracting Officers and Cost Centre Managers to ensure that this

4. Do you still have contracts with McKinsey?

No, the CBSA does not have any active contracts with McKinsey.

5. With your reductions of consultants – do you consider now that you have the internal capacity to deliver without consultants? Can you tell us more about your plan to reduce reliance on external consultants while relying more on internal capacity?

The CBSA has reduced the number of consultants significantly. It is anticipated that there will still be occasions to contract for consultants in the future, in cases where we do not have capabilities inhouse (using a solutions based contracting approach).

The plan to continue to rely on internal capacity includes:

1. (a) Ensuring the CBSA's IT team has is working on the highest priority files for CBSA
   • CBSA assesses IT capacity regularly throughout the fiscal year, with the goal of reassigning resources from completed, cancelled or re-profiled projects and operational activities to emerging priorities
2. (b) Training and mentoring our IT employees
   • The CBSA is working to create an inventory of skills for a target group of ISTB employees, uncover critical gaps and provide actionable insights to guide training and upskilling priorities and strategies
   • Many long-term contractors that have been off boarded from the CBSA since 2023 had knowledge transfer to CBSA employees included as final deliverables in their contracts, keeping the knowledge in house
   • Some of these consultants have been hired as public servants into the CBSA's IT team, augmenting expertise

6. Are security clearances done before contracts are given to consultants?

Yes, consultants are subject to a security clearance verification before they undertake work on a contract.

7. Can this be compared to what happened with ArriveCAN?

No misconduct or contract irregularities were found on the McKinsey contracts. However, deficient contract file processes were identified in both audits, and steps have been undertaken to address this shortcoming.

8. What have you done since ArriveCAN to fix the issues raised by the Auditor General and the Procurement Ombuds?

In response to the issues raised by the Auditor General and Procurement Ombuds, the CBSA improved its contract management practices.

Several notable activities include:

• Improved Conflict of Interest declaration process for vendors, Cost Centre Managers and employees across the organization
• Increased awareness of contracting rules and requirements through:
  • Increased mandatory procurement training
  • Improved guidance documents
  • Increased involvement from procurement officers
  • Increased oversight for standing offers and supply arrangements
• Enhanced procurement governance through the deputy-led Executive Procurement Review Committee (EPRC) and corresponding DG-led Contracting Review Committee (CRC), each with its own thresholds for high-risk or high-cost contracts
• Reviewed and updated proactive disclosure entries, as well as implementation of a new data validation process to maintain the accuracy of these entries going forward
• Creation of a dedicated Contracting Centre of Expertise
• Development of tools and mandatory training sessions for all Cost Centre Managers across the Agency

9. Are you still using ArriveCan – how much money to maintain and what are the benefits?

Through the ArriveCAN app, travellers can use the CBSA's Advance Declaration feature today. From November 2024 to November 2025, 4.3 million or approximately 13% of travellers arriving in Canada used Advance Declaration. The key benefit of using Advance Declaration is a reduction of traveller processing time at participating airports in Canada.

In November 2025 travellers who used Advance Declaration saved approximately 35 seconds per passage, which represents an average time saving of 39% compared to those who used primary inspection kiosks but did not use Advance Declaration.

The cost of maintaining ArriveCAN is forecasted to be $1.4 million for 2025-2026. The CBSA receives $2.9 million annually for maintenance of ArriveCAN but has worked to find efficiencies and reduce this amount to $1.4 million as part of ongoing fiscal spending reviews (i.e. Comprehensive Expenditure Review).

The activities that were completed or paid for as maintenance this fiscal year so far are the following:

• Updates to meet App store requirements
• Releases with updated content, including Accessibility updates: 2 minor, 3 major
  • 2 iOS upgrades, 3 Android upgrades
• Licensing cost for Optical Character Recognition software
• Cloud service provider hosting costs
• Assisting users with various account issues (unable to register, problems with password reset, unable to confirm account, etc.)

10. What is the status of investigations/litigation related to ArriveCan?

The CBSA has completed the professionals standards investigations that we first launched in November 2022 after receiving Botler's allegations that certain CBSA officials had engaged in misconduct. However, the investigation reports are now the subject of litigation before the Federal Court. In July 2025, the Court issued an interim order preventing CBSA from disseminating the investigation reports until the case is resolved. Out of respect for the Court process, I am not in a position to say anything further about the CBSA investigation reports at this time.

11. How did McKinsey's work contribute to the CARM project? What did they recommend? (expect CARM criticism – be ready with our results)

In 2016, McKinsey provided professional services to review and validate the options, risks and impacts associated with the benefits of CARM – they provided analysis on how CARM could drive efficiency, revenue and reduce administrative burden.

In 2018, McKinsey was contracted to develop a Vendor Management Office – similar to a project management office – focused on ensuring that the CBSA was managing to outcomes. This role was undertaken by CBSA in-house staff – who assumed the accountability of managing towards the benefits of CARM.

In 2022, McKinsey was contracted through a standing offer to perform a review of the CARM benefits; this contract was cancelled with no work performed and the review was performed by CBSA resources.

12. How did McKinsey's work contribute to the Border Modernization work? Have they given any advice on your IT legacy systems, how to manage the outages you have been experiencing, and how to transform to a more modern state? Will you need more IT consultants to maintain your current systems or to transform them?

In 2017-2018, McKinsey's review of the Agency confirmed that the CBSA's traditional, transactional border model was not sustainable as traveller volumes increased. Their analysis showed that maintaining the status quo would require significant growth in front-line staffing, without delivering the level of efficiency or risk-based processing needed for the future. The findings served as a foundation for Border Modernization, reinforcing the need to shift toward a digitally-enabled, intelligence-driven model for traveller processing, and helped the CBSA articulate both the operational risk of inaction and the case for modernization. This work is now being advanced through the Traveller Modernization initiative.
McKinsey has not been re-engaged and has not provided any advice related to the recent IT outages.

No IT consultants are needed at present to maintain current systems. 
For transformation initiatives and other projects in the future, there may be skills or capacity needed from the private sector to help deliver. These requirements would be looked at case by case and suitable contracting means explored, and subject to the CBSA's procurement and contract governance.

13. Are you bringing artificial intelligence in your Agency? If so – what and how?

The CBSA is developing a framework for the use of Artificial Intelligence (AI) across several of its functions, including:

• Detection and Screening: to identify contraband in x-ray images and help with intelligent cargo screening and real time threat detection
• Targeting and Intelligence: to aid border services officers in their efforts to assess risk and streamline traveller inspections
• Trade Analysis for Anomaly Detection: to identify irregularities in import transactions, including money laundering and proceeds of crime detection
• Identification: to strengthen identity management and increase efficiency across border operations by enhancing existing facial recognition technology (for example, a prototype that uses AI and CCTV footage to calculate wait times)
• Administration: to streamline internal administrative functions, including translation, Access to Information requests, as well as improve case intake and triage for litigation files

Through the development and application of its AI framework, the CBSA will improve the efficiency and accuracy of its operations while reducing risks such as bias, inequity, accessibility, and accountability gaps, while ensuring privacy and security are upheld.

Procurement Improvement Summary

• Enhanced procurement oversight through the deputy-led Executive Procurement Review Committee (EPRC) and DG-level Contract Review Committee (CRC)
• Enhanced procurement accountability through centralized procurement activities and authorities under the procurement and contracting directorate, reporting directly to the CFO
• Updated procedures and tools for employees, managers and procurement officers
• Strengthened contract documentation by creating one filing structure to be used for all procurement files
• Improved contract administration through increased testing of invoice documentation and deliverables before payment to vendors
• Established a procurement compliance process to review contract files for accuracy
• Ensured mandatory procurement training and in-house, CBSA-specific procurement training was completed by all Cost Centre Managers
• Created a Conflict of Interest Attestation process, requiring managers to sign off at multiple stages of procurement
• Reviewed and validated proactively disclosed contract details and developed a data validation process to ensure accuracy of disclosed information going forward

PACP meeting summaries on this study

October 7

Report prepared by: Colin Archer
Date and time: October 7, 2025; 11:02 am to 12:44 pm
Location: Room 415, Wellington Building
Subject: Report 5, Professional Services Contracts, of the 2024 Reports 5 to 7 of the Auditor General of Canada

Witnesses

Canada Infrastructure Bank

• Ehren Cory, Chief Executive Officer
• Frédéric Duguay, General Counsel and Corporate Secretary

Department of National Defence

• Stefanie Beck, Deputy Minister
• LGen Paul Prévost, Chief, Professional Conduct and Culture

Department of Public Works and Government Services

• Arianne Reza, Deputy Minister
• Catherine Poulin, Assistant Deputy Minister, Departmental Oversight Branch
• Dominic Laporte, Assistant Deputy Minister, Procurement Branch

Office of the Auditor General

• Andrew Hayes, Deputy Auditor General
• Aliya Haji, Director
• Nicholas Swales, Principal

Highlights

The committee met to begin their study of Report 5, Professional Services Contracts, of the 2024 Reports 5 to 7 of the Auditor General of Canada, hearing from the Auditor General, the Department of National Defence, Department of Public Works and Government Services and the Canada Infrastructure Bank.

In his opening remarks, Mr. Hayes stated that between 2011 and 2023, $209 million in contracts were awarded to McKinsey across 20 federal organizations, with over 70%—worth approximately $118 million—awarded non-competitively. He added that organizations awarding contracts often disregarded federal contracting and procurement policies and guidance and that often the practices of those organizations did not demonstrate value for money.

In her opening remarks, Ms. Reza referenced the 2023 reviews of McKinsey contracts led by the President of the Treasury Board, the Minister of Public Services and Procurement, and the Procurement Ombud. She emphasized PSPC's efforts to improve procurement practices, including the creation of the Office of the Chief of Contracts Quality Assurance.

Opening remarks from Ms. Beck welcomed the additional oversight and recommendations from external experts. She noted that DND has fully implemented all of their management action plans and provided an overview of the steps taken to strengthen their contracting polices.

In their opening remarks, the Canada Infrastructure Bank (CIB) explained that similar to other asset management organizations, they engage a number of external advisors to support their work. Mr. Cory, stressed that the CIB is committed to following robust procurement practices, including conflict-of-interest polices and to ensuring value for taxpayers.

Conservative Party of Canada

MP Stephanie Kusie and MP Gérard Deltell asked PSPC whether they had any input into the Government's decision to enforce the House of Commons motion to recoup $64 million in ArriveCAN funds from GC Strategies. Ms. Reza confirmed that she was not involved with the decision, further explaining that in terms of overbilling they go after the suppliers to seek recovery. Ms. Poulin added that the funds being recovered pre-date the ArriveCAN program. Additionally, she added they have recovered $4.1 million in overpayments related to three cases over overbilling by GC Strategies. Questions were asked concerning the decision to seek only $198,000 in repayment were referred to the Canada Border Services Agency (CBSA). In response to questions on compliance with the rules, Mr. Hayes emphasized the importance of stronger procurement controls, competitive processes, and accountability by Deputy Ministers and Crown Corporation CEOs to ensure transparency and value for money.

MP Gérard Deltell expressed interest in why the full $64 million isn't being recovered from GC Strategies. Mr. Laporte replied that they have consulted their legal council to see what they would be able to recover and that their role is limited as they were not the contracting authority.

MP Ned Kuruc asked whether departments had tailored processes to suit McKinsey. Mr. Hayes stated that they had found there were instances where procurement strategies were adopted in order to obtain services from McKinsey, adding he was not in a position to say whether there had been any instances of bid rigging.

MP William Stevenson inquired whether the audit was able to determine why rules were not followed by departments. Mr. Hayes stressed it is critical to identify why rules were not followed and that it is important to identify where efficiencies can happen. He also asked questions on conflict-of-interest and self-reporting. Ms. Reza explained that each employee must adhere to the code of values and ethics and noted that steps need to be better documented.

Liberal Party of Canada

MP Anthony Housefather asked PSPC how they would do things differently now based on the findings of the Auditor General's report. Mr. Lapointe informed the committee that in the future competitive processes will be the norm. With respect to there being changes to regulations from TBS, Mr. Lapointe added that TBS plays a valuable role, highlighting the amendments to the Directive on the Management of Procurement.

MP Jean Yip asked DND about waiving of security clearances and sought clarification on mandatory and proactive screening. She also expressed interest in what the implementation of DNDs action plans entailed.

MP Tom Osborne asked how national security and Canadian sovereignty are protected with their ability to ensure procurement is open and transparent. Ms. Reza pointed to the recently announced Buy Canada approach and the new defence investment agency, while Ms. Beck emphasized a whole-of-government strategy to manage risk and deliver effectively. With respect to measures implemented by TBS, Mr. Lapointe cited close collaboration with TBS, referencing the measures TBS has in place which aim to strengthen oversight and ensure responsible procurement practices in IT by ensure in-house resources are considered before outsourcing.

Bloc québécois

MP Sébastien Lemire questioned the rising consulting budgets in the Main Estimates, prompting Mr. Lapointe to highlight PSPC's cost reductions from $3.8 billion to $2.5 billion. In response to concerns about relying on contractors over internal capacity, Ms. Reza explained that short-term or hard-to-source expertise often necessitates external consultants, though efforts are underway with TBS and IT to build internal capabilities. PSPC committed to providing written responses on contractor use for pay system modernization and consulting costs for IT projects, while also agreeing to consult with TBS on Mr. Lemire's request for project and cost details. Additional questions included defining "regional or distant areas" and whether PSPC has contracts with McKinsey, to which Mr. Lapointe responded that competitive processes help mitigate conflict-of-interest concerns.

Next Steps

The committee is expected to meet again on Tuesday, October 21, 2025, to hear from the Auditor General on the 2025 Fall Reports which includes the report on Network Cybersecurity.

November 18

Report prepared by: Colin Archer
Date and time: November 18, 2025; 3:33 pm to 5:01 pm
Location: Room 415, Wellington Building
Subject: 2025 Reports 5 to 10 of the Auditor General of Canada & Committee Business

Appearing

Office of the Auditor General

• Andrew Hayes, Deputy Auditor General
• Josée Surprenant, Director

Trans Mountain Corporation

• Todd Stack, Chief Financial Officer

Highlights

The committee met to study the 2025 Reports 5 to 10 of the Auditor General of Canada, hearing from the Deputy Auditor General and Trans Mountain Corporation and to conduct committee business.

Opening remarks from Mr. Stack stated that they welcome the additional oversight and recommendations received from external experts including those from the Auditor General, noting that they have implemented a more proactive conflict of interest declaration process and instituted mandatory annual conflict of interest training. He also confirmed that they maintain a robust whistleblower program which enforces and identifies potential conflicts.

The Chair noted that accounting officers are expected to appear as witnesses on Auditor General reports. He also noted delays in witness responses to the clerk regarding scheduling after invitations are sent. To address this, the committee is opening new dates for pending invitations, and the Chair will seek further direction next week if invitees continue to respond late.

Conservative Party of Canada

MP Gérard Deltell asked the witness why non-competitive contracts had been issued. Mr. Stack explained that the overall costs of projects are under review. With regard to the sole sourced contract, he said McKinsey was hired past the halfway point of the contract when a need for someone with highly specialized skills was required, adding that they do look for requests for proposals on as many projects as they can. Mr. Hayes responded to questions on the rising cost of contracts to McKinsey expressing the need for the Government to examine the reasons behind those contracts and what the results are.

MP Ned Kuruc questioned the cost of the Trans Mountain project having risen by 5 times the original estimate during Ms. Farrell's tenure. Mr. Stack explained that this is a case which is currently being examined by the Canada Energy Regulator. With respect to the procurement decisions made by Ms. Farrell, Mr. Stack stated that McKinsey brought unique and specialized skills into the company and that the contact would not have been extended had value not been delivered and that they have been telling the Government to ensure that the rules are clearly understood and followed.

MP William Stevenson focused on whether the Auditor General had noticed any deviations or changes to how conflict of interest rules were being defined. Mr. Hayes stated their findings were focused on the importance of pursing the conflict of interest declaration early in the process. He further stated that their findings on conflict of interest were general in nature and based on the sampling used in their audit.

CPC MPs also questioned whether Gerald Butts or Dawn Farrell had been involved in making recommendations for the hiring of McKinsey.

Liberal Party of Canada

MP Kristina Tesser Derksen asked what benefit contacting out brings over keeping the work internal. Mr. Stack stated the project saw ongoing pressures for cost and schedule which resulted in bringing in an outside source which resulted in some efficiencies being found. Mr. Stack expanded on the annual conflict of interest training program, saying it is a dedicated session on conflict of interest which will explain what to do when there is a conflict and the steps for resolving any conflicts.

MP Anthony Housefather inquired whether there had been any outside influence in the decision to enter into a contract with McKinsey. Mr. Stack confirmed that it was an internal decision and no outside influence occurred, adding that the contract followed the correct approval process. With respect to conflict of interest, Mr. Stack explained it has been moved to a standalone item focused on education, declaration and sign-off. He further noted that he was not aware of any conflicts of interest within Trans Mountain.

MP Tom Osborne sought comment on steps TBS has taken such as updates to the Manager Guide and the new mandatory procedures for procuring professional services. Mr. Hayes stated that future audits will look at how the new rules have been applied by public servants. Mr. Stack responded they he was not familiar with the new rules implemented by TBS, committing to reviewing them to see how they apply to Trans Mountain.

MP Jean Yip asked whether each Crown Corporation being responsible for developing and implementing its own procurement policies and procedures is a sufficient oversight mechanism to keep Crown Corporations accountable. Mr. Hayes responded by saying that in the context of a Crown Corporation they would not expect the same application of policy and rules. With respect to updates to the Managers Guide, Mr. Stack said they are always looking to improve their procurement practices and are open to any advice they can get. He also informed the committee that their whistleblower program has been a good check for conflicts and instances of wrongdoing.

Members also expressed interest in Trans Mountain's exports to foreign markets and the overall benefits of the project to Canadians.

Bloc Québecois

MP Sébastien Lemire asked how much money taxpayers would lose as a result of Trans Mountain. Mr. Stack stated that program costs were $34 billion dollars with the Corporation being on track to return $1.7 billion, adding that he is confident taxpayers will recover their investment. He also confirmed that they are not actively looking to sell Trans Mountain. Mr. Stack explained that McKinsey was contracted due to the size and magnitude of the project, and they brought new ideas and additional arms and legs. Mr. Lemire also expressed interest in contracts being given to companies which self-identify as being indigenous.

Next Steps

The committee is expected to meet again on Tuesday, November 25, 2025, to deal with draft reports.

December 2

Report prepared by: Colin Archer
Date and time: December 2, 2025; 3:31 pm to 5:20 pm
Location: Room 415, Wellington Building
Subject: 2025 Reports 5 to 10 of the Auditor General of Canada

Appearing

Office of the Auditor General

• Andrew Hayes, Deputy Auditor General
• Josée Surprenant, Director

Business Development Bank of Canada

• Christian Settano, Chief Financial Officer

Canada Post Corporation

• Nathalie Séguin, General Manager, Finance Business Partner
• Maya Walker, General Manager, Sourcing Management

Department of Citizenship and Immigration

• Harpreet S. Kochhar, Deputy Minister
• Jason Choueiri, Senior Assistant Deputy Minister and Chief Digital Officer, Client Service, Innovation
• Nathalie Manseau, Chief Financial Officer
• Matthew Oommen, General Counsel

Highlights

The committee met to study the 2025 Reports 5 to 10 of the Auditor General of Canada, hearing from the Deputy Auditor General, the Department of Citizenship and Immigration (IRCC), Canada Post, and the Business Development Bank of Canada (BDC).

In his opening remarks, Mr. Kochhar spoke of the digital transformation undertaken at IRCC to improve program delivery to Canadians and the contracts awarded to McKinsey to design and launch the transformation. He noted that since the release of the Auditor General's report, they have strengthened their documentation and verification process so that each new procurement decision includes a written justification and that conflict of interest guidance has been strengthened.

BDC's Mr. Settano focused on the two contracts they issued to McKinsey, noting they have addressed the Auditor General's feedback, improving their procurement process. He noted that their new strategy should result in a profound change.

Ms. Walker from Canada Post highlighted their commitment to fair, open and transparent procurement. She noted that their response to the Auditor General's recommendation on strengthening conflict of interest practices has seen the enhancement of policies and practices for the hiring of consulting services which aligns with Treasury Board policies, adding that procurement training for employees has been strengthened.

Conservative Party of Canada

MP Gérard Deltell asked how Canada Post has managed to accumulate a deficit of over $5 billion dollars. Ms. Walker explained that their financial situation is a result of the challenges created by COVID and the loss of parcel delivery. In response to questions on passports, Mr. Kochhar informed members that McKinsey was not involved with passports and that ESDC is responsible for provisioning passports to Canadians.

MP Ned Kuruc questioned whether granting consultants access to government systems without proper security clearance signaled a breakdown in safeguarding sensitive data. Mr. Hayes stressed clearances should precede access, while Mr. Kochhar added that clearances were pending and data stayed on IRCC's network, and that he was aware of what information might have been exposed.

MP William Stevenson focused on better understanding the differences between procurement rules in Departments and Crown Corporations. Mr. Hayes explained that Departments and Agencies follow rules set out by Treasury Board while Crown Corporations are able to have their own policies, stating that it is reasonable to expect that Crown Corporations would try to construct procurement processes to benefit from competition. In response to questions on the results of the new processes implemented at Canada Post, Ms. Walker stated that they have committed to reducing their use of consultants, noting their transformation plan was submitted in November and that they were working with the Government to finalize it.

Mr. Hayes pointed out that Canada Post had been submitting their corporate plan annually as required, but that those plans had not been approved which had had a negative impact on their financial situation, suggesting the committee may want to examine this when it studies the Public Accounts.

CPC MPs also questioned asked about the number of pending immigration files, health care for immigrants and Canada Post's use of a contractor who also advises competitors.

Liberal Party of Canada

MP Kristina Tesser Derksen asked if IRCC requires competitive bids for all contracts, and Mr. Kochhar confirmed they follow TBS policies, always use a competitive process, and refer contracts over $3.75 million to PSPC. Mr. Choueiri added that recent competitive processes have been highly collaborative with industry, leading to better bids. Regarding a BDC contract awarded to a non-lowest bidder without written justification, Mr. Settano acknowledged documentation was below standard at the time but noted improvements since the audit.

MP Jean Yip asked about the value for money BDC provided through consultants, and Mr. Settano said they helped develop a long-term strategy and offered market insights, noting consultants are still used when needed under policy. Mr. Kochhar confirmed IRCC aims to reduce consultant reliance to about 13% over three years, with most consultants in IT. He added that IRCC faces challenges maintaining legacy systems while transitioning to new ones, aiming to use in-house expertise as much as possible.

MP Tom Osborne asked witnesses how they plan to reduce their reliance on consultants. Mr. Settano explained that BDC will always have instances where hiring consultants will be more efficient and profitable for them to work in this manner. Ms. Walker said that the implementation of the process of following Treasury Board guidelines has been helpful, noting that consultants would be used when advice is needed outside their subject matter expertise.

Members also expressed interest Canada Post's efforts to reduce its deficit, their plans for using artificial intelligence and IRCC's move digital processing of applications.

Bloc Québecois

MP Sébastien Lemire asked about taking advice from a private management firm on immigration policy, and Mr. Kochhar clarified that immigration levels are based on broad stakeholder consultations, not specific entities, adding IRCC has no contracts with McKinsey and has reduced its reliance on consultants. Officials noted they generally trust internal capacity but use consultants for surge needs, hiring over 300 new employees for digital modernization. Mr. Lemire also expressed interest in IRCC's GeoMatch tool.

Next Steps

The committee is expected to meet again on Thursday, December 4, 2025, with the topic of the meeting still to be determined.

OAG Report 5: Professional Services Contracts

OAG Report 5—Professional Services Contracts