Politics

The value of one consulting firm's federal contracts has skyrocketed under the Trudeau government

The consulting firm McKinsey & Company has seen the amount of money it earns from federal contracts explode since Prime Minister Justin Trudeau came to power — to the point where some suggest it may have a central role in shaping Canada's immigration policies.

The cost of McKinsey's contracts has spiked 30-fold since the Harper years

Prime Minister Justin Trudeau awards Dominic Barton, Global Managing Partner at Mckinsey and Company.
Prime Minister Justin Trudeau embraces Dominic Barton at a 2017 reception. Trudeau would appoint the former global managing partner of McKinsey and Co. as ambassador to China two years later. (Christopher Katsarov/The Canadian Press)

The consulting firm McKinsey & Company has seen the amount of money it earns from federal contracts explode since Prime Minister Justin Trudeau came to power — to the point where some suggest it may have a central role in shaping Canada's immigration policies.

A Radio-Canada investigation also learned the private consulting firm's influence is raising concerns within the federal public service.

According to public accounts data from Public Services and Procurement Canada (PSPC), the Liberals spent 30 times more money on McKinsey's services than Stephen Harper's Conservatives did.

In the nine years of the Harper government, McKinsey was awarded $2.2 million in federal contracts. During Trudeau's seven years in office, the company has received $66 million from the federal government.

McKinsey, an American firm with 30,000 consultants in 130 offices in 65 countries, provides advice to both private and public entities — which sometimes have conflicting interests — and does not disclose its business ties.

For example, Export Development Canada has paid McKinsey $7.3 million to provide various analyses since last year. The Business Development Bank of Canada paid the company $8.8 million for advice in 2021 and 2022.

Major role in immigration department

Radio-Canada's analysis shows that Immigration, Refugees and Citizenship Canada (IRCC) has turned to McKinsey the most since 2015, with $24.5 million in contracts for management advice.

IRCC and the Canada Border Services Agency account for 44 per cent of federal compensation issued to the firm.

McKinsey refused to answer Radio-Canada questions regarding its role and agreements with the federal government. The government did not provide copies of the firm's reports in response to Radio-Canada's request.

McKinsey's influence over Canadian immigration policy has grown in recent years without the public's knowledge, according to two sources within IRCC. Both spoke on the condition of anonymity because they were not authorized to speak publicly. 

A building closeup with a sign that reads 'Immigration, Refugees, Citizenship Canada.'
Immigration, Refugees and Citizenship Canada has been McKinsey and Co.'s best customer within the federal government since 2015. (Ivanoh Demers/CBC)

Both held major roles within the department during the height of the consulting firm's influence and spoke to Radio-Canada separately.

"It was completely opaque. We asked to collaborate, to share our ideas, but it didn't work," said one source with an important position within IRCC.

"McKinsey was an idea from the government. The policy was decided for civil servants. It causes a lot of operational instability," said the second source.

"These people, these firms forget the public interest, they're not interested in it. They're not accountable."

According to contracts, McKinsey was hired by IRCC to develop and implement various strategies for "transformation." 

An IRCC spokesperson said the consulting firm was tasked with reviewing, developing and implementing digital tools, processes and services. 

The department spokesperson said the contract was revised during the pandemic — at an increased cost — to help IRCC respond to pressures related to the pandemic, deal with acute demand and maintain essential services for clients.

A mandate for 'transformation'

Representatives of McKinsey facilitated or attended about 10 meetings of the IRCC transformation committee, according to documents obtained under access to information law. The documents do not include details of those presentations.

"We had a few presentations on very generic, completely vapid stuff. They arrived with nice colours, nice presentations and said they would revolutionize everything," one of the sources said.

"In the end, we don't have any idea what they did," the source added, referring to "nice marketing" that "isn't science."

Before a federal committee hearing in late November, IRCC Deputy Minister Christiane Fox said McKinsey was involved in the transformation and modernization of the department's systems.

"According to managers and politicians, everything that comes from outside is always better, even if we had enough resources internally," said one department source.

"[McKinsey] always says they have great expertise, but it doesn't make sense because we have expertise and we're completely pushed aside," said the other.

McKinsey head recommended immigration boost

The IRCC sources are also critical of McKinsey's possible influence over Canada's immigration targets.

Ottawa announced a plan this fall to welcome 500,000 new permanent residents each year by 2025, with an emphasis on fostering economic growth.

The target and its stated justification follow similar conclusions in the 2016 report of the Advisory Council on Economic Growth, chaired by McKinsey's then-global head Dominic Barton.

Then-Finance Minister Bill Morneau (right) looks on as Dominic Barton, chair of the Advisory Council on Economic Growth, speaks at a news conference in 2016. Morneau formed the council during his time as finance minister. (Adrian Wyld/Canadian Press)

The advisory council recommended a gradual increase in permanent immigration to 450,000 people per year to respond to labour market dynamics. At the time, Canada was accepting about 320,000 permanent residents.

John McCallum, the immigration minister at the time, expressed his reservations about the "huge figure" presented in the report.

But one of the sources at IRCC said the department was quickly told that the advisory council's report was a foundational plan.

'Telling truth to power'

While Dominic Barton chaired the advisory council from 2016 to 2019, he left McKinsey in July 2018 after a 30-year career with the firm. The next month, the consulting firm started its first contract with IRCC.

Trudeau named Barton Canada's ambassador to China in 2019 — a post he held for two years before leaving and joining the mining firm Rio Tinto.

Shortly before the pandemic, parliamentarians pressed Barton on the work he did for Chinese businesses during his time at McKinsey

"I'm very proud of my career and time in the private sector," Barton said. "We're known for telling truth to power."

Barton is also a co-founder of The Century Initiative, an advocacy group calling for policies that would bring Canada's population to 100 million by 2100.

Dominic Barton was Canada's ambassador to China from 2019 to 2021 after 30 years at McKinsey. (Paul Chiasson/Canadian Press)

The group was founded in 2011, while Barton was still at McKinsey, and has an current executive from the firm on its board of executives. 

The Century Initiative has been listed on Canada's lobbyist registry since 2021. It has organized meetings with the immigration minister's office, the minister's parliamentary secretary and Conservative and NDP MPs.

Radio-Canada's questions to Barton about the increase in McKinsey's contracts have not been answered.

Single-source contracts

Departments other than IRCC also have turned to McKinsey.

Public Services and Procurement Canada used the company for computer services. Innovation, Science and Economic Development Canada hired it for management advice, as well as science and research services.

The Department of National Defence also paid McKinsey several million dollars for leadership development.

Some of these contracts are still in progress and their total cost isn't known yet.

According to Radio-Canada's research, PSPC has called upon McKinsey on behalf of various federal entities for 18 contracts since 2021 — contracts worth more than $45 million.

All of those contracts were sole-source, according to documents obtained by Radio-Canada.

The Prime Minister's Office referred questions to the Treasury Board Secretariat (TBS). In a statement, the TBS said external professional services bring in specific expertise and help to address fluctuations in the civil service workload.

According to TBS spokesperson Martin Potvin, such a contract could help fill shortages in certain work groups or geographic locations.

He said the decision to resort to outside firms rests with individual departments.

'Shadow government'

Benoit Duguay, a professor at the Université de Québec à Montreal's School of Management Services, said he's surprised by McKinsey's apparent influence.

"How come McKInsey has the skills to do absolutely everything a government does? ... It looks like another level of government. Almost a supranational government," Duguay said in French.

(Duguay is a former consultant himself, though not at McKinsey.)

Isabelle Fortier, professor at the École nationale d'administration publique in Quebec, said the use of firms like McKinsey suggests a break between politics and administration of the state.

She said it supplants the internal expertise of the civil service and operates as a "shadow government" without transparency or legitimacy.

The federal government said it employs consulting firms to provide high-quality services and ensure the best possible value for taxpayers. It said departments are required to award contracts in a fair, open and transparent manner.

Controversy and calls for accountability

McKinsey has advised many national governments on their COVID-19 pandemic response in recent years, including those in the U.S., U.K., Germany and Mexico.

The governments of Quebec and Ontario also hired McKinsey to advise them on their pandemic responses and plan for the economic recovery.

McKinsey and Co. was hired to provide advice to the governments of Ontario, Quebec and several countries on pandemic response and recovery. (AFP via Getty Images)

An investigation by the French Senate accused consulting firms like McKinsey of undermining national sovereignty and making the state dependent on them.

McKinsey also has been under investigation in France over tax filings, the awarding of contracts and its role in President Emmanuel Macron's 2017 and 2022 election campaigns.

In Canada, some experts are also calling for an inquiry. 

Ontario lawyer Lou Janssen Dangzalan, who has been studying IRCC's digital reforms, said an inquiry could provide transparency on how consulting companies handle government contracts.

Fortier, who studied McKinsey's record in France, said she supports a public inquiry into the use of consulting firms.

"We must force the black boxes to open," she said in French.

with files from Daniel Boily and Marie Chabot-Johnson

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