Federal Contracting System Needs ‘Urgent Reform,’ Procurement Ombudsman Says

Procurement Ombudsman Alexander Jeglic prepares to appear before the Standing Committee on National Defence in Ottawa, on Oct. 24, 2023. Justin Tang/The Canadian Press

Canada’s procurement system is in need of urgent reform, according to Procurement Ombudsman Alexander Jeglic.

Jeglic made the comments during a Nov. 26 appearance before the Senate national finance committee to discuss an investigation into the procurement process for government contracts awarded to McKinsey & Company since 2011. His report, published in March 2024, noted the company received contracts with a total value of $117 million from April 1, 2011, to March 31, 2023.

Jeglic told the committee that his investigation found problems with the procurement system, as first reported by Blacklock’s Reporter.

“My office identified instances where procurement strategies were changed to allow for McKinsey’s participation in the procurement process, creating a perception of favouritism towards McKinsey,” he told the committee. “We also observed deficiencies related to bid evaluations in multiple files, including missing and incomplete file documentation.”

The issues Jeglic identified in his report were not isolated to the McKinsey contracts, he said.

“I must stress that what transpired with McKinsey is a symptom of a broken system, and my office has been identifying many of the same issues year after year, report after report,” he told the Senate committee.

Jeglic said he remains hopeful the timing is right to make meaningful changes to the process.

During his opening remarks to the committee, Jeglic said he was frustrated by the current state of the federal procurement process.

“To put it plainly, the federal procurement system requires urgent reform in several key areas. My annual report, tabled in October 2024 titled ‘Time for Action,’ underscores this sentiment.”

He said without changes to the system, there is no evaluation of supply performance.

“There’s no adjudication of whether it’s a good, bad, or otherwise performance by the suppliers, and as a result, poor performers can continue to gain federal government contracts.”

Public Service and Procurement Canada is considered the country’s largest purchaser, buying $25 billion in goods and services annually,  according to government figures.

However, the procurement process rules are not straightforward, Jeglic said.

“There’s many sets of rules, and so you’re asking people to understand what is a fairly complex web of rules in order to do their jobs.”

And while regular customers are used to how it works, it discourages new suppliers from participating, he said.

“The repeat players understand the system and have grown used to the system, but I don’t think that’s the methodology we should invoke to encourage others to participate as well.”