'Not a matter of state secrets': Anand dismisses concerns over McKinsey contracts

OTTAWA -

Defence Minister Anita Anand is dismissing opposition concerns about millions of dollars in contracts between her department and McKinsey & Company, saying the company's work was "not a matter of state secrets."

Anand made the comments on Monday while testifying to the House of Commons government operations committee, which is looking into the federal contracts awarded to McKinsey and other consulting firms since 2011.

The Department of National Defence has awarded about $30 million in work to McKinsey through 15 contracts since 2011, Anand told committee members. Most of that work dealt with improving the management of human resources and data, she added.

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"All of the subject matters of the contracts were in relation to corporate improvement, improvements in the way in which the institutions function," she said. "This was not a matter of state secrets that were being provided."

As an example, Anand said the military recently turned to McKinsey to help with its culture-change efforts, which included organizing and reporting on consultations with thousands of Canadian Armed Forces members across the country.

The company also worked with the Royal Canadian Navy to better integrate digital technology into its long-term plans, the committee heard, and helped develop a long-term human-resources strategy for the Canadian Joint Operations Command.

That command is responsible for overseeing all Canadian military operations at home and abroad, sparking Conservative concerns about potential security breaches.

The Tories noted that the company has previously worked with Russia and China, ties that have previously been raised in the U.S. due to McKinsey's work with the Pentagon.

But Anand pushed back on such concerns, saying the contracts related to how the Defence Department and military work and did not put security, privacy or confidentiality "in jeopardy in any way, shape or form."

The minister and senior officials also reassured committee members that the company did not have any influence over the government's recent decision to buy the F-35 stealth fighter jet, or any other military procurement projects.

"We do have rules in place to make sure that these types of conflicts don't occur," said Defence Department procurement chief Troy Crosby.

The committee launched its study of McKinsey's contracts with the federal government following revelations the firm's work for Ottawa has expanded rapidly since Prime Minister Justin Trudeau's Liberal government came to power in 2015.

According to data shared by Public Services and Procurement Canada, $116.8 million has been paid McKinsey since 2015.

Between March 2021 and the fall of 2022, the contracts totalled at least $62 million, according to a document recently tabled in the House of Commons in response to a question from a Conservative MP.

Outsourcing to such firms has increased across the government in recent years -- a trend that some researchers say erodes the abilities of federal workers to carry out their work.

Anand told members that she took her role as a steward of taxpayer dollars very seriously, and that contractors are hired when they have special skills that aren't available within the department or to fill a specific role.

"I have no reason to believe that those contracts have been unethical," the minister said of her department's contracts with McKinsey. "They have been executed in large measure, all except one of them."

This report by The Canadian Press was first published on March 20, 2023.