PACP Committee Meeting

    Good afternoon everyone.

    I call this meeting to order.

    Welcome to meeting number 18 of the House of Commons Standing Committee on Public Accounts.

     Today's meeting is taking place in a hybrid format, but I believe all our witnesses are in the room.

    Thank you very much for coming in today to see us in person.

    Pursuant to Standing Order 108(3)(g), the committee is resuming consideration of report 5 of the Auditor General of Canada, entitled “Professional Services Contracts”, from the 2024 reports 5 to 7 of the Auditor General, referred to the committee on Tuesday, June 4, 2024.

    I'll just remind you, although I think everyone knows, to address all comments through the chair. I don't think there will be any outside debate, but should there be, just look to be recognized by me. Otherwise, we'll proceed in rounds, as we always do.

    I'd now like to welcome our witnesses.

    From the Department of Citizenship and Immigration, we have Harpreet Kochhar, the deputy minister.

    It's nice to see you. Thank you for coming in today.

    We also have Jason Choueiri, senior assistant deputy minister and chief digital officer, client service, innovation; Nathalie Manseau, chief financial officer; and Matthew Oommen, general counsel.

    From the Business Development Bank of Canada, we have Christian Settano, chief financial officer.

    From Canada Post Corporation, we have Maya Walker, general manager, sourcing management; and Nathalie Séguin, general manager, finance business partner.

    From the Office of the Auditor General, we have Andrew Hayes, the deputy auditor general; and Josée Surprenant, director.

    To all of you, thank you for coming in today. I understand that there will be three opening statements. There will be none from the Office of the Auditor General.

    Mr. Kochhar, you have the floor for up to five minutes or thereabouts. I'm not terribly strict unless you go on and on and on. I won't cut you off if you are wrapping things up.

    Thank you.

    Thank you, Mr. Chair and members of the committee.

    My name is Harpreet Kochhar. I am the deputy minister for Immigration, Refugees and Citizenship Canada.

    I want to acknowledge that we're meeting on the traditional, unceded territory of the Algonquin Anishinabe nation.

    As public servants, we welcome the Auditor General's work and the opportunity to demonstrate how we continue to improve transparency and stewardship of our operations.

    I also appreciate the opportunity to appear before you to discuss the Auditor General's report 5 on professional services contracts.

    My department participated in this audit, which examined 97 federal contracts with McKinsey & Company between 2011 and 2023, including two at IRCC. In 2018 and 2019, we undertook major service and digital transformation work to improve how we deliver programs to Canadians and newcomers. To help design and launch the transformation, we engaged McKinsey & Company through two competitive contracts awarded under Public Services and Procurement Canada supply arrangements.

    The first contract, valued at $2.9 million, provided an in-depth assessment of the department's operations and a road map for modernization. The second, valued at $24.8 million including amendments, helped establish our transformation office and deliver new digital tools and digital journey labs that improved processing efficiency and client experience. These engagements were designed to bring in short-term expertise and to build internal capacity, not to outsource our core work.

    The Auditor General's report offered a valuable independent review of these contracts and of the department's contracting practices more broadly. The report's findings were very constructive and helpful, and did not identify any integrity or value-for-money concerns specific to IRCC.

    However, the Auditor General did note two administrative issues. First, that our files did not fully record the rationale for one contracting decision. Second, that a small number of external consultants received temporary network access before their final security clearance was confirmed.

    We took these observations very seriously. Since that time, my department has strengthened its documentation and verification processes. Each procurement decision must now include a written justification, and no external resource can access our systems without documented security clearance. We have also strengthened conflict of interest guidance and expanded training for managers to reinforce oversight and accountability in contracting.

     These measures build on controls that are already strong. Both of our contracts with McKinsey were competitively awarded, audited and found compliant with Treasury Board and PSPC rules. This work helped lay the foundation for our ongoing digital modernization—creating a transformation office, growing our service design expertise and creating client tools that make applications faster and easier to use.

    My department remains committed to stewardship, transparency and continuous improvement.

     We appreciate this opportunity to demonstrate the steps we've applied towards continuing to serve Canadians with integrity. We'll continue to work closely with the Auditor General and central agencies to ensure that our procurement processes remain rigorous, transparent and constantly aligned with Treasury Board policies.

    Thank you.

    I am happy to take any questions.

    Thank you very much.

    Up next is Mr. Settano.

    You have the floor for up to five minutes.

     Thank you, Mr. Chair and members of the committee.

    For over 80 years, the Business Development Bank of Canada, or BDC, has played a vital role in the Canadian economy as the only bank fully dedicated to entrepreneurs. We support small and medium-sized businesses with financing, advisory services and investments, addressing gaps in the market and collaborating with private lenders, thanks to our teams' expertise.

    We are proud to operate profitably, ensuring that BDC is not a burden on the taxpayer while providing an annual dividend to our sole shareholder, the Government of Canada. Since 2021, BDC has paid more than $1.4 billion in dividends to the government, an approach that directly benefits not only our more than 107,000 clients who drive the country's economy forward but the Government of Canada's balance sheet in support of every Canadian.

    I'm here today to answer your questions regarding the report from the Office of the Auditor General on professional services, which mainly concerns two contracts with McKinsey.

    The first contract, awarded through a competitive tender, aimed to validate our new corporate strategy as we emerged from the pandemic, with our client base growing by 20%. This project, which was launched in 2021 and completed in summer 2022, demonstrates BDC's ability to support a greater number of entrepreneurs during a crisis.

    The second contract, which was awarded by mutual agreement, involved adjusting our go‑to‑market strategies. McKinsey had unique expertise and direct knowledge of our strategic development, which allowed for quick action and fast‑tracked the time to market.

    I want to emphasize that all BDC procedures were followed, the decisions were justified and the value for money was strong; however, the Auditor General recommended that we strengthen the process for documenting our selection committee's decision.

    Since then, we have addressed the auditor's feedback and improved our procurement processes, including assurance of thorough documentation. Our procurement team oversees the administration of all processes, working closely with internal teams to ensure compliance. Reporting on contracts exceeding $100,000 is made semi-annually to both our management committee and our board of directors.

    Regarding value for money, we assess McKinsey's mandates in both the short and the long term. In the short term, their support enhanced our capabilities without disrupting day-to-day operations. Since implementing our new strategy, the number of clients served has grown by 49%, especially among the smallest and youngest businesses and those in rural and remote regions.

    In the long term, the new strategy that was developed should bring about a change as profound as the one resulting from the creation of BDC Capital 11 years ago. Since then, the Canadian venture capital market grew from $750 million to $15 billion, and BDC is now Canada's most active venture capital investor in terms of number of transactions.

    Lastly, the launch of our community banking initiative, in partnership with local lenders and financial institutions, is a key pillar of our strategy. This initiative aims to foster the creation and growth of businesses outside of major urban areas with unconventional business models, little credit history and from underserved groups. It also aims to support 100,000 new entrepreneurs over the next 10 years.

    In summary, the initiatives stemming from our strategy are generating positive and lasting impact on entrepreneurs and on the Canadian economy.

    I am happy to take any questions.

    Thank you.

    The next person to speak is Ms. Walker.

    Ms. Walker, you have the floor for five minutes.

    Good afternoon Mr. Chair.

    Thank you for inviting me here today.

    My name is Maya Walker and I'm the general manager of sourcing management at Canada Post. I'm joined by my colleague Nathalie Séguin, general manager, finance business partner.

    I appreciate the important work of the Standing Committee on Public Accounts and welcome the opportunity to discuss the 2024 report 5 of the Auditor General of Canada on professional services contracts.

    I look forward to the discussions and questions from committee members.

     Canada Post, as a federal Crown corporation, is responsible for serving all Canadians and is one of the country's largest purchasers of goods and services. Each year, we procure over $2 billion in goods and services from suppliers who meet our requirements and deliver value for money. We are committed to conducting fair, open and transparent procurement in accordance with all applicable laws and regulations and our own rigorous policies.

    Our policies and practices ensure that procurement activities are compliant, conducted with integrity and focused on achieving the best overall value for Canada Post and, in turn, for Canadians. All suppliers are treated equitably, and no proposer receives special advantage.

    Our approach to procurement always starts with a clear sourcing strategy aligned with our policies, defining value for money, understanding market conditions, and challenging the necessity and the scope of each procurement.

    The Auditor General's 2024 report, “Professional Services Contracts”, made important findings about following procurement policies and practices, and about demonstrating value for money. The OAG also put forward a recommendation regarding the strengthening of conflict of interest requirements and practices. Canada Post has strong proactive conflict of interest measures in place and fully agrees with the recommendation.

    In parallel with the Auditor General's process, Canada Post began implementing its enhancements early, launching an internal audit of our consulting services. We take the Auditor General's findings seriously, and over the last year, we've taken actions to improve our processes in contracting for professional services and consulting.

    First, we enhanced our policies and practices with respect to the hiring of consulting services, including a new process and checklist aligned with the Treasury Board guidelines. This new process has helped to clarify the roles and responsibilities of the requesting business function.

    Second, we've strengthened training for employees to reference the importance of value for money and the specific role they play in the procurement process when contracting for professional services.

    Third, while we already had conflict of interest declarations built into the procurement cycle, building these declarations into our systems for employees and for suppliers is helping to ensure more consistency and transparency. In addition, Canada Post employees undergo annual conflict of interest reviews and declarations as part of our human resources process.

    In conclusion, procurement policies and processes must continuously evolve and remain subject to ongoing review. Canada Post thanks the Office of the Auditor General for its observations and recommendations regarding sound procurement practices. We are committed to continuously reviewing best practices and informing our employees of their responsibilities when obtaining professional services. For Canada Post, and all Canadians, we will continue to procure goods and services in a fair and transparent manner, with a focus on delivering the best value.

    Thank you.

    Thank you very much.

     We'll begin with our first round, which will consist of three members with six minutes each.

    Mr. Deltell, you'll start things off for us, please.

    Thank you very much, Mr. Chair.

    Good afternoon, colleagues.

    Ladies and gentlemen, welcome to your parliamentary committee. You're Canadian citizens, so this is your parliamentary committee.

    I want to thank everyone who spoke in French. I congratulate them on the quality of their French. I am sure that those who were more discreet are also very skilled in both official languages.

    The first few questions will focus on the Canada Post Corporation, so they will be addressed to Ms. Séguin and Ms. Walker.

    Ms. Walker, you talked about the best value. In other words, we should get our money's worth.

    As you know, when the Prime Minister created his new cabinet, he appointed a new Minister of Government Transformation, Public Works and Procurement. One of his first public statements concerned the Canada Post Corporation. He took a critical look at the Canada Post Corporation's financial situation.

    During its last 10 years in power, the Liberal Party turned a blind eye to this. Today, the Liberals seem to be pounding on their chests and saying that people need to get their money's worth, but they turned a blind eye for 10 years.

    Can you explain to us how it is that, over the past 10 years, the Canada Post Corporation accumulated a deficit of $5 billion and how, as we speak, based on what the minister said, it's losing $10 million every day?

    Thank you for the question in French. I'm going to answer in English, because it's easier for me.

     I will repeat a little bit.

     First of all, Canada Post very much welcomed the announcement by the government in our current situation. Yes, over the period of time when these contracts were being reviewed.... Canada Post has been in a financial situation with the erosion of letter mail since 2006. Our financial situation as a result of COVID and the loss of the parcel business with new players coming into the market has also had an effect. With the new announcement.... We very much welcome that.

     We put forward our transformation plan regarding the changes that we need to make to be able to be solvent. Our goal is always to find revenue that comes from the products that we deliver and not from the public, and we are hoping that this plan can get us there.

    A lot gets blamed on COVID‑19 in many situations and, indeed, in this case, the goods delivery industry has changed completely in 10 years. I think you're in the best position to see that. Canadians listening to us are now turning to private delivery companies, whereas before, they didn't even question it and immediately relied on the Canada Post Corporation.

    By the way, I'm a big user of Canada Post. I appreciate its services and I'm very well served in my riding. I say that in all honesty, not because the sorting centre is in my riding. As a citizen, I use Canada Post quite often. However, as a manager, member of Parliament, Canadian and a taxpayer, I'm not happy to see that we've lost $5 billion and that, as we speak, we're losing $10 million a day. I know you're not happy about that either.

    When you had contracts with McKinsey, did you ask them how you could develop a brand new approach? These kinds of questions can be introduced into the conversation quite easily. Compared to where we were 10 years ago, we're in a new world now. However, for 10 years, very little constructive action has been taken, which has resulted in a $5‑billion deficit and losses of $10 million a day.

    Did McKinsey not help you with that?

     When we have requirements for procurement, including our consulting requirements, we are looking at the services that we need to help inform our current situation. When we have requirements, especially when we deal with consulting requirements, we have a need, and we look at that need on a case-by-case basis.

     At the time, Canada Post was in a position where we were losing money, and we are continuing to lose money. We have now put forward that plan to help us get out of that. The consulting service was a requirement to look outside of the expertise that we had in-house to help inform on a more global scale how we can come out of the current situation that we're in.

    My next question is for Mr. Kochhar regarding the Department of Citizenship and Immigration.

    I understand that it is under your authority that Canadian passports are approved before they are issued. Is that correct? Canadians will unfortunately remember how, at the time that you had contracts with McKinsey, we were going through a major passport crisis. Canadians had to line up, wait and even sleep in hallways to get their passports.

    Did McKinsey help you solve that problem?

     Mr. Chairman, I'll just add to this that McKinsey was actually hired to do more of a departmental plan or strategy development for digitization, which was on the processing side of things, not on the passport side of things. The passport itself was a different situation, in which McKinsey wasn't playing any role.

    Did you award contracts to other companies to help you get out of the passport crisis, which was caused entirely by your department?

     Mr. Chair, again, the aspect of actually addressing that situation was done through internal resources and working with ESDC. To clarify, IRCC is the policy authority. However, ESDC is the authority that is dealing with passport provision to all Canadians.

     Thank you very much.

    Next is Ms. Tesser Derksen for six minutes, please.

     Thanks, Mr. Chair.

     Welcome, everyone.

    I'd like to start by asking questions of Mr. Kochhar.

     IRCC—and immigration in general—has been under some scrutiny lately, including by this new government, of which I am a new member. I know that's resulted in some review of policies and in changes for temporary foreign workers, international students and so forth. I feel this meeting is quite timely to have you here to talk to you about this particular report.

     I'll note that one of the things the Auditor General's office was particularly concerned about was the pervasiveness of non-competitive contracts. The report notes that IRCC's two contracts were, in fact, competitively offered.

     Does IRCC always require a competition for the contracts that it puts out?

     Mr. Chair, the contract, which is done by IRCC, is based on the Treasury Board guidelines. For up to $3.75 million, we have the ability to do it. Otherwise, we do have PSPC, which allows us, but they are always done through competitive processes.

    I'll ask about the policies in your department. You said that you follow Treasury Board policies, so any contract over $3.75 million would have to be competitively offered. Is that correct?

     Mr. Chair, for anything above $3.75 million, we would actually go first to PSPC and it would assist us in standing offers and that. For anything below $3.75 million, we do have internal capacity to do that competitive process. Both are competitively done.

    Tell me a little bit about the benefits that you see in having that competitive process within your policies.

    The benefit of having a competitive process is to be very transparent and upfront with the requirements and what the tangible benefits are that we are looking for from those contracts.

    At times, we are looking for diagnostics. For example, with the first contract we had with McKinsey, we were looking to see if there was an ability for us to design a road map or a strategy for digitization and improving the client experience, given the fact that we were experiencing a high volume and increasing wait times for the processing. That was done just to make sure that we had a very clear task authorization to develop that strategy and give us a road map. That is where it ended.

    That is how we run all of these, in terms of a clear indication of what we are looking for and then asking for the RFP or request for proposals from different companies to participate in that. Finally, we have the assessment of those that have submitted that. Based on that, we assess which one is the winner.

    That sort of leads into my next question about the RFPs.

    I'm going to refer to paragraph 5.31 of the report. The Auditor General found that four of the 28 contracts that they reviewed were awarded through a competitive process, two of which were for your department. The report also found that it looked like some procurement strategies were actually structured to make it easier for this particular service provider, McKinsey, to be awarded the contract.

    For IRCC specifically, I believe that McKinsey was the only service provider to submit a bid. Is that correct?

     To my knowledge, it was not. There were a couple that submitted a bid for the first one. That is how it was. It wasn't just McKinsey.

    Okay.

    I do believe as well, referencing the Auditor General's reports, that there were some concerns that some bidders found the criteria rather restrictive or maybe even too restrictive for their purposes. I believe that IRCC did respond to some questions and address some concerns from bidders. Can you talk a little bit about what was involved with that?

     Sure. What was asked of us was to actually clarify what tangible things we were looking for in that. There were questions asked about clarity on what we were requiring. We actually did answer those questions. We also shared those answers with all the people who were bidding for that one.

     I'm going to follow up with one more.

    I believe the Auditor General did have a concern about some of the data tracking or collection with one set of.... I don't have it right in front of me, but there was one contractor or one bidder where there didn't seem to be a lot of data about their concerns or the responses that IRCC gave.

    Are you familiar with that particular case?

    I'll have to turn to my colleagues, because that might help.

     Thank you.

    There were questions around the requirement for the level of expertise and the proof of having done similar kinds of work at the scale that we were asking for. There was a request for us to change some of the criteria. We did not accept that. That's where that question came and that was follow-up on that.

    The OAG's point was that we did not document, necessarily, all the details of the rationale. We now require, as part of all our processes, a detailed rationale. We have a disposition log for all our processes today.

     Out of the report and out of that recommendation, you've already addressed how you're going to correct that in the future going forward.

    Have you seen any actual, tangible positive results from implementing that new policy?

     We have implemented it with several of our recent competitive processes. We've engaged very collaboratively with industry. This has created a much richer kind of experience and a better set of bids at the end of the process. Yes, we've seen positive aspects of this.

    Thank you.

    I'm afraid that is the time. I'm sure we'll come back and pick this up.

    Mr. Lemire, you have the floor for six minutes.

    Thank you Mr. Chair.

    Thank you to all the witnesses for being here.

    My first few questions will be for Mr. Kochhar.

    The Century Initiative, a group created by McKinsey's top boss, Dominic Barton, has had a huge impact on the policies of Immigration, Refugees and Citizenship Canada, or IRCC. Even today, we live in a world where the intake capacity of both Canada and Quebec is feeling the consequences.

    However, IRCC officials had warned you. In 2022, in a report entitled “Population Growth and Housing Supply”, Matthew Saayman, an IRCC policy analyst, wrote that policy‑makers, in their role as immigration managers, must be aware of the misalignment between population growth and housing supply, as well as how permanent and temporary immigration affects population growth.

    Why did you listen to a private management firm and pay it millions of dollars when your own officials already had the expertise and skills to develop your immigration policies?

    The immigration levels we submit every year to Parliament are presented based on a lot of consultation with different stakeholders. That is how they are presented. They are not based on any specific individual or entity's ideas on how to grow the population.

    In this specific case, if I am understanding the question correctly, it is about us trying to actually get information from different sources. For example, when we presented the immigration level plan this year, we consulted over 1,200 stakeholders, which included different chambers of commerce, different academics and so on, so it was a part of that.

    While our internal policy people also gave us advice, we actually put it all together to see what would be the best outcome. This year, for example, in 2025, which was presented in 2024, we changed course and reduced the number of permanent residents. That was the first time in the last 12 years that we have gone down rather than going up. This is, again, a testament to our assessment, which is based on public opinion research, what our policy folks are saying and what we are hearing from our stakeholders.

    McKinsey was hired to develop and implement various transformation strategies. Its mission was to review, develop and implement digital tools, processes and services. That is what Christiane Fox, who now works at the Privy Council Office, pointed out before a parliamentary committee in November 2023 when she was deputy minister at IRCC.

    If McKinsey was supposed to provide you with incredible expertise, how is it that wait times skyrocketed in Canada?

     In terms of the ability for any consulting firms to actually look at our systems that deal with immigration.... For example, we use a global case management system, which is the backbone IT system for any case processing. It is imperative that we continue to do the current work, so we can then actually also apply transformation. We cannot just stop the work we are doing, which is our core business. The visas have to be issued while we are building a new system. It does take time before we can transform from what is a legacy system to the new system, which is the digital platform modernization. That is what it's going to take for us to get to that point.

    However, we've succeeded in actually increasing access to the client experience by.... We have started the journey into the digital world of passports. We have rolled out passports for adults online. We have also done much more work in terms of people applying for temporary residence online, so this is part of that continuum.

    It always seems ironic to me that, even though the different departments have their own experts, including people with IT expertise, somehow we imagine that private firms will be able to deliver so many magic solutions. Unfortunately, it's costing taxpayers in Quebec and in Canada millions, if not billions, of dollars to use these firms. I get the impression that this is one more sign of broken trust in public servants. I find it extremely hard to accept that private companies are more highly valued.

    Do you still have contracts with McKinsey?

     We don't have any more contracts with McKinsey, but we also want to mention in that context that we very much rely on our in-house expertise. Since January 2024, when I joined the department, we have looked at our strategy to reduce the IRCC's reliance on consultants. We have reduced over 127 consultants who had been there for a period of time. We have a target, which we will achieve by the end of 2027, to reduce it to merely 50.

     I have to mention that we have a legacy backbone of IT, and that kind of expertise does not exist in-house. Sometimes we do have to hire those.

    In 2021, you used subcontractors because you didn't have certified expertise within the department. That was according to the Professional Institute of the Public Service of Canada.

    My time is up, so I'll come back to that in the second round of questions.

    Thank you very much.

    We are in our second round, which will consist of five members with various times.

    Mr. Kuruc, you'll lead us off for five minutes, please.

    Thank you.

     Thank you to all the witnesses for coming today and making themselves available.

     Often we're here in public accounts talking about value for money, but I'd like to touch on a possible breach of sensitive data.

    My line of questioning will start with Mr. Hayes.

    How serious is it that IRCC allowed McKinsey consultants to access its network without proper security clearance? This hasn't been a one-off problem. There's been a clear trend across government contracting, including the arrive scam scandal. Does this show that there's been a breakdown in safeguarding sensitive government systems and citizens' data?

     From our perspective as Auditor General, we want to see the rules followed in every case. One of the fundamental controls, in terms of both security of government information and protection of confidential information and privacy, is to have security clearance in place before access is given to government servers, networks, etc.

     In this case, we identified that there were five individuals who had access to IRCC's network without a valid security clearance. I will say that, when IRCC became aware of that, they stopped the access right away, but that should be something that is identified up front and controlled up front.

     Thank you.

     I do agree with you. That's why it's very concerning for someone like me who's new in Parliament. The general public would assume that these procedures are in place to safeguard people's data, not only when alarm bells start ringing. Thank you for your answer.

     My next question would be for Mr. Kochhar.

    The report found that five McKinsey consultants were granted access to IRCC networks without valid security clearances. Who approved this access, and what systems or data were exposed?

    To my knowledge, there was a situation where their security clearances were pending, and they were given access, but they received the security clearance. In between, in the time when they did not have that security clearance, they did have access to the data. None of the data is shared or is in any other McKinsey kind of domain. It always remains on our network. They can have access, but they cannot copy it or transfer it anywhere. That might be—

    I understand. Thank you for that answer.

     Now I have another question. What you've said is that they had applied for security clearance, were okayed to start working without a clearance and then got their clearance. Now, I understand that all the systems stay on your system, but you had five people from McKinsey with access to sensitive data who weren't cleared yet. It's more concerning that protocol broke down, because they applied for it and nobody could wait until they got it for them to start working, based on your answer.

    Again, my question is, who approved the access and what systems and data were exposed? Now, if there's something you can't say in public on what was exposed because it's sensitive, I do understand that, but what could be exposed?

     I would be guessing what would be exposed from that because I wasn't really.... I'm not sure what they were, but to my knowledge, it was about the work we were doing, allowing them insight into how we do our processing, getting them to understand our way of processing the applications, from which they could find efficiencies by leaning the process or by using digital tools.

     If you allowed five people.... Not you personally, sir, but if the IRCC allowed five people to access that type of data in the processing of immigration, I view that as highly sensitive data. That means that data could have gone out and people could be jigging the system to get into Canada.

    Am I correct in saying that?

     Mr. Chair, I think that is a little bit of an extrapolation. What I am trying to say is that what we actually do in processing is sometimes to give them an idea.... For example, for training purposes, we would have trainees come in and look at some of the applications that we have already processed, just in that case.

    I am not privy to the details, but I do believe that it wasn't a case of something where data was taken away. It stayed on our system.

     You can't guarantee that, though. Is that correct, sir?

     I cannot speak about that.

    I do thank you for your honest answers.

    Thank you, sir.

    That is your time. You can pick it up again down the road.

    Ms. Yip, you have the floor for five minutes, please.

     Thank you, Chair, and thank you to the witnesses for coming today.

    Mr. Kochhar, I seem to remember your coming from another department, health. It's good to see you here with a different department.

    Mr. Settano, you mentioned in your opening statement that BDC did not wish to be a burden on the taxpayer and that it did provide dividends, which is commendable. What value for money did BDC provide to the taxpayer?

    Do you mean overall?

     Yes, I mean just overall, while using the consultants. Did they save you money? Did they help BDC?

    Basically, when we use consultants, it's really important to note that we do it to complete our talent in-house. They really have the expertise, where they tested and validated our assumptions. The big value for money was that they helped us define the new strategy, which we will enhance for the next five to 10 years. We're still in it today. They gave us deep insight into how other financial institutions were approaching the market. We have to go back in time, as this was a post-COVID situation where people were very, very busy responding to various government programs. Everyone was really busy with that, so it was really important that we got that insight and value for money from them.

    Basically, today we can say that we have increased by 49% the number of customers served throughout all of Canada, with the number of Canadian entrepreneurs we serve rising from 72,000 to roughly 107,000 today. All of this was part of the new strategy we implemented following the mandate we worked on, and we worked with McKinsey.

     Did McKinsey provide unique expertise, as you mentioned in your opening statement, that in-house employees couldn't provide?

     The ideas and the ambition and the thinking were all coming from in-house. What McKinsey did, as I said, really completed that by having access to the benchmarking of all of the market, testing our approach, testing the different ideas, and also making sure that our reach approach.... We wanted to reach more and more Canadian entrepreneurs, which was an important point within our strategy, so that was something that was a success following the implementation of this strategy.

     You mentioned that you're still using this strategy. Has this helped following the imposition of the American tariffs and changing global protectionism?

     It's part of our day-to-day business. Everything we do today is really in line with the strategy.

    Basically, what we have done with regard to tariffs is that various programs—like the pivot to grow program, which has been in place for the last few months, and other programs with regard to the softwood lumber issues—are all directly or indirectly in relation to our reach strategy for helping Canadian entrepreneurs. Our global strategy has four pillars—including growth and competitiveness, reach and relevance, and big challenges of our time—and we're making sure we're always financially sustainable within those.

    When you look at the current situation with the tariffs, we can say for sure that the strategy we have today is the right one and it's helping us deliver on the promise for Canadian entrepreneurs.

     Would you use external consultants today?

     To come and vet our strategy or for other specific mandates, for sure, we would use consultants for what I would call completion of work. We do it here and there, and we obviously follow rigorously our procurement policy and directive, for sure. Yes, we would.

     Mr. Kochhar, how did the pandemic impact IRCC services?

    The pandemic was something that really exposed the need for us to do things differently, given the fact that we were looking at transforming our ways of delivering visas.

    To us, that was a huge backlog that occurred over time, because there was pent-up demand for the visitors and others to visit, so there was a need for us to look at effective, quick ways to assess the applications and then issue or refuse the visas. That is what we were focused on, given the fact that we were also looking at making sure that the human capital that would come in to assist us during the COVID crisis, whether they were personal support workers or others, could actually come and contribute to us.

    Thank you.

    That is your time, Ms. Yip.

    Mr. Lemire, you have the floor for two and a half minutes.

    Thank you, Mr. Chair.

    Mr. Kochhar, the Professional Institute of the Public Service of Canada says that Immigration, Refugees and Citizenship Canada justified its contracting out of IT services in 2021 on the grounds that the department lacked the expertise it was looking for. Excessively long staffing processes were also creating recruitment and retention issues. As a result, we had to turn to contractors to get more human resources. There was also no funding for certain positions.

    You invested $134 million in various IT services, with preference given to subcontractors rather than public service expertise.

    Again in 2021, in the budget, you estimated the cost of modernizing the digital platform at $827.3 million over five years. You requested additional funding of $134.8 million in 2025-26. That adds up to an expenditure on modernization of over $1 billion, on top of the various IT services that I mentioned earlier.

    Why don't you trust the department's own resources?

    Can you give us your estimate of how much the modernization project is going to cost in 2025?

     Mr. Chair, I'll answer a part of that, and then I'll turn to my colleague Jason, if you permit.

    First of all, as I said earlier, we have great trust in the internal capacity that we have, but our internal capacity also needs some surge support in cases where we are under a crisis situation, in cases where we are modernizing and in cases where we are building new systems. We have a legacy system that is mostly supported by our own internal resources, but there are times when we need to bring in new folks from outside, whether they are subcontractors or those with specific expertise, for a specific period of time so that we can build something new onto that.

    I'll turn to Jason, who has been working on the DPM-3, as the member pointed out, and he can give a little bit more of an idea.

     To answer the other part of the question, we do value the public service's contributions. We've actually hired as part of the digital platform modernization.

    We hired over 300 new employees, almost half of them from within our department. We simply provided them with training to upgrade their skills. The others came from outside the government, but now they're employees of our department. Part of the work is being outsourced to the private sector because of a need for expertise that the public service can't meet.

    As the deputy minister mentioned, modernizing the digital platform is complex. We're working with new platforms that we've never used before. So it's important to get the necessary expertise—which happens to exist in the private sector right now—so that we can train our employees to grow the platform moving forward.

    That's our strategy. It isn't limited to the private sector. We're investing heavily in our employees as well. As I said, we've already hired over 300 new employees.

    Thank you very much.

     Mr. Stevenson, you have the floor for five minutes, please.

    Thank you.

     I start with Mr. Hayes, with similar questioning as the previous times when we talked about the contracts. Can you review for me why there is such a difference between some of the rules and regulations in regard to how they deal with things within the departments versus in the Crown corporations? Why are they different, and what are some of those differences?

     The rules that apply to government departments and agencies are set by the Treasury Board Secretariat, Treasury Board itself and the work that PSPC, Public Services and Procurement Canada, does. Those rules apply across the board to departments and agencies. Crown corporations are at an arm's length from the government. They are able to have their own procurement policies; however, they are subject to some of the broader requirements of the law, like trade agreements and those sorts of things.

     That's basically what I wanted you to say.

    With that, would it not be advantageous to have the instructions to Crown corporations to have, at least at minimum, the same standards as the department, even though they have different requirements?

    That's a policy question. It comes down to the intention of having Crown corporations operate under a different model from the government oversight that happens centrally. I think, though, it is reasonable to expect that the Crown corporations will try to construct their procurement processes to benefit from competition and the best services that can be achieved at the lowest price for the taxpayer.

    Thank you.

     Ms. Walker, you mentioned in your opening statement that there were some changes.... I believe the report was back in 2024. You said that you started some implementations of new processes. Can you tell me when that started, and whether or not you have some results to report back on how that was being effected?

     Following the Auditor General's report, we also ran an internal audit to look at our process and policies: looking for improvements; taking some of the observations that were put forward through the report; and, following the release of the report, following some Treasury Board guidelines that were released regarding best practices around putting in place professional services. We started there. The results of that also line up with our commitment to the government to reduce our consulting spend, following the McKinsey review. It really just lines up with the best practices of the policies that we have in place.

     Has that contributed to Canada Post's changes in terms of analyzing how they're going to be structured in the future? How is that affecting the negotiations they had with their union, which was on strike?

    When we have requirements for consulting, we start by asking ourselves the question of whether that work can be done in-house or whether there is an enhancement that needs subject matter expertise that we don't have. In the case of the work that was done prior to where we are today, we looked at expertise around the markets, the new entrants in the market, and how we can find new ways of developing and creating revenue for Canada Post so that we do not have to depend on taxpayer money and be self-sustainable. That was the work done over that 12-year period, as observed by the Auditor General.

    Today, when we have requirements for consulting, we use those guidelines that we have put in place to help us review the requirements we need and to develop the right sourcing strategy if the requirement is needed across any types of goods or services that we buy.

     At this point, you don't have any major results to say that you've changed X, Y, or Z to make some improvements so that you can stem these $10-million losses that you have?

     Canada Post has put forward its transformation plan to the government. That was done in the early part of November, resulting from the announcement of our minister, allowing us to do the recommendations put forward in the William Kaplan report. Again, we were very excited to see that announcement come out and to put some of those strategies in place to put that plan forward. We look forward to the refinement and the finalization of the plan with the government and the endorsement of it so we can start acting on it.

    Thank you.

     That is your time, I'm afraid.

     We go over to you, Mr. Osborne, for five minutes.

    Thank you, Mr. Chair.

    Part of the role of the Auditor General is to ensure that departments are doing things the way they should be and sometimes to suggest a better way of doing things. I think in the report for IRCC, we've seen some of that.

    Mr. Kochhar, I wonder if you could talk a little bit about the transformation office. Did that start as a result of the recommendations of the Auditor General's report, or was that something that was in process prior to that? Could you guide us through what the transformation office is doing? You indicated in your speaking remarks that it would create operational efficiencies. Will it create spending efficiencies as well?

     What I mentioned in my opening remarks was that, to look at gaining efficiencies, we asked McKinsey to look at a road map for our transformation, and that was the genesis of the chief transformation officer and chief transformation office. This was much earlier than the Auditor General's report on that.

    What it did was look at how we can develop that strategy so that we can be more effective, efficient and client-centric in terms of the processing of visas. That was the main aspect of that. We have a diverse workforce in the 51 different countries who are also engaged in processing. We have a central processing here. The legacy system we are transforming right now was unable to cope with that kind of pressure that was coming in terms of the volume of the applications, and it needed an overall change in that. The transformation strategy and the chief transformation officer were focused on whether this was a system that we could try to correct or whether we should rebuild that system. That is one of the things we looked at. We are embarking on building a new platform, which is a digital platform.

    The second part of that was to see how we can actually go towards online, because most of the paper filing of the applications took too much time in moving from one place to another. An example of the online digitization of that is the TR, the temporary residence. We have actually embarked on that. I gave the example of online passports earlier. These are all part of the transformation that has happened.

    The transformation office itself has been in essence driving this change. My colleague here, Jason Choueiri, is the ADM responsible. More importantly, there is a part where we are constantly looking at what our pain points are and how we can invest in bringing digitization, innovation and transformation to have a client-centric approach.

     Thank you.

    Mr. Kochhar, the processing efficiency and the client experience are improving, and presumably will continue to improve over time. As we move more and more into the future, we will see more and more people relying on online application and usage. Will we see fiscal efficiencies as a result of this work?

     The translation of the fiscal efficiencies is also part of our assessment, which we call benefit realization. With benefit realization, as we move from paper-based to more digital, there are efficiencies in terms of fewer requirements for individuals to use other automated techniques. Yes, there is efficiency, which is fiscal efficiency realized during this process.

    However, I have to mention, very clearly, that this efficiency is over a period of time. While we are building this new system, we have to continue with the legacy system, which has to still function in the back end. At the time we can shift onto that, we can then disengage the previous system, and that's when you will see the bigger efficiencies.

     Thank you. That is your time.

    We'll now begin our third round, which will consist again of five members with various times.

    Mr. Deltell, you have the floor for five minutes.

    Thank you very much, Mr. Chair.

    Immigration is a sensitive topic and it needs to be handled with humanity. We have to avoid overstating or understating the numbers. The goal is not to have as many as possible or as few as possible. The goal is to reach reception capacity as a baseline. Reception capacity depends on employment, housing and public services, like health and education. Standardized measures pose challenges that I consider negative, and that's why more regional approaches are needed.

    Mr. Kochhar, when the Liberal government announced a target of 500,000 immigrants, who made that decision? Was it the government or was it McKinsey who suggested that?

    Every year, the department pulls together the immigration levels plan, which is a three-year plan, but in reality the first year is the one we actually implement. The other two forward years are for debate in the next session.

    Mr. Kochhar, I don't want to know about the process. I want to know who made the suggestion. Was it McKinsey or the government?

    It is always advice from the public service and from the department. This is based on a lot of consultation. This is not about McKinsey.

    For over five years, migrants used an irregular crossing that was originally an illegal crossing to enter the country. After crossing the border by this route, they became irregular migrants. I'm talking about Roxham Road, where 113,000 people arrived in our country following an unfortunate, clumsy tweet by the Prime Minister.

    Was it McKinsey or the government that suggested keeping Roxham Road open?

    If I'm understanding the question, McKinsey had no role in guiding us, whether it was Roxham Road or anything related to that. Irregular migration was a challenge we faced along with CBSA, and we worked on it.

    In recent years, we've seen a steep increase in the number of cases involving foreigners applying for study permits in Canada, which unfortunately turned out to be more of a ruse to gain entry to Canada, as a number of journalistic reports have revealed.

    Who decided to substantially increase immigrant student numbers? Was it the government, at the recommendation of the McKinsey firm?

    Let me assure you again that McKinsey has no role in the policies that guide us to look at the immigration plan. The growth in the number of students has prompted us to now put a cap on the temporary residents, which includes the students and the temporary foreign workers.

    IRCC has a number of immigration programs. For example, there's temporary immigration, used to admit foreign students and temporary workers. There's also the so-called regular immigration. There are various other programs, too.

    All in all, Mr. Kochhar, how many IRCC files are pending?

    We are looking at a vision of managed migration. However, we have three kinds of immigration happening. One is the permanent residency, which is under three categories: economic, family reunification and humanitarian. The second is temporary residence, which includes the visitors, the eTAs—

    We know all that. What I'm asking you specifically is how many files are pending as we speak.

     Mr. Chair, I'll need some precision on the pending files—

    The last figure we saw was one million backlogged files. As every member around this table and in the House of Commons can confirm, we receive dozens of calls every day or every week from citizens experiencing issues with Immigration, Refugees and Citizenship Canada. Just this afternoon, I had a case reported in my riding.

    How many cases are pending within the department as we speak? Can you give us a number, yes or no?

     I can undertake to be more precise so we can give you the figure. It fluctuates as more people apply. We don't have control over who applies, and that actually brings on the backlog.

    How is it possible that you don't know—

    I have a point of order.

    Wait one second. You might not need a point of order, Ms. Yip.

    Mr. Deltell, your time is up.

    Mr. Kochhar, would you like to provide that information in writing to the committee? You said that there are three different buckets. Is that something you'd undertake to get back to us in a written reply?

     I was mentioning, Mr. Chair, that there are three different buckets in terms of how we do our immigration files. If we are looking for the numerical value of how many are pending files in each category, yes, we can provide that as of today.

     Whenever you add it up, but we usually look for answers within three weeks.

    It will be at some point in time today.

    Thank you. I appreciate it.

    Do you still have a point of order, Ms. Yip?

    Jean Yip: No.

    The Chair: That's okay. I thought we would just lasso it off.

    Thank you very much.

    It's over to Ms. Tesser Derksen again for five minutes.

     Thank you, Mr. Chair.

    If I could, I'd like to ask some questions of Mr. Settano.

    I'd like to direct you to paragraph 5.34 in the Auditor General's report. Here, the Auditor General found that a contract was awarded by the Business Development Bank of Canada that, according to the evaluation completed, was not to the highest-scoring bid. You chose an offer that was not the highest-scoring.

    I understand that the organization is not required to choose the highest-scoring bid. Is that correct? Do you have some discretion there?

     Yes.

    However, there was no explanation documenting why your department made that particular choice, when the quoted price of the bid selected was considerably higher than the others.

     Could you provide some insight—specifically would be great, but if not specifically, generally—into what type of discretion you use when you're awarding these contracts if they're not necessarily the highest-scoring bid?

    To provide a bit of context, there were six invitations because it was a confidential RFP. We got five bidders, and four went to the second round. The information I have on this is that the selection committee unanimously agreed to award the contract to McKinsey, although it was not the highest bidder. We were allowed, under our procurement policy, to do so. Basically, I can confirm that it was not the lowest price among the four bidders that applied, but it was definitely the best bid, and we're very satisfied with the overall contract McKinsey worked with us on for that.

     I don't think the Auditor General's concern was necessarily that you were improperly exercising your discretion to choose a different-scoring bid. The selection committee, certainly, is there for that reason. The critique the Auditor General offered was that there wasn't supporting documentation, rationale or justification for why that bid was chosen. I don't think the Auditor General is saying it was right or wrong. What the Auditor General is saying is that there's no way to tell if it was right or wrong, because there was no documentation.

    Does that make sense?

     That makes sense.

    If we look back, this was a time when, obviously, post-pandemic.... I know COVID made a large back, as we say in French, and we were working on a lot of files at the same time. I can confirm that the documentation was not at the level required back then.

    Since then—and this is the most important thing—we've significantly improved our documentation process, completely enhanced our procurement policy and directive, and given training to all the internal, specific teams awarding contracts within BDC. We've improved a lot since the report.

     Okay. That's good to hear.

    I'll take you a little further into the report, to paragraph 5.45. This is where the Auditor General talks about “chains” of contracts. The report does note that the Auditor General found several series of contracts, which she referred to as chains, where, after awarding an initial contract with no competition, organizations then awarded additional non-competitive contracts for continuous or related work. There's a chain of contracts here that starts with an original non-competitive bid. The report notes that the Business Development Bank of Canada stated that competing later contracts in the chain would have generated “additional costs”, because the work of the earlier contracts that were given to McKinsey specifically was very specific to the business of the department.

    I get the rationale here, but could you comment a little bit on the chain of contracts and how your department deals with those, particularly when the initial bid is non-competitive?

     In this case particularly, the initial bid was a competitive bid in the chain of contracts. The second contract that was awarded to McKinsey was sole-source, as I mentioned in my opening remarks.

    In this specific situation, we justified it by the fact that since McKinsey had thoroughly worked on the implementation of the new strategy and the definition of the new strategy, they were very well positioned to help us in the second chain of contracts—the “impact acceleration”, as we called it. It was actually the execution of the strategy, where they helped us deploy the strategy more quickly.

    The good news is that the contract that was elected was finally not spent in total. We were able to put more and more resources in-house to deliver on the strategy as COVID decreased a bit and we were capable of effecting more resources into the project itself.

     That is your time, I'm afraid, unless it's a very short question.

    It is very short, yes.

     For the record, were you able to quantify the savings from that type of process in the chain of contracts?

     Yes. We elected a contract for $2.9 million, and we actually spent $2.1 million. We spent $800,000 less.

    Thank you.

    Thank you.

    Mr. Lemire, you have the floor for two and a half minutes.

    Thank you, Mr. Chair.

    My question is for Ms. Walker or Ms. Séguin.

    There was a lot of talk this fall about Canada Post's deficit. However, Canada Post is losing a multitude of parcel deliveries every day to Purolator, its private sector affiliate. According to Purolator's website, this Canadian courier company is owned 91% by Canada Post, 7% by Rainmaker Investments and 2% by other companies.

    During the various strikes, we know that Purolator mounted a major offensive to appropriate contracts previously awarded to Canada Post. So we're robbing Peter to pay Paul. Purolator is competing directly with Canada Post in its markets, especially in the regions.

    Why are you competing with or sabotaging yourselves?

    Thank you for the question. I will answer in English.

     Purolator functions as an arm’s-length company, although there is an ownership by Canada Post.

    Nathalie, do you have anything to say on the percentage of ownership?

    Yes, I can help you.

    Thank you for the question, Mr. Lemire.

    Purolator is part of the Canada Post group of companies, but as my colleague Ms. Walker mentioned, it's managed independently. Our stake is about 90%. I can get you the precise figure after the meeting, but it's transparent.

    The Purolator site puts it at 91%.

    Exactly. It's transparent.

    Customers are free to choose. We've been very transparent about the fact that parcel delivery is a highly competitive field where most of the big players, like Purolator, FedEx, USPS and Amazon, are obviously free to compete in the market at will.

    Customers are free to choose the carrier they want. We understand, however, given the labour dispute of recent months, that customers didn't have the luxury of that choice to secure their supply chains.

    I have very little time left and it's important to me that I ask you my second question.

    I hear that post office closures in the regions will apparently include offices in Gatineau. I gather from that, then, that Canada Post considers Gatineau a regional postal service location. The same goes for Salaberry-de-Valleyfield.

    Can you give us your definition, in writing if necessary, of what constitutes a remote region, a rural region and an urban region?

     That is a good question. As a procurement organization.... I would like to take that one away. I don't have the exact definition of the rural and urban locations.

    Thank you for the question.

    Thank you.

    That is fine. That is exactly what the member was asking for. If you could respond within a couple of weeks, that would be great. Thank you.

     Thank you.

     Up next is Mr. Kuruc again, for five minutes.

    Thank you.

     I'd like to continue some questioning with Mr. Kochhar, please.

    As my colleague was saying.... You were explaining...or maybe I want clarity. You consult stakeholders—McKinsey may or may not be one of them—and then you bring your immigration recommendations to the government. Is that correct?

     That is correct, yes.

    The current government, which is the Liberal government, or the last government, which was the Liberal government, would have the final word on saying yes or no. Is that correct?

    Actually, the procedure is to table it to Parliament. That is our recommendation from the minister. That is how it is.

     Thank you for that clarity.

    In a ploy that happened a few years ago, there was advertising of free health care for non-citizens in Canada, or it was advertising of free health care for people to come to Canada. Was McKinsey involved in that or were there other stakeholders involved? Or was it just a government decision to run that?

     Mr. Chair, I'd like to clarify. Nobody advertises free health care. What we do put out on our social media is that if you are coming to Canada to assist the people, you will get health care three months after you arrive here, depending upon the provincial.... That is just an attempt to be very transparent. This is not something—

    It was advertised, though. Is that correct?

     This is put on the social media recurrently every year. This is done just to make sure that those who are making choices to come to Canada actually know what are the other.... We also put other aspects on there: our settlement services and others that are available. That is also there.

     Sure, but that would be considered advertising, meaning to entice people to come to Canada. Hence, you advertised something. Is that correct?

    We don't use the word “advertising”. We're not advertising. We are putting some principles and policy pieces on the web just to inform our clients that these are the things they should expect when they are in Canada.

    Okay. Before doing that, did you consult? You said earlier that you consulted over 1,200 stakeholders. Was anyone in the health care industry consulted about that?

     We do consult multiple different associations. I believe—and I can check and come back to you—that the Canadian Medical Association was one of those consulted.

     Okay. I'll end off with this, actually. Could the IRCC provide that list of consultants or stakeholders? Is that okay? Could you table that for us?

    Is that fine, Chair?

     You can certainly ask for it, Mr. Kuruc. You have that right. The department can respond if it sees fit, and then we can have a bit of a tug-of-war if we don't like the answer. You can certainly ask for that. Are you doing that?

    Would it be possible for you to table with the committee the list of stakeholders who were involved in this process that Mr. Kuruc is discussing here?

    I'll strive to actually get that precise information to you.

    Thank you very much.

    You have about a minute and a half, Mr. Kuruc.

     I don't mean to be super aggressive in my line of questioning, but so often when we sit in these public accounts committees we're left to figure out what went wrong. I understand that different procedures have been put into place, but I do believe that a lot of sectors in this country have been affected by rapid immigration and a breakdown of our immigration system, and we have to go back and figure out what happened there.

    Just to be clear, was or wasn't McKinsey involved in that advertising of health care for non-citizens?

     McKinsey was not involved in any of those messages we put out.

    Again, Mr. Chair, I would say that is not advertising. That is being transparent on one of our policies.

     I would beg to differ. We could have a very good debate on that.

    When you put something on social media—and I can actually provide you with the advertisement—you're technically advertising something, and you're telling people who don't live in Canada what Canada has to offer them. It's transparent, yes, but you could refer to all the legal documents that someone needs to immigrate to this country. When you pick out the things that would entice them the most to come to this country, I would call that advertising, sir.

    That's beside the point. You don't have to answer that.

    Your time is done, Mr. Kuruc.

    Thank you.

     Next, we have Ms. Yip for five minutes, please.

    Mr. Kochhar, I understand that the IRCC has launched a consultant reduction strategy to decrease departmental reliance on external expertise. Can you tell us about the strategy and what progress has been made to date?

    As I mentioned in the earlier line of questioning, we are relying more and more on the expertise that we can actually bring through the public service. The goal is to reduce the reliance on consultants in IRCC to around 13% in the next three years in the office of the chief information officer.

    Most of our consultants are IT consultants who are helping us with a very complex system. Maintaining a small, targeted use of consultants is a prudent and common procedure for temporary needs. The second is the search capacity, which we need, knowledge transfer, and also upscaling. We also have specialized expertise, which we probably need to maintain on that. An important part that we have set up over time is a target and a strategy that is focused on knowledge transfer.

    The overall goal is to let go of 300 out of the 351 consultants we have by April 2028. It may sound like this is far away, but this is very aggressive in our world, where we are removing the reliance on consultants and training and hiring the public servants on that one. As of today, we have achieved a reduction of 127 of them. We are hiring people to backfill, but it is not one-to-one. We have approximately 52 new public servants who have been trained and are taking on the work of the 127 consultants we have let go.

    This is our attempt to make sure that we have less reliance on consultants and more reliance on the in-house expertise. As we move forward with our transformation, these are the people who will support us for a longer period of time.

     How will you proceed to a complete digital transformation while maintaining back-end legacy operations? Are you going to need more consultants?

     This is the question we grapple with: How do we actually get the transformation into a new end state while we are still working on our legacy system?

    The legacy system has to be maintained until the time when we can switch over to the new system. We are putting less reliance on the legacy system by having consultants. We are moving the expertise into what is coming next. We do need some surge capacity, because that does not exist in-house for the new system. Once we have transferred over our reliance on the consultants, which we want to be much lower.... As I said, we may need them for surge capacity. It will never be that we will not have the consultants, but we will have them only for those times we really need them, and most of it would be done in-house.

    Is that what you refer to as backbone IT consultants?

     Yes, that is what it is, in terms of maintaining the IT infrastructure, which allows us to do the processing.

     Are the paper files—which shocked me when I first heard of this before the pandemic—still there?

     The paper files have evaporated from our processing pieces. We are more and more.... There are some areas where we do still have the paper, but it is mostly converted into electronic. If not, we have digitized most of our work in that category.

     In terms of your comments on the Auditor General's recommendations, how can we be sure that this will not happen again?

    We have revised our procedure. We are making sure that nobody gets any access to our system without having proper approval of their security.

    Second, we are making sure that any of the questions asked during the RFP process are transparently available to all the bidders, and should we need to revise the RFP, we will do that.

    We have done this, in addition to firming up our conflict of interest, and many other suggestions that came from the ombud's office too.

     Thank you. That is your time.

    We're going into our fourth and last round. It's going to be just a half-round. It will consist of the official opposition plus the Bloc Québécois. Then I'll end with the government.

    Mr. Osborne, if you're going to split your time with one of your colleagues, you'll have plenty of time for that.

    Without further ado, Mr. Stevenson, you have the floor for about five minutes, please.

     Thank you.

    I have little bits of questions spread out all over the place.

    To summarize, Mr. Hayes, the policy from the Treasury Board is about who makes decisions as to the procurement rules and how they're going to.... It's not so much the department, but it's the Treasury Board that says who's going to make the rules for contracting and that sort of thing when they're different from.... I'm just making sure that it's the government making that decision, not the departments. They're being told which way to do it when it's Crown corporations versus departments.

     The government sets the policies for departments and agencies. The Crown corporations set their own policies.

     Mr. Kochhar, going from what some of my colleagues said—and not to belabour the point about advertising—on the transparency of information, you stated that when individuals come here, they would have x amount of health care available to them. Were they actually informed about the state of our health care system, with lineups, not having doctors and poor access, or was it just stated that they're going to have free health care when they get here?

    As I mentioned, we put these things on the web to make sure that people are aware when they arrive. There are no qualifiers as to what happens.... We don't have any qualifiers on that. We just have the aspects that express, if you're immigrating to Canada, what things will be available to you.

     That's fine. Basically, they're just given a one-liner, and they don't get too much detail.

    I'll move on to Ms. Walker.

    With regard to Canada Post and the adoption of McKinsey's recommendations, do you know how much they actually saved, going forward, for Canada Post?

     At the time we were doing the studies with McKinsey, it was really to look at how we could generate revenue for our current situation, which continues now, when we're still losing money.

    We are in a position now to put forward those recommendations. They were also enhancing internal decisions that Canada Post was making for itself. They provided insight, but at the end of the day, it is our teams putting forward the plans that were just released to the government.

    Did Canada Post have some mitigation with regard to the conflicts McKinsey might have with simultaneously advising their global competitors, such as Amazon and UPS? Did they take into consideration that it might not always be the same recommendations from either side?

     Again, at the time when we were doing work with McKinsey, Canada Post was looking at various ways. Since that time, letter mail has continued to decline. The market did change considerably post-COVID with new entrants. Therefore, as subject matter experts in those very strategic and specific needs.... That information was taken into consideration and then enhanced with our own internal knowledge and understanding of the current market.

    I have one minute left.

    I'll probably just cede my time because I won't be able to get through a question.

     I will take you up on that. Thank you, Mr. Stevenson.

    I will now give the floor to Mr. Lemire for two and a half minutes, plus the remaining several seconds of Mr. Stevenson's time.

    I'll take them. Thank you, Mr. Chair.

    Mr. Kochhar, I thought your answer to the question on the use of paper, put by my colleague from Milton East—Halton Hills South, was interesting.

    In 2019, you introduced a $68‑million program to modernize Canada's asylum system in order to improve border integrity. This project was scheduled for completion in 2022. That program was still heavily based on paper documents. In February 2024, however, after expending 75% of your budget, you abandoned the project.

    Does that mean that we're still using paper for asylum seekers? What's causing these delays? Why did it fail?

    I mentioned that we have reduced a lot of paper on that. We haven't eliminated paper. We still have some, which actually exists because the applications do come through that route. However, in terms of the asylum, we have embarked on a one-step way in which it is captured electronically in most of the cases, and it is work between the CBSA and IRCC to prepare the case for the IRB. That is where we are at this time on that particular way.

    You developed a program called GeoMatch, an artificial intelligence tool designed to help economic immigrants settle in Canada.

    I'd like to know the costs involved in this platform.

    I'd also like to know if the platform takes account of region-specific economic immigration needs, in other words, the needs of regions like Abitibi-Témiscamingue and other rural regions, in Quebec and Canada.

    Accordingly, I also want to know, if possible, your definition of what constitutes a remote region, a rural region and an urban region. I want to make sure that your choices take this factor into account, and that equity exists among the various regions of Canada.

     Mr. Chair, if you allow, I will ask my colleague to answer that, please.

    Thank you very much for the question. I'm going to answer in English, because there are some nuances.

     GeoMatch is a pilot. It's not a full program right now. We partnered with Stanford University, which designed an algorithm to match people coming into the country with different parts of the regions, looking at demographics, characteristics and whether they would settle better in one part of the country than in another. It is a pilot. We are just testing this out right now to see if there will be long-term benefits.

     In terms of the cost, it's quite small. I don't have the exact number on me, but we're not talking about a significant amount. This is because we've developed it in-house with our staff, in an academic partnership with Stanford University. It's a very small piece. We do want to evaluate this over the coming years to see if it adds value and contributes to the success of settling in Canada.

     I'd have to come back to you on the definition. I don't have the definitions in front of me. However, I just want to clarify that it's pilot project to see if it will advance the interests and help us better match people to parts of the country.

    Mr. Lemire, I'll give you time to ask one last question on the same topic.

    I'd like to use the few seconds I've been given to invite you to launch a pilot project that accounts for the needs of more remote regions, where immigrant integration is a tremendous success, and where many entrepreneurs and chambers of commerce are specifically requesting immigrants.

    Thank you.

    Thank you very much.

    Finally, Mr. Osborne, you have the floor.

    I understand that you want to split your time. Unless you want me to manage it, I'll let you manage it back and forth with your colleague.

    I think you had a question.

     Thank you to all the witnesses for their testimony and for spending time with us.

    My question is for you, Ms. Walker.

    First of all, I definitely appreciate your department's services. Whether it's -35°C or 35°C, rain or shine, in rural areas or in urban areas, your services are there all the time and you guys are trying your best to give 10 out of 10. I really appreciate that recent negotiations between the government and your department went well, and you appreciated that.

    I know there's a large deficit. I think my colleagues were mentioning $10 million. Are you guys planning to do something on a structural basis to bring some changes to reduce this deficit?

    As I mentioned, when the announcement came from the minister to put in place the recommendations that came out of the William Kaplan report, we welcomed that. The teams put together the transformation plan. That has been presented back to the minister, and we are looking to finalize that.

    Our hope is that this can be endorsed so that we can make the changes necessary to make that change and become self-sustainable in the future.

    My next question is for you, Mr. Kochhar.

    You guys said you're transforming from paper to digital, I think. What are you expecting in efficiency? By what percentage do you think your efficiency will be enhanced or improved once you change and the transition is complete?

    I think it is hard to quantify it in terms of percentage. What we are hoping to achieve is speed or efficiency with which we will process these applications, a reduction of the backlogs and fitting into the processing times, which are the service standards on that.

    Right now, because of the volume of people who want to come to Canada—Canada remains a destination of choice—we have a lot of people applying for that. What we are trying to do with our transformation is get the use of technology and innovation to obtain rapidity in our decision-making.

    As we say, we want to be fair, fast and final in our business. That is what we are hoping to achieve with the transformation.

    I really appreciate our immigration system. Because of that system, I came as an immigrant in 2003, as a civil engineer, to this beautiful country.

    My last question is for you. Due to this digitalization, do you think some people will lose their jobs or will everybody keep their jobs?

    I don't think the digitization actually results in reduction of the jobs or things like that. We have a complex immigration system. We will be using expertise in a different way. It's hard to predict if advanced analytics, automation, artificial intelligence or others will make an impact on that. It will only be possible to see that once we actually adapt those technologies, fit them into our business and see what the outcome of that is.

    What we want to achieve out of this is, as I mentioned earlier, an efficient system that is to the betterment of the client experience, which we serve.

    Ms. Walker, are you guys bringing artificial intelligence to your department, too?

    Artificial intelligence is something that is around us, so when there is a requirement—I can speak from a procurement perspective—we would obviously look at what that is and make sure that we have very clear requirements when we compete anything that we need to help support our business.

    Thank you, Mr. Chair.

     Mr. Osborne, take two minutes. You've learned a valuable lesson here today.

    Mr. Chair, have you ever read the story about giving a mouse a crumb?

    Mr. Kochhar, you've answered the question already, so I will ask Mr. Settano and Ms. Walker.

    Can you tell us your plans to move away from consultants and rely more on in-house capacity and expertise?

     We have to understand that, in the banking environment, the majority of the consultants are from IT teams. The way it is structured is that we have a percentage of that workforce who are consultants versus in-house employees.

     We have significantly reduced the number of consultants over the past three to four years, and it's still going down. We'll never get to zero, because we'll always need that specific consultation expertise to complete the work of the employees. Sometimes there are specific projects that last for only one, two or three years, and then you hire your consultants for that period of time. It's much more efficient and much more profitable for us to work that way.

    We do understand that there is a cost to consultation, and we always keep that in mind. We are, as I said, financially sustainable, and making a profit is one of our targets.

     On our side, as well, the implementation that we put in place regarding our process of following the guidelines of the Treasury Board has really helped us, as has the training that we've done with the business function owners around really understanding the role they play in making sure, first, that consulting is needed. This is not work that can be done in-house or day-to-day activities.

     Usually we would continue to use consultants when we need advice outside of our subject matter expertise, such as looking at other global postal industries or looking at the competitors in the market that we're in. I can say—and maybe, Nathalie, you have the number—that we have considerably reduced using consultants since the report and since the government's recommendation to reduce consulting in our operating spend, making sure that our investments are appropriate.

     I don't know if you have anything you would like to add.

     I think we're following the direction of the Government of Canada to reduce consulting spend. For Canada Post, this is less than 1% of our overall $7-billion operating expenses.

    Thank you.

     Mr. Kochhar, I have a question for you based on your opening remarks. You talked about strengthening documentation and verification processes. Can you elaborate on that?

    We have multiple ways to detect fraud and to make sure that the documentation that is submitted to us is verifiable through different ways, for example bank statements or language rules. All of that is to say that we have embarked on something that would allow us to clearly verify with a connectivity, for example, to financial institutions or to academic institutions.

    I'll give an example. We get students who apply and who have been accepted by a university. They have put in a note that says they have been accepted at this university. We connect through a portal with that university to make sure that it is true, rather than just believing the document.

    There are a few of those things that we are putting in place so that we can have ways to interact digitally with different parties. That strengthens both our fraud detection and the document verification. That's what we are focused on.

     Thank you.

    Before I wrap things up, I have a couple of comments.

     Mr. Hayes, you didn't take any time at the top. Would you like to have any last words here to help the committee and the analysts wrap up this hearing today?

     Thank you, Mr. Chair. I have a few comments on each of the entities here.

    There were many questions about Canada Post's situation. Indeed, it's been a challenging one for the Crown corporation. I note that, in our financial commentaries over the last number of years, we have raised the fact that Canada Post, as required, has been submitting its corporate plans, but these haven't been approved. The magic in this is that every Crown corporation has to do this every year, but if their corporate plan is not approved, they have to follow the previously approved corporate plan. In the case of Canada Post, we highlighted how the delay in approving corporate plans has had a negative impact on their financial situation and their ability to move forward with projects. That's something that, of course, the committee will likely be studying when looking at the public accounts.

     In terms of the Business Development Bank of Canada, some of the questions today highlighted what we raised as probably the most important feature for them: documenting the reasons behind decisions. One of the members' questions was right on point. I would emphasize that quantifying how much could be saved when choosing to stay with a contractor, instead of opening up another competition, is a way to show that the public interest wouldn't be served by running another competition. That's still in the vein of documenting reasons for decisions.

     In terms of IRCC, I will also reinforce the importance of documenting decisions. Questions around the perception of favouring McKinsey had to do with our finding that there were a number of bidders raising questions during the procurement process about what they considered to be an unfair or incumbent advantage. The evidence we had in the file—this is for the large, $24-million contract—was that there was only one bid received, even though 38 pre-qualified suppliers were invited. They asked questions about the requirements and were told that these wouldn't be changed. What's important is to have the documentation and rationale for why those requirements weren't changed. We at the Auditor General's office are not in a position to say whether or not the competition was unfair or anything like that. To address the perception of unfairness, you need to have that rationale documentation.

     As a final point, I will also say that the Auditor General has been clear that professional services contracts are needed in some cases. There will be surge capacity. There will be cases where you have needs for expertise that you can't have in-house. There will be cases where, for example, you might want an outside perspective on something like transformation, because you get different, fresh ideas or validation. What we have said many times is that it's important that your reason for contracting is documented. You need to have a clear perspective on how much it's going to cost, and you need to make sure you're getting the services you're contracting for.

     Those would be my comments today.

     Thank you.

     Thank you very much. It was enlightening, as always.

     Before I close things up, I want to be clear on something. I might have sounded a little passive. The committee, of course, has the right to request documents, and I know it did with several witnesses. We're curious to hear information about rural post offices, in particular. Mr. Kochhar, the request for stakeholders doesn't seem to be a state secret. I want to remind witnesses and urge them to be as forthcoming as they can. Committees in Parliament have great latitude to request additional documents, so I always encourage witnesses to be as forthcoming as possible. If I say it can be a tug-of-war, it's a very polite way of saying that we can be difficult.

    On that note, thank you very much to the witnesses for coming in, and for their testimony today in relation to the study of “Report 5: Professional Services Contracts” among the 2024 reports 5 to 7 of the Auditor General of Canada.

     We'll pick it up again here on Thursday with the Secretary of State for the CRA.

     This meeting is adjourned.