The Liberal government has a dubious track record when it comes to national security in general, but recent testimony from the defence minister on the McKinsey Scandal revealed yet another potential vulnerability. Our defence department is casually contracting with a third party who also works with hostile regimes. They should stop.
McKinsey is a global management consulting company that has received over $100 million dollars in federal government contracts during the tenure of the Trudeau Liberals. These contracts raise many important questions, and the Government Operations Committee is studying them. The Minister of Defence testified before the committee recently about contracts between her department and McKinsey.
McKinsey’s work with the federal government raises many concerns, but there are some particular issues associated with their work for the defence department.
A central part of McKinsey’s selling proposition is that they simultaneously work for multiple clients across an industry. The tradeoff associated with hiring McKinsey is that, while they will keep strictly proprietary information secret, they have probably learned general best practises through working with your competitors that they may use when working with you and they will probably learn general best practises through working with you that they might use in their work with your competitors.
This kind of learning and sharing might be fine in certain situations, but it can be a serious problem when government work is involved. McKinsey has, for example, simultaneously done work for regulators and for entities that they regulate, such as working for pharmaceutical companies and pharmaceutical regulators in the United States in the years leading up to the opioid crisis. Regulators should not want entities that they regulate gaining a privileged understanding about their organizational culture by hiring a particular group of third-party consultants.
Indirect ‘learning’ through third party contractors like McKinsey is a particular problem when national defence is involved. If McKinsey is working for the Canadian military and for other militaries at the same time, then indirect learning may be happening in this case as well. We therefore need to know which other militaries McKinsey is working for at the same time, and whether the same analysts who serve our military are also serving the militaries of hostile foreign actors.
I asked these questions to the Liberal Defence Minister and she could not answer. It is well known that McKinsey keeps its client lists hidden, but this is vital information for at least her and her department to know. Are the people advising our military on organization and structure simultaneously working with our strategic foes? We know that McKinsey has worked with state-affiliated entities in Russia, China, and Saudi Arabia, but we do not know the full extent of those engagements. Neither, apparently, does our defence minister.
After I repeatedly asked Minister Anand which other countries retained McKinsey to do work for their departments of defence, the Chief of Defence Staff chimed in to try to help. He acknowledged that he also did not know which other defence departments McKinsey had worked for, but said: “when these companies work with our allies, we can garner that sort of expertise to help us out ourselves.” This was a striking comment, insofar as it was an admission by the Chief of Defence Staff that McKinsey is able to learn information working for a defence client which they then apply in their work for another defence client. Surely we can find consultants or other methods that help us learn about the approaches of our allies without worrying that those third party consultants are also working with Moscow and Beijing. With McKinsey, we are flying blind.
Trying to help further with the government’s defence, the Deputy Minister declared: “The nature of the work is not sensitive. It’s HR, benchmarking and data.” The problem with this claim is that the government has still refused to release details of these contracts to the committee trying to study them. The government implicitly acknowledges that lessons learned through working with our defence department could be applied in other ‘client engagements’, dismisses concerns by saying that the information is not that sensitive, and still will not share the apparently “not sensitive” information with Canadian Parliamentarians.
This testimony further underlines that the government’s relationship with McKinsey stinks. We need to continue to fight to access all of the necessary documents and get to the bottom of what is happening.