Global Affairs Audit Finds 26 Percent of Contracts Failed to Comply With Regulations

A person makes their way past the Peace Tower on Parliament Hill in Ottawa on Feb. 13, 2024. (The Canadian Press/Sean Kilpatrick)

An audit of Global Affairs Canada found routine irregularities in the hiring of consultants, with 26 percent of contracts examined failing to comply with the Financial Administration Act.

“In the last five fiscal years, the department signed more than 8,000 consulting service contracts totaling $567 million to support the delivery of its programs,” said the recently released Audit of Procurement of Consulting Services, which covered the period from 2018 to 2023.

“Due to the recent media attention and subsequent targeted procurement audits in the Government of Canada, this audit was conducted to help ensure that the contracting of consulting services is appropriately carried out in the department.”

According to Blacklock’s Reporter, of the 73 contracts randomly sampled, 19 of them did not fully comply with federal requirements. These included seven instances of individuals exercising transactions who did not have the required authority to do so, “either because the amount of the contract exceeded their limit or because they did not have authority over the fund center used for the transaction.”

Additionally, the audit found six instances where the same individual exercised both the transaction and certification authority, which goes against Treasury Board rules. Seven instances were found of contracts being signed after the services had already been rendered, and one instance of the certification authority being exercised by an individual who benefited from the transaction.

For six samples, the signed contract was not provided at all and it was “not possible to determine whether they complied with the requirements,” auditors said. Three contracts were also recently signed and the certification authority could not be verified because services had not yet been rendered.

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The auditors’ review also found cases of contract splitting where a large payment was divvied up into smaller billings of less than $40,000 in order to bypass competitive bidding requirements. Under contracting regulations, sole-sourced awards may only be made in cases of pressing emergency, federal secrecy, exclusive talent, or where the estimated expenditure does not exceed $40,000.

Spending on Consultants

The federal government has repeatedly promised to curb spending on consultants’ contracts, which are worth approximately $21.6 billion annually, according to Budget Office estimates. In a report from last December, analysts calculated that spending on consultants had increased in six of the past eight years.

“Spending on professional services continues to increase,” said a Budget Office report Supplementary Estimates (B), with figures showing that the rate had doubled since 2015.

According to records from last November, the federal government paid consulting firm KPMG nearly $700,000 for advice on how to save money on consultants. In an attempt to find $15 billion in government savings, the consulting firm was paid in order to “develop recommendations” to ensure Canadians’ tax dollars “are being used efficiently and being invested in the priorities that matter most to them.”

“This is not about doing more with less or arbitrary cost cutting,” Treasury Board President Anita Anand wrote in the Inquiry of Ministry document. “This is about ensuring public servants and public funds are focused on the priorities that matter most.”