Feds Issue Guidelines on Outsourcing Contracts Amid Ballooning Costs

Anita Anand (C) arrives for a cabinet swearing-in ceremony at Rideau Hall in Ottawa on July 26, 2023. (THE CANADIAN PRESS/Justin Tang)

Treasury Board President Anita Anand has issued guidance to the federal government on the use of outside contractors amid increasing costs in recent years and a current tightening of the purse strings.

“I have written to my colleagues across government today to ensure that these guidelines are distributed widely, respected, and adhered to,” said Ms. Anand on Oct. 5.

“What we are trying to ensure we do as a government, and certainly at Treasury Board, is to ensure effective management of resources and taxpayer dollars.”

Ms. Anand was switched from National Defence to the Treasury Board file in the July cabinet shuffle. Her announcement is the second in her new job that relates to tightening government expenditures.

In a letter sent to her colleagues in August, Ms. Anand said they would need to find $15 billion in “refocused spending” by Oct. 2. The newly released guide for managers seeks to help them determine when to use their own resources and when to hire outside help.

She said managers need to consider specific reasons why contractors would be better placed to fulfill a task, by identifying key constraints such as budgetary considerations or timelines.

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The Treasury Board said in a news release that the government has “long had robust rules in place for the management of contracts,” but that the new guide will “further improve and strengthen procurement practices.”

Conservative MP Stephanie Kusie, the Tories’ Treasury Board critic, expressed doubts about the new initiative. “I’m not sure that things will change with simply some guidelines for managers or some training,” she told reporters on Oct. 5.

“I think that the problem is much deeper than that and I think that we have to get to the bottom of it.”

Ms. Kusie cited a recent  Globe and Mail report indicating the RCMP is investigating allegations of misconduct in a project outsourced by the Canada Border Services Agency, with links to the $54 million contract for the ArriveCan system.

Government outsourcing also came into focus early this year around contracts awarded to U.S. multinational consulting firm McKinsey & Company, which increased exponentially under the Liberal government.

Concerns were raised over the coziness between McKinsey and the Liberals, with then head of the firm, Dominic Barton, being appointed as chair of the government’s Advisory Council on Economic Growth on 2016, then as ambassador to China in 2019.

Mr. Barton denied being a friend of Prime Minister Justin Trudeau and said their relationship played no role in McKinsey landing federal government contracts.

A government report tabled in June following audits of the contracts found no evidence of political interference, but did find some administrative issues.

While McKinsey contracts indeed increased under the Liberals, they remained relatively small in amount and were part of a larger trend. Information provided by the government earlier this year put McKinsey contracts at over $117 million since 2015.

By comparison, Deloitte received nearly $1.3 billion over the same period, PricewaterhouseCoopers garnered nearly $1 billion, Accenture $388 million, and KPMG $326 million.

From 2015 to 2022, outsourcing increased 74 percent, reported The Globe and Mail in November 2022. The number of public servants also increased 24 percent from 2015 to 2021.

Former Treasury Board president Mona Fortier previously said Ottawa’s spending on outsourcing is consistent with the size of the government.

“I think we have to make sure that we do focus on the fact that we have, as a government, a very ambitious agenda,” Ms. Fortier told MPs in February, in justify the spending.

Both Ms. Fortier and Helena Jaczek, who was the minister in charge of Public Services and Procurement Canada when the outsourcing issues surfaced, were removed from cabinet in July.