Decades-old problems are plaguing federal contracting system, watchdog says

As the Liberal government attempts to clean up federal contracting, the procurement watchdog says the current system is in desperate need of "fundamental change" and is calling for the creation of a central body to oversee all government purchasing.

"The same issues are identified year after year and most span decades," a report from the Office of Procurement Ombud Alexander Jeglic says.

The report, released Tuesday morning, highlights a number of potential solutions to clean up a procurement system it characterizes as being plagued by long-standing issues. It says the "most critical change required" is the creation of a chief procurement officer (CPO).

"This is really a special moment in time," Jeglic said in Ottawa Tuesday. "Our office has heard time and time and time again that the system is too complex.

"This doesn't come from a unique perspective; this comes from all perspectives across the procurement environment," he added. "The time to make those substantive changes is now."

The CPO would be a central body that oversees government purchases, simplifies contracting processes and fills in accountability gaps that exist between various departments involved, the report says.

"The current procurement system is marked by silos of responsibility and accountability that sometimes overlap with each other or leave glaring gaps. When accountabilities and responsibilities in a procurement system are not exceptionally clear, it becomes very difficult to address the problems plaguing the system," the report says.

Other jurisdictions, including the U.K., have such a central body, it notes.

Jeglic said this and other changes are needed because Canadian vendors are saying it's easier for them to sell their goods abroad than it is to sell them to the federal government in their own country.

"We can no longer sustain Band-Aid solutions. We have to address the foundational issue that our system is too complex and it's not working for all participants," he said.

Jeglic's report also called for the creation of a "vendor's performance-management system" — a way to keep track of a company's history with government contracts.

He also wants the federal government to develop a single set of federal procurement rules that apply universally across government departments.

His report also calls for increased use of artificial intelligence to help streamline the contracting and purchasing process in government by taking over repetitive administrative tasks.

Jeglic's fifth recommendation is for the federal government to develop a way for all government departments to share information and results on the procurement process so all departments have access to the same information.

Federal contracting and procurement has been under a microscope in the wake of the COVID-19 pandemic.

Last year, Auditor General Karen Hogan reported excessive reliance on contractors was a major factor contributing to the controversial ArriveCan app's ballooning $59.5-million price tag. That report also said there were several omissions in financial record-keeping for the pandemic-era project that made it almost impossible to determine final costs.

In the wake of that report, the feds have referred several cases of suspected contractor fraud to the RCMP and have filed a civil lawsuit against a number of contractors and one IT subcontractor.

Hogan conducted a subsequent audit of government contracts awarded to GC Strategies — the main contractor for the ArriveCan project. That report, released last month, highlighted several "deficiencies in how public servants applied federal procurement rules."

Just prior to the release of last month's audit, the government banned GC Strategies from bidding on federal contracts for seven years.

Tuesday's report comes as Prime Minister Mark Carney has promised to boost defence procurement to reach NATO spending targets. Carney has promised that Canada will be spending two per cent of its GDP on defence by March.

To that end, Defence Minister David McGuinty announced $850 million in infrastructure upgrades to CFB Trenton on Monday.

Jeglic's report notes that defence spending currently involves a number of various departments and says the government should consider creating a separate CPO for defence. Alternatively, the government could hand over all military procurement activities to one department, either the Department of National Defence or Public Services and Procurement Canada.