Ministers directing review of government contracts to cut costs

Two ministers are directing the public service to review all current and planned federal contracts in an effort to find cost savings.

Finance Minister François-Philippe Champagne and Procurement Minister Joël Lightbound wrote to senior bureaucrats responsible for procurement and government services asking for a detailed proposal for such a review within 45 days.

"We've asked for a proposal with concrete measures: Benchmarking contracts against global prices, integrating international best practices, prioritizing Canadian vendors, opportunities for pooling buying power with provinces and territories, updating procurement policies and more," Champagne said in a social media post.

"This is another step in building a more efficient government that delivers for Canadians."

The contract review is part of the government's overall spending review. Champagne is set to table a budget this October and Prime Minister Mark Carney has signalled he wants to see a reduction in government expenses.

"We made a clear commitment to Canadians to bring a new fiscal discipline to the federal budget. These are tough times. We have to make tough choices for a better future," Carney said at this week's Liberal caucus retreat in Edmonton.

Carney and Champagne had already asked ministers and departments to find "ambitious savings" and cut regulations.

Government contracting and outsourcing were heavily scrutinized issues under Justin Trudeau, Carney's predecessor.

A report from the government's procurement watchdog released earlier this summer found that the current contracting system is in desperate need of "fundamental change" and called for the creation of a central body to oversee all government purchasing.

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

In the past few years, both Jeglic and Auditor General Karen Hogan have released reports on procurement rules being flouted or ignored when it comes to outsourced contracts.

Jeglic and Hogan heavily criticized the procurement practices surrounding the controversial ArriveCan app. Hogan found the government's record-keeping was poor and its reliance on outside contractors allowed the cost of the project to balloon to $60 million — when the initial contract was valued at just $2.35 million.

In June, the government barred GC Strategies Inc. — the main firm responsible for ArriveCan — from bidding on government contracts for seven years. GC Strategies partner Kristian Firth had previously been called to the bar of the House of Commons to be admonished for refusing to answer questions at a committee hearing.

The two government watchdogs also released separate reports about dozens of government contracts awarded to the consulting firm McKinsey & Company.

Hogan said that basic procurement practices were ignored when it came to McKinsey, while Jeglic said the government created a "strong perception of favouritism" in awarding certain contracts to the firm.

The auditor general also released a report last year that found "significant weakness" in the contract management for the Canada Emergency Business Account (CEBA) — the pandemic-era loan program for small businesses — that resulted in little oversight of the costs.

The government has referred a number of cases to the RCMP for suspected invoicing fraud by IT subcontractors.