Question Period Note: Outsourcing of professional services

There has been recent media attention on federal government spending on professional services contracts, noting a 40% increase between fiscal years 2015-16 and 2020-21.

• As a common service provider, Public Services and Procurement Canada provides procurement support to other departments in advancing policy and program objectives
  • Public Services and Procurement Canada continuously improves and modernizes its procurement practices and instruments in the area of professional services to ensure they maximize value for money and that appropriate controls are in place
  • The decision to hire public servants or to pursue professional services contracts is made by departments and agencies based on multiple factors including the nature and duration of the activity and the availability of specialized skills
  • The vast majority of Public Services and Procurement Canada contracts for goods and services are for work that cannot and has not been traditionally carried out by public servants
  • In Budget 2023 the Government committed to a reduction in spending on consulting and professional services

If pressed on the growth in expenditures on professional services:

• Over the past decade, government expenditures on professional services have remained consistent relative to both total government expenditures and the total payroll for public servants

If pressed on subcontracting:

• The Government of Canada does not have a contractual relationship with any subcontractors
• While it is normal for firms to subcontract or collaborate with other firms or individuals to deliver on contracts, the main contractor is solely responsible for the performance of the sub-contractor
• This includes ensuring that contractual obligations of subcontractors are met and that all subcontracted resources requiring access to protected information or sensitive worksite/systems have the proper personnel security clearance
• If wrongdoing or contracting irregularities are detected, Canada has a number of measures in place in order to take action immediately, including revocation of security clearance(s), and referring the matter to law enforcement

If pressed on mark-ups (commissions) paid to vendors through subcontracting:

• For the majority of service contracts, rates are all-inclusive and are established as the result of fair and open competition
• In a competitive market, staffing agencies are required to be pragmatic in their rates, so they can attract quality resources while remaining competitive with their peers
• For sole-source contracts and in cases where a competitive process results in the reception of only one compliant bid, a cost analysis is conducted to ensure that the rates proposed represent fair value for Canada
• During the COVID-19 pandemic, some contracts were issued under Emergency contracting authorities, which allows to deviate from normal procurement procedures. For that reason a cost analysis may not have been conducted for some of the sole source contracts.

In January 2022, media reported that the federal government spending on outsourcing contracts in the fiscal year 2020-21 increased by 40% when compared to fiscal year 2015-16. This came from information publicly available in the Public Accounts of Canada, tabled in the House of Commons on December 14, 2021.

The House of Commons Standing Committee on Government Operations and Estimates (OGGO) is currently carrying out a study on this issue. Budget 2023 proposes to reduce spending on consulting, other professional services, and travel by roughly 15 per cent of planned 2023-24 discretionary spending in these areas. This will result in savings of $7.1 billion over five years, starting in 2023-24, and $1.7 billion ongoing. The government will focus on targeting these reductions on professional services, particularly management consulting services.

On October 5, 2023, Treasury Board published guidance about the use of contracted professional services. The Manager’s Guide: Key Considerations when Procuring Professional Services will help managers determine when to contract for professional services versus when to use internal resources. The Guide also lays out practical considerations for managers when structuring contracts so that they deliver best possible value, can be effectively managed, and fully align with requirements of Treasury Board’s Directive on the Management of Procurement

• Budget 2023 proposed to reduce spending on consulting, other professional services, and travel by roughly 15% of planned 2023-24 discretionary spending in these areas
  • This will result in savings of $7.1 billion over five years, starting in 2023-24, and $1.7 billion annually thereafter. The government is focusing on targeting these reductions on professional services, particularly management consulting services