Question Period Note: Outsourcing of Professional Services

There has been media attention on federal government spending on professional services contracts.

• As a common service provider, Public Services and Procurement Canada (PSPC) provides procurement support to other departments in advancing policy and program objectives
• PSPC 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 PSPC contracts for goods and services are for work that cannot and has not been traditionally carried out by public servants
• The Government commitment made in Budget 2023 to reduce spending on consulting and professional services is ongoing

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 subcontractors meet their contractual obligations 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 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 based on 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

The Office of the Procurement Ombud (OPO) and the Office of the Auditor General (OAG) tabled audit reports on January 29, 2024 and February 12, 2024, respectively. The reports highlight serious concerns regarding project management and offer recommendations pertaining to procurement, specifically professional services.

In light of the findings of the audits, PSPC took immediate action to strengthen existing controls around the administration of professional services contracts. On November 28, 2023, other government departments and agencies were informed of new measures, introducing a common set of principles and mandatory procedures that clients must abide by to use PSPC’s professional services contracting instruments.

These changes closely align with the recommendations in the OAG and OPO audits and are echoed in the resultant management action plans PSPC committed to.

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.

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