Question Period Note: Procurement & Professional Services (including Spending in the Main Estimates 2025-26)

What is the Governments planned spending on professional services and what actions have the government taken in response to procurement issues uncovered through the ArriveCan case and other situations where procurement rules were broken?

• I expect that all spending, including the use of professional services, is prudent and directed to priorities that provide value for Canadians.
• The use of professional services is a normal part of government operations.
• However, contrary to assertions, very little of what the government spends goes to management consultants.
• The lion’s share of government contracting is for specialized
expertise and capacity needed to advance key priorities.
• For example, the government uses contracting to hire construction firms to build and maintain various assets, to secure nurses for health care in the north, and to manage contaminated sites across the country.
• The Department of National Defence is typically one of the largest users of professional services.

• This reflects contracting to purchase and maintain equipment and vehicles for our brave men and women who serve in the Canadian Armed Forces.
• We have a strong procurement system that is continuously being enhanced so that contracting is efficient, open, fair and transparent.
If Pressed:

• To strengthen procurement, oversight the government has:
o Updated the Manager’s Guide and introduced new mandatory procedures for procuring professional services.
o Published the Directive on Digital Talent to support the development of a robust internal digital workforce, establishing reasonable thresholds for departments to ascertain whether qualified talent is available before contracting out.
o Completed a horizontal audit to evaluate governance, decision-making, and contracting controls. The audit found that we have processes in place to manage and oversee procurement, in compliance with roles, responsibilities and accountabilities.

o Developed a Risk and Compliance Process to assess controls and risk in procurement and other key administrative areas, with a launch planned for Spring 2025.

Procurement & Professional Services (General)
Government spending on External Professional Services (EPS) – a broad type of services, including, but not limited to health and welfare, engineering and architectural services, scientific services and management consulting – increased by $2.0B (14%) in 2023/24 when compared to fiscal 2022/23. 65% of departments have increased their EPS in fiscal 2023/24 which is consistent with prior year, and the year over year variance or “growth rate” of 14% for the Government of Canada is higher than the average increase for the past 4 years (9.7%).
While absolute procurement spending has increased, the proportion of spending on EPS has decreased slightly when compared to overall adjusted gross expenditures of the past 10 years (9.7% compared to an average of 11.6%). Specifically, total departmental EPS in 2014 was 11.1% of gross external expenditures excluding transfer payments and public debt charges as compared to 12.4% in 2023. Through those years, the range was from 10.6% (2021) to 11.8%
(2016 and 2017).
TBS and Public Services and Procurement Canada (PSPC) published the results of their review of contracts with McKinsey & Company in June 2023. The independent audits conducted as part of the review found no evidence of political interference in the contracts awarded to McKinsey. The review also found that certain administrative requirements and procedures were not consistently followed. TBS has since implemented several measures to address these findings. This includes amendments made in June 2023 to the Directive on the Management of Procurement and the Guide to the Proactive Publication of Contracts to increase transparency and strengthen risk-based systems of internal control and documentation requirements.
There have been serious questions raised regarding the integrity of the federal procurement system, including the practices of certain suppliers to the Government of Canada. Recent and ongoing audits (including by the Office of the Auditor General, Indigenous Services Canada, and departmental internal auditors), practice reviews (by the Procurement Ombud), investigations (including by internal departmental investigators, the Privacy Commissioner, and the Royal Canadian Mounted Police) and studies by parliamentary committees concerning the use of professional services have consistently identified gaps in contracting practices and documentation.
In their reports, the Auditor General of Canada and the Procurement Ombud confirmed there are clear rules in place to ensure sound procurement management practices across government, but more can be done. In response, TBS and PSPC announced a series of new measures on March 20, 2024, to strengthen management and oversight of government procurement. This includes undertaking a horizontal audit of professional services contracts governance (underway), updating the Manager’s Guide on procuring professional services (complete), and new mandatory procedures on procuring professional services (compete).
TBS and PSPC are continuing to explore and action procurement modernization efforts with the intent to strengthen procurement and management practices.
While contracting is a normal and acceptable delivery strategy, the Government of Canada Digital Talent Strategy supports skills development and training for the federal public service’s digital and IT community and helps ensure it has the in-house digital talent and leadership

needed to build, deliver, and maintain simple, secure, and efficient digital services and programs.
Professional Services in the Main Estimates 2025-26
Federal organizations have the flexibility to be able to address their individual operational context and requirements. Treasury Board policies require organizations to ensure their procurement activities are conducted in a fair, open and transparent manner that ensures best value for money.
For information purposes, organizations break down planned spending in the Main Estimates by standard object. For 2025–26, organizations are forecasting expenditures of $26.1 billion for
‘professional and special services’. In comparison, the amount shown in 2024–25 Main Estimates was $19.1 billion and total Estimates for 2024–25 (Main Estimates plus Supplementary Estimates A and B) was $22.8 billion. Over 40% of spending on professional and special services shown in the 2025–26 Main Estimates is concentrated in 2 departments:
• $7.3 billion for National Defence
• $3.6 billion for Public Services and Procurement Canada
These two departments manage complex, long-term contracts for facilities and vessels, and are the primary government users of engineering and architectural services.
Professional and special services is a broad category that includes everything from nursing to engineering to research to management consulting. Recent growth in spending is mainly related to four major types of professional services:
• Informatics Services (Computer services, information technology and telecommunications consultants);
• Health and Welfare Services (Hospital services, welfare services purchased from social and related agencies, physicians and surgeons, paramedical personnel, and dental services);
• Business Services (Accounting and audit services, banking services, collection agency fees and charges, real estate services and other business services); and,
• Engineering and Architectural Services (Architectural design, control and plans, construction supervision of buildings, and architecture of naval vessels, services related to assessment, remediation, care, maintenance and monitoring of contaminated sites and engineering consultants).
Management consulting services make up only a small fraction of professional and special services. In 2023–24, final expenditures for management consulting services totalled $837.8 million across the federal government. This made up roughly 4% of the $20.7 billion spent on professional and special services.

None