GOLDSTEIN: Ignoring contracting rules costs taxpayers billions

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Federal auditor general Karen Hogan on Tuesday reported widespread incompetence in the awarding of government contracts by the public service, resulting in billions of dollars of taxpayers’ money being wasted.

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What’s even more alarming is that everyone in the system knows it and no one is doing anything about it.

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Given that, what is the point of having an auditor general if every time she exposes incompetence and waste, the government pays lip service to implementing her recommendations and then goes back to doing the same things that led to the issue being investigated by the auditor general in the first place?

In her latest report, this concern arises from Hogan’s deep dive into federal contracts awarded to Ottawa-based GCStrategies Inc. a two-person Ottawa-based IT staffing firm — meaning it doesn’t do the work but contracts it out to other companies — to develop the infamous ArriveCan app.

That was supposed to cost $80,000. As far as Hogan could determine — because the record keeping was so bad — it ended up costing almost $60 million.

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This time Hogan, at the request of the House of Commons, examined a near-decade of 106 professional services contracts awarded to GCStrategies from 2015 to 2024 by 29 federal departments and agencies, one Crown corporation and one agent of Parliament, valued at up to $92.7 million with $64.5 million actually paid out.

Among her findings:

— in 58% of the contracts examined that were awarded without tendering, federal departments failed to assess whether doing so would have resulted in lower costs to taxpayers.

–in more than 80% of the contracts examined that were awarded without competition or with only one valid bid, government departments failed to verify that the fees paid did not exceed market rates.

— in almost 50% of the contracts examined, federal departments couldn’t show the work was delivered, even though payments were made.

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— in 33% of the contracts examined, federal departments couldn’t show the firms contracted were capable of completing the work.

–in 21% of the contracts examined, federal departments lacked documentation showing valid security clearances for contractors working on government networks containing sensitive information.

The most alarming conclusion by Hogan was her observation that she has no reason to believe these government failures were confined to this one vendor.

She noted the same thing happened last year when she examined 97 contracts awarded by 10 federal departments and agencies and 10 Crown corporations valued at $209 million with $200 million paid out, to McKinsey & Company for consulting services from 2011 to 2023.

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Hogan — who didn’t make any recommendations to improve procurement policies saying the problem isn’t a lack of policies but failure to follow them — said she believes the same thing is happening throughout the federal government.

Writ large, that’s why, to cite just one of countless examples, the estimated cost to taxpayers for Canada acquiring 88 F-35 fighter jets — another issue Hogan examined in her report — increased by almost 50% from $19 billion in 2022 to $27.7 billion in 2024, with at least another $5.5 billion needed to make the purchases fully operational.

Without drawing conclusions from these specific examples, the fact the same failures keep happening over and over again year after year across the federal government, raises the question of whether beyond incompetence, political corruption is involved, which is beyond the auditor general’s purview.

Whether, for example, political pressure is being put on public servants to ignore procurement rules in favour of handing contracts to favoured companies and if so, why?

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