Algoma-Manitoulin-Kapuskasing MP Carol Hughes writes a regular column about initiatives and issues impacting our community.
There sure is more than enough going on in the world to draw our attention away from the operating procedures of the Federal government. Trump, his nonsensical trade wars, his kowtowing to Russian aggression against our longtime ally Ukraine, and the ineptitude of his attempts to run his own government (such as firing federal aviation staff to clearly poor results, as well as accidentally firing nuclear safety workers) have sucked all of the air out of the room. But it’s important to draw attention to issues that are happening at home as well, and a recent report has lent credence to a particular issue that needs to be focused on: the outsourcing of government contracts and services.
In 2024, the Federal government has spent a record $17.8 billion on outsourced contracts that are not administered directly by the government itself. Despite hard commitments to reduce the costs of government contracts, the costs of which actually rose by 13.5 percent year-over-year. There are the obvious contracts that become national news because they become scandals, such as ArriveCan. The app was created from a sole-source contract that started as an $80,000 investment and grew into a $54 million boondoggle. We’ve known for some time that the federal government struggles to hire internally for projects they need done, particularly in departments like National Defence ($5.6 billion in 2023/24) and Public Services and Procurement ($3.05 billion), especially on IT specialization, lawyers, and consultants, but it becomes a self-fulfilling prophecy where outsourcing begets more outsourcing.
Government contracts, in and of themselves, aren’t necessarily an issue, but it is when you are dumping money into private companies rather than hiring within the public service itself. The increase in outside consulting means that the same accountability or transparency rules that apply to public servants do not apply to government contracts. The use of consultants has been especially egregious in places where the government has spent an absurd amount of money, particularly for American and international firms doing business with the Federal government. According to Public Accounts, the federal government spent $308 million to hire accounting and professional services giant Deloitte in 2024, 22 times the $14 million the firm was receiving from the federal government a decade ago in 2013-14. Other companies that the federal government contracted out specialization to included: IBM (who many will remember as the sole source contractor responsible for the Phoenix debacle) at $190 million; Accenture, another international consulting firm, was given $43 million in contracts in 2024; CGI received $36 million; and KPMG received $28 million.
The explosion in outsourcing and government contracting has two clear detriments. One, as noted earlier, it hampers public accounting, meaning it becomes harder and harder to know exactly what a company is doing for the federal government. It becomes harder to know how much money is being spent, and exactly what that money is being invested in. This is why ArriveCan felt so underhanded. It started as a government contract to create an app designed to ease airline passengers through customs and became a $54 million waste of money, whereby even the Auditor General could only estimate some of the spending involved. The other issue with government contracting at this level is the amount of dependence it creates. Phoenix is a prime example because it is IBM who designed and ultimately controls the payment system, and any changes to Phoenix require that IBM is involved, not only because of potential wording in their contract but also because they have the knowledge the government requires to operate or fix Phoenix if something goes wrong. It becomes a self-perpetuating system, where the lack of ability for the federal public service to deal with certain complex problems persists, they must rely on contracts with firms who specialize in “helping” the federal government. Those firms create systems that only they can operate, so the federal government gets trapped using those firms to do the work they need through inefficient “shadow public servants” at multinational companies.
Canadians have a right to know that the government is spending tax dollars efficiently. Overuse of private contracting hampers our ability to keep government lean and efficient.