Delivering Canada’s Future Fighter Jet Capability
Current and Future Use of Federal Office Space
Professional Services Contracts with GCStrategies Inc.
Karen Hogan, Fellow Chartered Professional AccountantFCPA
Auditor General of Canada
Good morning, Mr. Chair and thank you for the opportunity to appear before the committee today to discuss some of our recent reports that were tabled in Parliament on June 10th. I would like to begin by acknowledging that we are gathered on the traditional unceded territory of the Algonquin Anishinaabe people. With me today are Andrew Hayes, Deputy Auditor General, and Nicholas Swales, Markirit Armutlu, and Sami Hannoush, the principals who were responsible for the audits.
First, our audit of Canada’s future fighter jet capability examined the large, multiyear project aimed at maintaining a strong fighter‑jet capability to protect the safety and security of Canadians. We found several risks that could jeopardize the timely introduction of the new CF‑35 jets.
Estimated costs for the Future Fighter Capability Project reached $27.7 billion in 2024, which is almost 50% more than National Defence’s original $19 billion estimate, a figure that was based on outdated information. In addition, estimates did not include key elements like infrastructure upgrades and advanced weapons, which would add at least $5.5 billion to the total estimate.
Other significant risks include a potential shortage of qualified CF‑35 pilots and delays of over 3 years in building 2 new squadron facilities, resulting in additional costs to develop interim facilities. Active and ongoing management of risks and costs is essential to bring the CF‑35 fleet into service on time.
Turning now to the audit of federal office space, which examined the government’s efforts to right‑size office space to minimize costs and repurpose underused properties for potential conversion into affordable housing. In 2017, Public Services and Procurement Canada, or PSPC, estimated that half of federal office space was underused.
We found little progress in PSPC’s multiyear effort to cut office space by 50% by 2034, with a reduction of less than a 2% from 2019 to 2024, mainly due to a lack of funding. The department estimates that reducing federal office space will produce savings of about $3.9 billion over the next 10 years.
The Canada Mortgage and Housing Corporation, or CMHC, supported by Housing, Infrastructure and Communities Canada, is tasked with converting surplus federal office properties into affordable housing through the Federal Lands Initiative. The audit found that CMHC is on track to meet the Initiative’s 2027–28 target of securing commitments to build 4,000 new housing units. However, the target is based only on commitments, and only 49% will be ready for occupancy by 2027–28.
Public Services and Procurement Canada and federal tenants must accelerate efforts to help increase stock for housing that is sustainable, accessible, and affordable.
Our last audit examined 106 contracts awarded to GCStrategies Inc. by 31 federal organizations from April 2015 to March 2024. We found these organizations frequently disregarded government procurement rules meant to ensure fairness, transparency, and value for Canadians.
In 21% of the contracts we examined, there was no documentation to show organizations had confirmed that the people doing the work had the required security clearances. We also found that organizations often failed to monitor the work performed by contractors, lacking evidence to show who performed the work, what was done, or whether the people doing the work had the required experience and qualifications.
These findings echo previous audits that also showed deficiencies in how public servants applied federal procurement rules. Our report includes no recommendations because I don’t believe that the federal government needs more procurement rules. Existing rules need to be understood and followed.
Mr. Chair, this concludes my opening remarks. We welcome any questions the committee may have. Thank you.