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2023 Minister’s Transition Book 2: Key files

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Acquisitions

Large procurements in support of other government departments

High frequency rail project

Mandate

The Government of Canada has committed to modernizing passenger rail along the Toronto-Quebec City corridor. The high frequency rail project, led by Transport Canada, will transform intercity travel in Canada through the implementation of a modern rail service between Québec City, Montréal, Ottawa, and Toronto.

Public Services and Procurement Canada (PSPC) is responsible for managing the procurement to select a private partner for the delivery of this project.

Key activities

The high frequency rail project is to be delivered using a Progressive Public-Private Partnership (Progressive P3) model. This approach uses a collaboration between the Government of Canada and the private sector to promote innovation, reduce risk and improve risk management, provide the best value to Canadians, and deliver a world-class service.

PSPC will ensure the procurement is fair, open, transparent, and abides by rules and regulations, while also adopting an agile and collaborative approach for successful implementation and for ensuring value for money. A multi-stage procurement process has been deployed to attract strong competition from domestic and international companies.

On July 20, 2023, the minister of Transport announced the prequalification of 3 consortia that will participate in the request for proposals, which will be launched in September 2023 and close in summer 2024. From the bidders, a single consortium as the private developer partner will be selected. This contract will enable the government to design, build and operate the passenger rail service for a period of 40 years, with a portion of private equity and financing.

Partners and stakeholders

Transport Canada is the lead partner, project authority, and accountable owner of the high frequency rail project. In December 2022, the Government of Canada announced the creation of VIA HFR-VIA TGF Inc. (VIA HFR), that will become the technical and contracting authority by the end of the procurement phase.

As the procurement authority, PSPC leads the procurement phase. Our procurement role will end when VIA HFR signs the Pre-Development Agreement with the winning consortium and takes over as the project lead to manage the co-development.

The Canada Infrastructure Bank provides advice on financial, commercial and transactional aspects of the high frequency rail project and may also be a potential investor.

Other partners include:

Transport Canada is receiving support from several external consultant firms, such as:

Transport Canada is also engaging with a large number of public and private stakeholders, such as host railways (for example, Canadian National), local services (for example, Metrolinx, Réseau express métropolitain), members of the industry (through the procurement phase), other jurisdictions (municipalities, provinces), and Indigenous and environmental groups.

Key considerations

Budget 2022 provided $396.8 million over 2 years, starting in 2022 to 2023, to Transport Canada and Housing, Infrastructure and Communities Canada for the planning and design steps in support of High Frequency Rail. As there are still uncertainties in the design, the costing will evolve as the project advances through the procurement and co-development phases, with the aim of obtaining a target price at the conclusion of the co-development phase.

A key aspect of the design is the alignment, including inter-city alignment, connections to city centres, technology, systems and equipment. Such alignment will be decided on by the private developer partner and will have an impact on the level of service (for example, speed and travel time) as well as on the costs and selection of the proper technology for the rolling stock and associated services.

Another key consideration is the acquisition of land. While the project spans over 1,000 kilometres, the actual land acquisition needs will depend on the chosen alignment. PSPC will support VIA HFR for land valuation, negotiations, and potential expropriation.

Finally, Indigenous engagement has been a key element of the high frequency rail project. The consortia participating in the request for proposal will need to develop an Indigenous engagement plan to demonstrate how they will support socio-economic benefits and maximize project participation opportunities for Indigenous Peoples, as well as support ongoing engagements to foster meaningful, 2-way dialogue.

Vaccine procurement

Mandate

One of the major pandemic response responsibilities of PSPC has been to procure COVID-19 vaccines and provide procurement support for the development of domestic biomanufacturing capacity to respond to current and future health emergencies.

Key activities

On behalf of the Public Health Agency of Canada and based on advice from Canada’s COVID-19 vaccine task force, PSPC finalized agreements with 7 COVID-19 vaccine suppliers:

The agreements with AstraZeneca and Johnson & Johnson have been completed and agreements with Medicago and Sanofi have been terminated by mutual consent.

As part of Canada’s current vaccine management strategy, there remain 2 suppliers for mRNA (Moderna and Pfizer) and one non-mRNA supplier (Novavax). The agreement with Novavax includes a commitment to produce vaccines in Canada at the Biologics Manufacturing Facility in Montreal. PSPC has continued to update and amend agreements with these vaccine suppliers to reduce and/or adjust firm supply commitments to ensure sufficient doses for 2023 to 2025 while minimizing wastage. These agreements enable Canada to buy the latest COVID-19 vaccine formulations offered by these suppliers to protect against new variants of concern, and include options to purchase additional doses if needed.

Canada had opted into the COVID-19 Vaccines Global Access (COVAX) initiative to ensure global access to COVID-19 vaccines. Canada’s agreements with vaccine suppliers allow for donations to be made when doses are deemed surplus in-country. Canada has donated over 25 million vaccine doses through the COVAX facility. Canada’s agreement with the COVAX facility was closed on May 16, 2023.

The department also continues to work with Innovation, Science and Economic Development Canada and the Public Health Agency of Canada to support the development of domestic biomanufacturing capacity to prepare for future health emergencies.

Partners and stakeholders

PSPC continues to work with a number of partners and stakeholders, including the Public Health Agency of Canada, Health Canada, Innovation, Science and Economic Development Canada, Global Affairs Canada, the National Advisory Council on Immunization, and vaccine suppliers.

As the lead client department, the Public Health Agency of Canada is responsible for establishing requirements guided by advice from the National Advisory Council on Immunization and in collaboration with external stakeholders, including the provinces and territories, and other government departments. Health Canada, as the regulatory authority for vaccines, must approve all COVID-19 vaccines before they can be used in Canada. Innovation, Science and Economic Development Canada is leading the negotiation for the development of domestic biomanufacturing capacity with vaccine suppliers.

Key considerations

Canada continues to maintain a portfolio of mRNA and non-mRNA vaccines while making efforts to minimize wastage through proactive donations, and plans to transition to sustainable management of COVID-19 vaccination. In the longer term, establishing domestic production capacity will further diversify Canada’s vaccine options and capabilities.

Lac-Mégantic

Background

In the summer of 2019, the Government of Canada announced the Lac-Mégantic rail bypass project. The government must acquire 124 parcels of land from 44 property owners for the construction of this bypass. These parcels belong to property owners located in the municipalities of Lac-Mégantic , Frontenac and Nantes.

Mandate

Transport Canada has mandated PSPC to proceed with the acquisition of the parcels, and to manage the technical contracts associated with the acquisition process. PSPC is responsible for meeting with property owners to explain the steps in the acquisition process, surveying and appraising the parcels, and negotiating by mutual agreement with the owners. Since January 24, 2023, at Transport Canada’s request, PSPC has been responsible for the expropriation process under the Expropriation Act.

Main activities

On June 6, 2023, the minister signed the notices of confirmation of expropriation, which were published in Quebec’s land register on June 14, 2023, formalizing the expropriation.

At Transport Canada’s request, PSPC also submitted a request to the Governor in Council for an Order in Council to take possession of the land as soon as possible, in order to meet the construction deadlines for the new bypass. The request was endorsed by the Governor General in Council on June 12, 2023, formalizing the legal instrument. Possession of the land is scheduled for August 1, 2023.

Partners and stakeholders

Since 2021, representatives of PSPC and Transport Canada have made numerous visits to Lac-Mégantic to meet with property owners affected by the project.

Main challenges

Opposition to this project has come from property owners affected by the expropriation, as well as from an interest group in the Lac-Mégantic region. A total of 1,494 objections to the expropriation have been received. On April 25, 2023, the Attorney General of Canada appointed Julie Banville as an investigator in the expropriation process. The investigator held public hearings from May 4 to 9, 2023, and submitted her report to the minister on May 25.

On July 13, 2023, an application for judicial review of the minister’s decision to confirm the expropriation was filed in Federal Court by 14 owner applicants affected by the expropriation. Such an application does not result in the suspension of the ongoing expropriation process, but only in an assessment of whether the minister’s decision to expropriate was reasonable in the circumstances, or perhaps in an attempt to overturn it.

The expropriation process is continuing, with plans to take possession of the land on August 1, 2023.

Service delivery projects

Overview

PSPC is facilitating the procurements associated with a range of complex service delivery projects for client departments, including supporting 2 major digital transformation initiatives for Employment and Social Development Canada and Immigration and Refugees Canada.

Key service delivery projects
Benefit delivery modernization

Benefit delivery modernization is a multi-year program led by Employment and Social Development Canada to replace aging and complex legacy systems with a single, modern, easy to use, and secure software platform. Its goal is to provide a seamless experience for Canadians accessing Employment Insurance, Canada Pension Plan, and Old Age Security benefits. [Redacted].

Through a competitive procurement process, PSPC awarded 4 master systems integrator contracts to 4 qualified systems integrators in spring 2021. Work packages are either competed amongst these 4 qualified suppliers, or if appropriate, the work is allocated amongst all 4 suppliers who work collaboratively in advancing a project. [Redacted].

The department has also awarded a competitive contract for the Core Technology Platform to IBM Canada, valued at $249 million, and a large competitive contract for strategic transformation advice to PriceWaterhouse Coopers valued at $179 million. Work has begun with Employment and Social Development Canada to prepare for the re-tendering of the strategic transformation advice contract, [Redacted].

Benefit delivery modernization is being advanced in 4 tranches of work, ending in 2031. It is currently in Tranche 1–Building the benefit delivery modernization technology foundation; deliver a new Old Age Security technology solution, and initial program planning to onboard Employment Insurance benefits to the new technology platform.

Old Age Security is the first benefit to be added to the new benefit delivery modernization platform. The first release of 3 technical releases (release 1) was successfully completed on June 10, 2023. This release provides a new system and experience for all users working on Old Age Security International Agreements and foreign benefits. Release 2 and 3 will onboard additional users onto the benefit delivery modernization platform in a phased approach and is scheduled for completion by December 2024. The next benefit to be on-boarded will be Employment Insurance. The department is currently working with Employment and Social Development Canada to design the procurement to replace the Employment Insurance system, [Redacted]. PSPC will also concurrently seek contracting authorities to support Employment and Social Development Canada.

Digital platform modernization

The digital platform modernization procurements will provide Immigration and Refugees Canada with a modernized web presence and supporting information technology systems allowing users to access services in a streamlined way and have visibility into the status of their transactions.

Digital platform modernization: Client experience platform:

The client experience platform will provide a new interface with which clients can interact with Immigration and Refugees Canada, allowing for a simplified and intuitive experience. This modern, client-facing platform will allow the department to ensure seamless digital client experiences across multiple channels and devices – enabling service capabilities that will allow Immigration and Refugees Canada to personalize services to its clients. The client experience platform contracts were awarded to Accenture Inc. and Salesforce Canada Corporation on July 14, 2023 for a combined initial contract value of $85.4 million.

Digital platform modernization: Case management platform:

The case management platform will replace Immigration and Refugees Canada’s current immigration application system global case management system used for processing all Immigration and Citizenship related applications - application processing functionalities that clients don’t see. This part of digital platform modernization procurement process is underway and currently has a group of 4 prequalified supplier partnerships supporting PSPC and Immigration and Refugees Canada to refine requirements prior to the launch of the request for proposal. Contract award is expected by March 2024.

Digital platform modernization: Programme Management Strategic Advisory Services:

The contract was awarded on May 3, 2023 to Ernst & Young LLP for an initial contract value of $9.6 million to provide a team of experts that will support the transformation objectives of digital platform modernization. Examples of strategic advisory services that will be provided include advising the Immigration and Refugees Canada leadership Team on how best to achieve the program’s transformation objectives, promote digital platform modernization’s change agenda, interact with a wide variety of senior stakeholders and assist Immigration and Refugees Canada in determining case management platform request for proposal requirements.

Procurement Policy

Indigenous procurement

Mandate

Federal procurement is an important lever for increasing socio-economic benefits for Indigenous businesses and peoples. The Indigenous business sector is also a key driver of wealth in Indigenous communities and in closing the socio-economic gaps between Indigenous Peoples and Canadians.

Key activities
Increasing Indigenous participation in government contracting

Modern treaties, Nunavut Agreement and the minimum 5% target are 3 of the department’s key drivers within Indigenous procurement.

There are currently 25 modern treaties, 22 of which contain procurement obligations. The department works with modern treaty partners to establish implementation plans and measures to implement those provisions. It also provides support to procurement officials involved in procurement projects subject to modern treaties and self‑government agreements to help them meet these obligations.

The Nunavut Agreement is a Comprehensive Land Claim Agreement that contains procurement obligations and the requirement for Canada to develop its procurement policies in close collaboration with Nunavut Tunngavik Incorporated. PSPC continues to provide procurement services, advice and guidance on Nunavut Settlement Area procurements.

Indigenous Peoples in Canada comprise approximately 5% of the overall Canadian population, however have received a lower percentage of federal contracts compared to other groups in Canada. In order to create more opportunities for Indigenous businesses to succeed and grow, PSPC, Indigenous Services Canada and Treasury Board Secretariat are implementing new approaches to ensure that at least 5% of federal contracts are awarded to businesses managed and led by Indigenous Peoples. In order to achieve this target, implementation is taking place across a total of 97 departments and agencies, in a 3-phased approach from fiscal years 2022 to 2025.

Indigenous procurement recent results

In fiscal year 2022 to 2023, PSPC’s Acquisitions Program awarded approximately $23.4 billion in federal government contracts on behalf of its client departments. In the same period, the department did not meet the 5% target, but did award 2.7% of the total value of its procurements to Indigenous Services Canada Indigenous Business Directory registered Indigenous suppliers. Consistent with economic Reconciliation objectives, work is underway to increase the range of Indigenous businesses and entities that are able to be identified as contributing to the 5% target outlined below.

The department is taking action through innovative approaches to accelerate the progress in increasing opportunities for Indigenous participation in federal procurement. These innovative methods include Indigenous by default approaches, utilising bid criteria to award points for Indigenous participation, increased use of set-asides, Indigenous Limited Bidding (where Indigenous capacity exists), and connecting demand to supply. PSPC has also taken action through the creation of Indigenous Participation Plans, including Indigenous subcontracting, employment and training opportunities, where Indigenous capacity is limited. The department is also working to accelerate progress by prioritizing early engagement and targeted opportunities where Indigenous capacity exists. This includes reaching out to departments to encourage more procurement, and reaching out to key industry players to notify them of the need to sub-contract with Indigenous businesses.

Procurement Assistance Canada is also working to accelerate progress through engagement and outreach efforts with Indigenous suppliers. Procurement Assistance Canada’s objective is to help smaller businesses and underrepresented groups navigate the federal procurement process, through its 6 regional offices, a National InfoLine and their community outreach. In 2022 to 2023, Procurement Assistance Canada held 403 events specifically for Indigenous businesses with a total of 9,087 participants, which continues to enhance collaboration.

Partners and stakeholders

PSPC, Indigenous Services Canada and Treasury Board Secretariat continue to build external partnerships that will help meet the 5% target. Organizations involved include: Assembly of First Nations, Canadian Council of Aboriginal Business, Council for the Advancement of Native Development Officers, Inuit Tapiriit Kanatami, National Aboriginal Capital Corporations Association, National Indigenous Economic Development Board, Métis National Council and Corporate Canada.

Key considerations

Results on how the government is achieving the 5% target will be calculated over fall/winter 2023 and publicly available in spring 2024. Initial results show that greater procurement action is needed to meet the government objective and continued collaboration between stakeholder departments will be essential in order to enhance opportunities for Indigenous businesses.

Despite there being 60,000 Indigenous businesses in Canada, there are currently less than 3,000 businesses on the Indigenous Business Directory, which are counted towards the 5% target. More effort is needed to encourage more Indigenous businesses to register on the Indigenous Business Directory and to make clear the capacity of Indigenous businesses.

Beyond the 5% there are opportunities to encourage further avenues of Indigenous Reconciliation. The transformative procurement discussion led by Indigenous Services Canada are the forum to uncover and work collaboratively with Indigenous partners on these broader approaches. PSPC will participate in and support discussions with Indigenous stakeholders on this transformative agenda.

Supplier diversity

Mandate

PSPC is delivering on the Government of Canada’s commitments to increase the diversity of bidders on government contracts. In 2022, the department launched a Supplier Diversity Action Plan to help build a more inclusive economy and boost the competitiveness and prosperity of Canadian businesses. The action plan outlines steps designed to increase the participation of businesses owned or led by underrepresented groups in federal procurement. Underrepresented groups include Women, Indigenous peoples, Black persons, other visible minorities, persons with disabilities, and persons who identify as LGBTQ2+.

Key activities

A Policy on Social Procurement was implemented that allows PSPC to leverage the government’s purchasing power to achieve socio-economic objectives and increase supplier diversity. The policy permits the department to create programs on social procurement to better understand how to meet socio-economic objectives through procurement practices. It also enables improved collection of information on suppliers to develop baselines on key data points, information that can be used to improve procurement activities and programs. For example, the department is able to collect and analyze personal information on suppliers (including gender information, visible minority groups status, disability status, LGBTQ2 status and Indigenous status), in accordance with the Privacy Act through additional questions on the Electronic Procurement System.

The Supplier Diversity Program was developed by PSPC to increase the number of underrepresented suppliers participating in procurements and increase the value of contracts awarded to underrepresented suppliers. It aims to do this by:

Procurement Assistance Canada enables the participation of Canadian business owners in federal procurement through capacity building and awareness activities for suppliers and small and medium size businesses, particularly those owned by underrepresented groups. This includes dedicated coaching services and support for underrepresented suppliers and resources through the CanadaBuys platform.

In addition to the Supplier Diversity Action Plan, Public Service and Procurement Canada’s Accessible Procurement Resource Centre supports federal departments and agencies on how to consider and integrate accessibility criteria into federal procurement. The Centre helps to build capacity and awareness through information sessions and the development of a suite of guidance tools to support procurement officers. The Centre is also responsible for leading the Agents of Change for Accessible Procurement, an interdepartmental community of practice.

Partners and stakeholders

Other federal departments and agencies, such as the Treasury Board of Canada Secretariat, Innovation, Science and Economic Development Canada, Shared Services Canada, and Women and Gender Equality Canada, will play a key role as Public Service and Procurement Canada’s clients in seeking federal procurements and in providing technical expertise.

Public Service and Procurement Canada aims to maintain consistent engagement with representatives of various industries and to learn about the barriers that some businesses face in joining the federal supply chain. The goals is to bring a positive economic impact for thousands of Canadian small businesses, including those led by Indigenous peoples, Black and racialized Canadians, women, LGBTQ2+ Canadians and other groups who are often underrepresented in federal procurement supply chains.

The Supplier Advisory Committee is a key stakeholder and has been used as an important platform for ongoing engagement with the supplier community on the department’s broader supplier diversity initiatives.

The Supplier Diversity Alliance Canada recently raised concerns regarding third-party certification, clear definition of qualification, and analytics and reporting. These concerns have been shared with the Supplier Advisory Committee.

Key considerations

One of the key considerations to be addressed relates to the specific definitions of ‘disadvantaged groups’ and certification. Groups targeted currently include businesses that are at least 51% majority owned and/or led by underrepresented groups identified in the PSPC Mandate Letter and in alignment with the 4 designated groups defined in the Employment Equity Act. That is; women, Indigenous peoples, Black persons and other visible minorities, persons with disabilities as well as LGBTQ2+ persons.

A common federal approach to the definition and certification of underrepresented suppliers will be essential to mitigate the risk of fraud and ensure that contracts related to supplier diversity initiatives are awarded to the targeted groups. This will require collaboration across federal organizations. The department currently uses self-attestation to certify suppliers, including for Indigenous Procurement, however some stakeholders have been advocating for third-party certification.

Supporting Canadian small and medium enterprises

Mandate

PSPC enables the participation of small and medium enterprises in federal procurement, with a particular focus on increasing supplier diversity among disadvantaged or underrepresented businesses via Procurement Assistance Canada. In addition the department supports other department programs to support small and medium enterprises, such as Innovation, Science and Economic Development Canada’s Innovative Solutions Canada program.

Key activities
Procurement Assistance Canada

Through its 6 regional offices, Procurement Assistance Canada supports small and medium enterprises understand and navigate the federal procurement system. It provides education and assistance to businesses on procurement tools, processes and resources available to help them sell to the Government of Canada. This assistance is provided through webinars, partnered seminars, a national Infoline number, one-on-one support, reverse tradeshows and small business information expositions within the department and with other departments.

In line with commitments made in Budget 2021, Procurement Assistance Canada is focusing significant efforts to supporting diverse and racialized communities. It is developing a cross-country network of partners that support under-represented supplier communities. These partnerships provide opportunities for small and medium enterprises to become aware that the federal government can be a client and receive advice and tips on how to sell to the government. They also contribute to the department’s understanding of under-represented supplier communities.

Procurement Assistance Canada also plays an advocacy role in advising on policies, strategies and procurement processes to help reduce barriers faced by small and medium enterprises, including businesses owned or led by Canadians from under-represented groups, and social enterprises. For this advocacy role, Procurement Assistance Canada leverages evidence-based data collected through yearly online surveys, research studies and direct feedback to validate and understand the barriers these businesses face.

CanadaBuys has recently become the official source for all tender and award notices for the Government of Canada as part of PSPC’s transition to e-procurement. This affects all suppliers and client departments. Procurement Assistance Canada is undertaking outreach and engagement efforts to ensure support to internal and external partners and stakeholders in the transition process.

Support to other departments

The department is currently supporting the Innovation, Science and Economic Development Canada-led Global Hypergrowth Project, which provides a new scale-up service that will support growth in jobs, exports, research and development and new intellectual property creation.

PSPC also supports Innovation, Science and Economic Development Canada’s Innovative Solutions Canada program from a procurement perspective by awarding contracts for innovations to small and medium enterprises. Innovation, Science and Economic Development Canada’s Innovative Solutions Canada program is a research and development program that helps to provide Canadian innovators with business opportunities by supporting research and development, from early to late stages. The program also includes a Pathway to Commercialization component that allows for commercial purchases of successful innovations. The Innovative Solutions Canada program supports the Government’s commitment to make Canada a global innovation leader and build a more resilient and inclusive Canadian economy through increased support for Canadian small and medium enterprises. Currently, 21 departments and agencies participate in Innovative Solutions Canada, including PSPC, with financial participation targets.

The Department of National Defence’s Innovation for Defence Excellence and Security program similarly aims to promote Canadian innovations of interest to the Canadian Armed Forces and, while open to businesses of all sizes, does provide opportunities for small and medium enterprise participation. PSPC also supports procurements for the Innovation for Defence Excellence and Security program in its role as central service provider.

In addition, PSPC supports the federal government’s commitment to ensuring that procurement policies treat Canadian workers and businesses fairly. Canada is subject to one internal and 11 international trade agreements that include substantive obligations for government procurement. Where they apply, the international trade agreements require that Canada open procurements to the suppliers and commodities of its trade partners and treat these suppliers and commodities the same as it treats Canadian suppliers and commodities.

Budget 2023 announced that the government will undertake targeted engagement with provinces and territories, industry stakeholders, and workers and unions on concrete reciprocal procurement measures. The proposed measures will include placing conditions on foreign suppliers' participation in federally-funded infrastructure projects, applying strict reciprocity to federal procurement, and creating a preference program for Canadian small businesses. The main area where PSPC is advancing efforts on reciprocity is through the development of Harmonized Procurement Regulations, which aim to consolidate all of Canada’s procurement obligations into one single instrument with a view to increasing flexibility and improving agility.

Partners and stakeholders

Procurement Assistance Canada maintains an extensive network of external partners representing various services, industries, and businesses aligned with the department’s socioeconomic priority groups (for example, those majority-owned or -led by Indigenous peoples, persons with disabilities, Black and racialized Canadians, women and 2SLGBTQIA+ Canadians). Ongoing engagement with these groups allows for discussions on shared issues, feedback from industry and to ensure a venue for disseminating critical information about federal procurement.

The National Supplier Advisory Committee is an ongoing consultative body co-chaired by PSPC and a representative of the private sector. It is composed of representatives from leading national industry associations who provide advice on potential improvements to government procurement and its mandate is to provide advice and feedback and make recommendations concerning procurement issues, including improvement of the procurement process.

Key challenges

The department continues to modernize and simplify its procurement processes, including through the launch of CanadaBuys, but small and medium enterprises continue to experience challenges in navigating the federal procurement process. Procurement Assistance Canada is focused on increased outreach and engagement to underrepresented businesses to assist them in participating in federal procurement. It does not support businesses with individual bids, rather provides general advice, counsel and guidance.

There is also a need to better understand how federal procurement can support innovation given the complexity of trade agreements and government contracting regulations. PSPC is currently supporting Innovation, Science and Economic Development Canada in determining how best to support the its pathway to commercialization program for small and medium enterprises from a procurement perspective.

Defence procurement and major projects

Defence and marine procurement overview

Mandate

PSPC, through the Defence and Marine Procurement Branch, has approximately 603 staff members (full-time equivalent), including both procurement and policy professionals dedicated to defence and marine procurement. The related 2023 to 2024 budget is $90.5 million, 75% of which comes from cost recovery and the rest from ongoing funding. PSPC is organized to support marine procurement, defence procurement for land and aerospace, and defence and marine procurement interdepartmental governance, and National Shipbuilding Strategy program management. In addition, it supports operations in 2 international offices, one in Washington, DC and the other in Geilenkirchen, Germany.

Key activities

The overarching priority is to deliver timely and efficient support for the requirements of the Canadian Armed Forces and the Canadian Coast Guard. PSPC guides and coordinates defence and major Canadian Coast Guard procurements through the ongoing implementation of the Defence Procurement Strategy and supports the implementation of activities such as:

There are numerous initiatives underway with the goal of:

Washington sector

PSPC has an office in Washington that was established in 1951 to act as the single window for Canadian purchases under the United States (US) foreign military sales program. Foreign military sales, a United States Security Assistance Program, allows Canada and other allied foreign governments to acquire defence articles, services and training from the United States Department of Defense. The PSPC Washington Sector is the only Government of Canada office with exceptional delegated authority to undertake procurements under the United States Foreign Military Sales on behalf of Canada. The office provides end-to-end management of over 350 government-to-government agreements, referred to as active cases, currently worth approximately USD $7.48 billion. This work includes:

In addition to managing Canada’s foreign military sales procurements, the Washington sector also:

Partners and stakeholders

Canada’s Defence Policy and the National Shipbuilding Strategy represent ambitious investments to equip the Canadian Armed Forces and the Canadian Coast Guard.

The Department of National Defence is a key partner for Canada’s Defence Policy, and PSPC supports and reviews the requirements for major projects and associated resource allocation, including the in-service support and renewal of the Royal Canadian Navy fleet, and works with industry to ensure the right capability is delivered and members of the Canadian Armed Forces are well equipped.

PSPC works with the Canadian Coast Guard and the country’s marine industry on the Fleet Renewal Plan and in-service support to ensure that the right capability is delivered.

The department also works with shipyards of all sizes as well as the 3 largest including Vancouver Shipyards Co. Ltd., Irving Shipbuilding Inc. and Chantier Davie Canada Inc. Within the purview of the National Shipbuilding Strategy, the department manages procurement contracts with shipyards across Canada for the in-service support and renewal of fleets, providing economic benefits to Canadians and rebuilding the country’s shipbuilding industry.

Finally, PSPC works with key defence and marine industry stakeholders and associations to maintain and foster solid relationships.

Key considerations

Equipping the Canadian Armed Forces and the Canadian Coast Guard represents a challenge of historic proportions for the defence and marine procurement community as business volumes and complexity are significantly increasing, requiring ongoing renewal and development of specialized skills within the workforce. For example, the Canadian Surface Combatant project is the largest and most complex procurement in Canadian history. Opportunities exist for PSPC to leverage the defined programs of work for defence and marine procurements to inform planning for procurement resource requirements and ensure long-term sustainability.

Key deliverables
Marine Procurement Initiatives

See associated note: National Shipbuilding Strategy.

Air procurement initiatives

National shipbuilding strategy

Overview

The National Shipbuilding Strategy is a long-term commitment to renew the vessel fleets of the Royal Canadian Navy and Canadian Coast Guard, to create a sustainable marine sector in Canada, and to generate economic benefits for Canadians. To date, 3 large vessels for the Department of National Defence and 3 large vessels for the Canadian Coast Guard have been delivered under the strategy and more are under construction.

Mandate

The National Shipbuilding Strategy consists of 3 distinct pillars: large ship construction (more than 1,000 tonnes of displacement); small ship construction (less than 1,000 tonnes of displacement); and, ship repair, refit and maintenance.

Four departments are central to achieving the defence and marine objectives set out under the Strategy:

Key activities

As of March 31, 2023, Public Service and Procurement Canada has awarded over $23.89 billion in National Shipbuilding Strategy-related contracts to businesses throughout the country. These contracts are estimated to contribute close to $25.0 billion ($2.1 billion annually) to Canada’s gross domestic product between 2012 to 2022 and create or maintain 18,800 jobs annually.

Strategic partner shipyards

In 2011, the Government announced the results of the National Shipbuilding Procurement Strategy to build large vessels for Canada over the next 20 to 30 years. Irving Shipbuilding Inc. was the selected shipyard for the combat package and Seaspan's Vancouver Shipyards Co. Ltd was selected for the non-combat package. To respond to evolving federal shipbuilding requirements, PSPC carried out an open and fair competitive processes and selected, on April 4, 2023, Chantier Davie Canada Inc as the third strategic partner shipyard.

Polar icebreaker

Through the National Shipbuilding Strategy, work is underway to renew of the Canadian Coast Guard fleet through significant investment in new vessels that will bring a modern, flexible approach to Coast Guard program delivery. This investment includes the construction of 2 new polar icebreakers to ensure continued delivery of the Canadian Coast Guard’s Arctic program. In May 2021, the Government announced plans to move forward with the construction of 2 polar icebreakers. Seaspan’s Vancouver Shipyards Co. Ltd. will engineer and construct one vessel while the other will be engineered and constructed at Chantier Davie.

Key deliverables
Large vessels
Small vessels
Repair, refit and maintenance
Partners and stakeholders

For large ship construction, Canada currently has strategic relationships with Irving Shipbuilding Inc.,Seaspan’s Vancouver Shipyards and Chantier Davie Canada Inc.. For smaller ship construction (1,000 tonnes or less), Canada sets aside the individual projects for competitive procurements amongst Canadian companies other than the shipyards selected to build the large ships. For ship repair, refit and maintenance, these requirements are met through publicly-announced requests for proposals to all yards within Canada (inclusive of the 3 large yards).

Key considerations

Shipbuilding is highly complex and challenging work. In a recent report on the National Shipbuilding Strategy, published in February 2021, the Auditor General noted this challenge and acknowledged that the Government of Canada continued to seek opportunities to improve the Strategy. The report recommended that:

PSPC and other government departments welcomed the report and accepted all of its recommendations. Moving forward, the department will continue to work with shipyards and industry to address ongoing challenges, including costs, estimated timelines and productivity.

Infrastructure funding request

Both Irving Shipbuilding Inc. and Seaspan’s Vancouver Shipyards Co. Ltd. requested additional funding to increase their yards’ infrastructure and approval for funding requests was granted. These improvements are now being executed in both shipyards.

Future aircrew training program

Mandate

A procurement process is underway to establish the Future Aircrew Training Program, which will deliver a modernized, agile, and flexible aircrew training system to produce pilots, air combat systems officers, and airborne electronic sensor operators for the Royal Canadian Air Force to meet defence policy tasks.

Key activities

Following an invitation to qualify process in 2018, 3 qualified suppliers were identified:

Canada released the request for proposal to the qualified suppliers in February 2022. Bids were received in January 2023. Bid evaluation was completed in June 2023, and a preferred bidder was identified in July 2023.

Indigenous engagement with the Métis and First Nations of Manitoba and Saskatchewan is ongoing. The Future Aircrew Training Program includes a requirement for an Indigenous Participation Plan. As a result, the Indigenous content will be the equivalent of 5% of the total contract value minus the price of the assets.

Partners and stakeholders

PSPC works with the Department of National Defence, the Royal Canadian Air Force, and Innovation, Science and Economic Development Canada on the program. The Royal Canadian Air Force is responsible for the program; the Department of National Defence provides technical support; and Innovation, Science and Economic Development Canada leads the implementation of the economic impact assessment and Industrial and Technological Benefits Policy.

Future fighter capability project

Mandate

Under the future fighter capability project, an open and transparent competitive procurement process was launched for the acquisition of 88 advanced jets and associated equipment and weapons as well as training and sustainment services.

Key activities

On December 12, 2017, the government launched an open and transparent competition to replace Canada’s fighter fleet with 88 advanced jets. The government also announced that the evaluation process would include an assessment of bidder’s impact on Canada’s economic interest. Officials engaged extensively with the eligible suppliers to seek their feedback on Canadian requirements and to maximize competition by creating a level playing field.

In fall 2018, a preliminary security document was shared with the eligible suppliers to provide them insight into some of Canada’s security and interoperability requirements. Canada also released a draft request for proposal and continued its engagement with the suppliers soliciting their input on the draft bid solicitation documents.

On July 23, 2019, the final request for proposal was released and the government continued to work with the eligible suppliers by assessing and providing feedback on their preliminary security offers, which they submitted as part of the process. The feedback helped suppliers understand the scope of information required to meet Canada’s security requirement and positioned them to submit competitive proposals by the bid closing date.

On July 31, 2020, the bid solicitation phase closed. Proposals were received from all 3 remaining eligible suppliers and the process entered the bid evaluation phase.

On December 1, 2021, Canada announced that, following evaluation of the proposals, 2 bidders—Swedish Government and SAAB AB; and the United States Government and Lockheed Martin Corporation with Pratt & Whitney—remain eligible under the Future Fighter Capability Project competitive procurement process and that it would be finalizing its selection for the next step of the process, which could involve proceeding to negotiations with the top-ranked bidder or entering into a competitive dialogue with both remaining bidders.

On March 28, 2022, following a rigorous evaluation of the 2 remaining eligible proposals, Canada announced it would enter into the finalization phase of the procurement process with the top-ranked bidder, the United States Government and Lockheed Martin Corporation with Pratt & Whitney.

On January 9, 2023, the Government of Canada announced that, following an open, fair and transparent competition, Canada had finalized an agreement with the United States (US) Government and Lockheed Martin with Pratt & Whitney for the acquisition of F-35 fighter jets for the Royal Canadian Air Force (RCAF).

Partners and stakeholders

PSPC works with the Department of National Defence, the Royal Canada Air Force and Innovation, Science and Economic Development Canada to fulfill this mandate. National Defence is the client and technical authority and manages the project, the Royal Canada Air Force is responsible for the requirements of the future fighter. Innovation, Science and Economic Development Canada leads the implementation of the industrial and technological benefits policy.

Assets

Office portfolio

National office portfolio strategy

Mandate

PSPC is the federal government’s administrator of real property and is responsible for approximately 6.9 million square metres of space across Canada. This represents approximately 25% of the Government of Canada’s real property assets (Crown-owned, lease purchased and leased) based on floor area. This includes the Parliamentary Precinct, warehouses, marine structures, heating/cooling plants, and office buildings. Of this space, about 6.2 million square metres is considered office buildings.

Key activities

The Office Long-Term Plan of the department identifies opportunities to modernize, consolidate and green the Government of Canada’s office portfolio over a 25-year planning horizon. Our plan aims to optimize the office space under our responsibility, lower operating costs, and reduce greenhouse gas emissions.

The department has identified opportunities to optimize office space, both leased and Crown-owned, including: renovating existing buildings, reviewing the leased inventory needs, working with landlords to ensure that the portfolio meets future requirements, and identifying surplus properties for disposal.

The plan will evolve in line with the new hybrid workplace and plans and investment timelines are regularly updated to reflect current realities, ensure office space is optimized, and improve the overall condition of core Crown-owned buildings.

Strategic objectives

PSPC will work closely with partners and key stakeholders to achieve the strategic objectives which are grouped under 5 pillars: people, portfolio, environmental, digital technology, and socio-economic. The goal is to improve and transform the office portfolio and provide federal employees with efficient, modern, accessible and green workplaces.

Two key initiatives are underway which will have a direct impact on the national office portfolio. Firstly, as enabled by a shift to a hybrid work environment that permits a more effective utilization and sharing of space and to be delivered in the fall of 2023, is the office portfolio reduction plan that aims to consolidate and modernize the office portfolio and achieve an up to 50% office portfolio reduction. Secondly, the department is prioritizing the acceleration and streamlining of the disposal process. In addition, given the potential for repurposing surplus assets, the department is assessing the potential for repurposing these assets for housing and other community use. A list of National Capital Region Crown-owned properties identified for disposal was recently made public on PSPC’s website.

The department continues to work with client departments and agencies to help identify future office needs as they continue to transition to a hybrid work model.

Key challenges

Key challenges impacting the implementation of the National office portfolio plan include:

Parliamentary Precinct

Long Term Vision and Plan

Mandate

The minister of Public Services and Procurement is the custodian of the buildings and grounds in Canada’s Parliamentary Precinct and the federal lead for its planning, development and operations. In support of this mandate, PSPC is implementing a multi-year strategy for the restoration and modernization of the Precinct called the Long Term Vision and Plan.

Key activities

The Parliamentary Precinct comprises 37 Crown-owned buildings—28 of which have a federal heritage designation. It includes Parliament Hill, as well as the 3 city blocks facing the Hill bounded by Wellington, Sparks, Elgin and Bank streets.

The Long Term Vision and Plan has 3 core objectives:

In 2017, the government endorsed a strategy to develop a parliamentary campus that would better integrate Parliament Hill and the parliamentary facilities being redeveloped on the south side of Wellington Street. PSPC also received direction to update the Long Term Vision and Plan for a second time to provide guidance for the development of an integrated parliamentary campus.

Since 2007, PSPC has completed a series of 24 major projects (consult Annex A). Major projects currently underway, include:

Centre Block Rehabilitation Program
Including a new and expanded Parliament Welcome Centre, it is the largest and most complex heritage rehabilitation project ever undertaken in Canada with an estimated cost of $4.5 to $5 billion and a targeted date of reopening of 2032. The Auditor General of Canada found in 2023 that PSPC had so far effectively managed the scope, schedule and costs of the project.
Redevelopment of Block 2
One of 3 city blocks facing Parliament Hill, block 2 is key to realizing the campus strategy. It will first act as swing space to enable the rehabilitation of remaining heritage and core parliamentary assets (for example, East Block and the Confederation Building), and then will provide permanent Parliamentary accommodations. An architectural design competition was successfully completed in 2022 and construction is targeted to begin in 2024.
Indigenous Peoples Space
In 2017, the Prime Minister announced that 100 Wellington (the former American Embassy) would become a national space for Indigenous Peoples. Located in Block 2, the space allocated for the Indigenous Peoples Space and a dedicated Algonquin space, also includes the former CIBC building located at 119 Sparks Street, and a future infill space between 100 Wellington and 119 Sparks. Crown-Indigenous Relations and Northern Affairs is the project lead, while Public Services and Procurement will be playing a key role in supporting the National Indigenous Organizations and the Anishinabeg Algonquin Nation Tribal Council in the design and the construction of the space.
Partners and stakeholders

Parliamentary Partners include the Senate of Canada, the House of Commons, the Library of Parliament and the Parliamentary Protective Service.

Other key partners include:

PSPC also chairs the International Network of Parliamentary Properties; a network of organizations in approximately 20 countries involved in the planning, redevelopment and operations of parliamentary properties.

Key considerations

An update to the Long Term Vision and Plan that will provide guidance on implementing an integrated parliamentary campus is being finalized for parliamentary and government consideration.

Governance for the Parliamentary Precinct and the implementation of the Long Term Vision and Plan is complex with accountability split between the Minister of Public Services and Procurement (responsible for budget and delivery) and Parliament (responsible for determining its requirements) without any formal bridging mechanism between the 2 at the political level, nor between the 2 independent Houses of Parliament, to build consensus on matters of common interest. The Auditor General of Canada recognized this in 2010 and again in 2023, and recommended that PSPC submit a semi-annual report to both Speakers of Parliament, outlining:

The first of such reports is to be submitted to the Speakers in fall 2023.

Annex A: The Long Term Vision and Plan–Past, present and future

This picture represents projects that have been completed, are in progress, and are planned for the future. It also depicts where occupants are/will go when the building is being rehabilitated.

Long Term Vision and Plan: Past, present and future

Map of the Parliamentary Precinct, indicating completed, current and future projects. Long description below.
Long description of the image Long Term Vision and Plan: Past, present and future

This map is titled the Long Term Vision and Plan: Past, Present and Future. It shows the Parliamentary Precinct and the sequence of projects being delivered by the Government of Canada to rehabilitate and modernize the Parliamentary Precinct. From north to south, the map shows buildings on Parliament Hill and in downtown Ottawa.

The map also shows a number of completed projects on Parliament Hill and in downtown Ottawa. Blue arrows are used to show the relocation of parliamentary activities from one building to another. Firstly, a list of completed projects which are denoted by the colour blue, in order from west to east and from north to south:

  • the Library of Parliament main branch was relocated to Block 2
  • West Block functions were relocated to Block 2, and a site adjacent to the Fairmont Chateau Laurier and north of Wellington Street, and a third location offsite for Food Production and Kitchen
  • functions in Block 3 were relocated to buildings at 181 Queen Street, 155 Queen Street, 131 Queen Street, and an offsite location for the Curatorial Services and Trade Shops
  • a part of the Block 2 project, the southwest segment, was relocated in part to 131 Queen Street and to the C.D. Howe Building
  • some functions at 131 Queen Street were relocated to the Sun Life Financial Centre

The map also shows a number of current projects on Parliament Hill and in downtown Ottawa. Both red and blue arrows are used to show the relocation of parliamentary activities from one building to another. Secondly, a list of current projects which are denoted by the colour light yellow, in order from west to east and from north to south:

  • the Centre Block functions and chambers were relocated to a site adjacent to the Fairmont Chateau Laurier, Block 3, West Block, 40 Elgin Street, and the Senate of Canada Building
  • Block 2 is a current project with future relocation being planned to 40 Elgin Street
  • other current projects that are underway are 100 Sparks Street, 30 Metcalfe Street, and 40 Elgin Street; however, these projects have not undergone any relocation activities

The map also shows a number of future projects on Parliament Hill and in downtown Ottawa. Red arrows are used to show the relocation of parliamentary activities from one building to another. Thirdly, a list of future projects which are denoted by the colour red, in order from west to east and from north to south:

  • the Confederation Building functions planned for future relocation to Block 2
  • the East Block functions are planned for future relocation to Block 2
  • the Block 1 functions planned for future relocation to the Block 1 southwest side of the building and to 100 Sparks Street
  • the middle segment of Block 3 is denoted by the colour red meaning that this part of the building was designated as a future project; however, this project has not undergone any relocation activities
 

The future of Wellington

Mandate

The minister of Public Services and Procurement is the custodian of the buildings and grounds in Canada’s Parliamentary Precinct and the federal lead for its planning, development and operations. Wellington Street is owned by City of Ottawa but runs through the federally-owned Parliamentary Precinct, and was the site of the 2022 protests referred to as the Freedom Convoy.

In response to the challenges imposed by the Convoy and the street’s location, the City of Ottawa passed motions in early 2022 to close Wellington Street to vehicular traffic and for city staff to engage the federal government on the possibility of transferring the street to federal ownership.

Key activities

A public Inquiry into the use of the Emergencies Act and a number of studies by Parliament yielded the Public Order Emergency Commission Report and a study by the House of Commons Standing Committee on Procedure and House Affairs made a series of recommendations, including considering changes to the division of responsibilities for policing and security in the National Capital Region. This would include Parliament Hill, expanding the boundaries of the Parliamentary Precinct, transferring ownership of Wellington Street from the City of Ottawa to the federal government, and restricting vehicle traffic on Wellington Street.

Formal governance was established at the political and officials levels in summer 2022 to guide discussions between parliamentary, federal and municipal stakeholders on the future of Wellington Street. The president of the King’s Privy Council is the chair of the political level body. The minister of Public Services and Procurement, as well as the Speakers of the Senate and House of Commons are members.

In March 2023, the minister of Public Services and Procurement tabled in Parliament a government response to the study by the Committee on Procedure and House Affairs, committing to launch discussions with the City of Ottawa on acquiring Wellington Street. Crown ownership of the street would allow for vehicle restrictions to be reinstated to prevent vehicle-borne attacks, a long-standing risk to the operations of Canada’s national legislature and to the safety and security of those visiting and working in the Parliamentary Precinct. This risk has increased as parliamentary operations and offices are increasingly being located in the 3 city blocks across from Parliament Hill, on the south side of Wellington Street. The international and national threat and risk environment has also continued to evolve.

In April 2023, the president of the King’s Privy Council, minister for Public Services and Procurement and the mayor of Ottawa agreed to enter into a 60-day negotiation period that concluded on June 19, 2023 to establish an agreement to transfer Wellington Street and fairly compensate the city.

A draft framework agreement has been completed with the City of Ottawa, as well as several due diligence activities including a joint transportation study, funded by PSPC and led jointly with the city and the National Capital Commission.

Key considerations

At this point, no formal agreement has been reached with the City of Ottawa to transfer Wellington Street. PSPC presented a generous offer to the City of Ottawa in May 2023 on the basis of the independent appraisal and provisional costing of mitigations identified in the transportation study. No counterproposal has been presented by the city although a number of unrelated issues have been raised through the Wellington discussions. The department has proposed establishing a senior level governance body with the city, the National Capital Commission and the department.

As a first order of business, you may wish to meet with the mayor of Ottawa to discuss a path forward. If an agreement is reached, the department, together with the City of Ottawa and the National Capital Commission, would launch a joint engagement strategy to solicit the input of the public, local businesses and indigenous groups on their views for a reimagined Wellington Street.

An update of plans for restoring and modernizing the Parliamentary Precinct is currently being prepared for presentation this year or early 2024. As committed in the government response to the Standing Committee on Procedure and House Affairs’ 19th report entitled Protecting the Parliamentary Precinct: Responding to evolving risks, it will include a proposal for redeveloping Wellington Street.

The objective is to re-imagine the use of Wellington Street in a manner that also makes Canada’s Parliament more of a destination for visitors. Redeveloping Wellington Street will require significant engagement and collaboration with the City of Ottawa, Indigenous partners, residents and the business community.

Many capital cities are facing similar challenges and have moved or are moving to restrict vehicle traffic and to pedestrianize streets adjacent to their national legislatures. Steps taken in many cities have not only enhanced security but have also created more vibrant public spaces that attract visitors and support local businesses.

Annex B: Wellington Street in the Parliamentary Precinct

Wellington Street

A map of the Parliamentary Precinct, highlighting Wellington Street in red. Long description below.
Long description of the image Wellington Street This image shows Wellington Street dividing the Parliamentary Precinct, with the main parliamentary buildings located to the north on Parliament Hill and to the south in the urban blocks facing Parliament Hill National Capital Region mobility.
 

National Capital Region mobility

Additional interprovincial crossing

Mandate

Following budgets 2019 and 2021, PSPC assumed leadership for this project in collaboration with the National Capital Commission. The National Capital Commission leads the corridor selection with refreshed studies to inform decision-making and will lead the multi-phased public engagement approach. PSPC will provide project management and procurement support.

Key activities

A series of environmental studies for a sixth crossing were completed between 2000 and 2013. The studies explored 10 different corridors and 2 tunnel corridors. Ultimately a preferred corridor was selected but at that point work stopped partly due to a lack of funding. From 2019 to 2020, studies were refreshed and the initial top 3 corridors (Kettle Island, Lower Duck Island and Gatineau Airport/McLaurin Bay) were costed.

A municipalities-led origin-destination survey to study post-COVID-19 traffic patterns took place in fall 2022 and a truck/commercial goods survey is currently underway. Once complete, the corridor selection process can recommence and be reflected in the National Capital Commission’s updated Long-Term Integrated Interprovincial Crossing Plan. An overall strategic view on infrastructure type investments in the National Capital Region, such as the works on Interprovincial Crossings and others, is in development.

The goal to have a recommendation on a corridor by spring 2024.

The project is also advancing in areas that are independent of corridor selection. Current activities include the development of a cost benefit analysis (through economic and climate resiliency lenses), procurement options analysis, and project planning.

As this is a designated project under the Impact Assessment Act it will follow the Impact Assessment Agency of Canada’s regulatory requirements and guidance.

Partners and stakeholders
Key challenges

Pre-pandemic traffic volumes indicated that additional capacity was required in the National Capital Region. The revised version of the Long-term Integrated Interprovincial Crossing Plan, which must also incorporate the origin-destination household survey and the commercial goods survey, should capture the impact of the shift to more telework, although it will take time for the new traffic patterns to emerge post-pandemic.

Alexandra Bridge replacement project

Mandate

As part of a broader effort to improve interprovincial transportation in the National Capital Region, the Government of Canada mandated the replacement of the Alexandra Bridge in 2019. The Alexandra Bridge is more than 100 years old and nearing the end of its life cycle. In addition to improving the active transportation experience, there will be one vehicular lane in each direction, and the possibility to convert for public transit in the future. It is expected to take 10 years to complete, with construction ending in 2032. The National Capital Commission is the lead in a multiphase public engagement approach and PSPC will be working in collaboration with it to design a replacement for the bridge.

Key activities

In June 2021, the National Capital Commission’s board of directors approved the planning and design principles for the replacement. These principles were developed by the department and the National Capital Commission with input from the public and Indigenous partners. Over 2,300 participants took part in the first phase of a series of online public consultations and stakeholder sessions held in fall 2020. The principles were circulated to Indigenous partners who are continuously engaged with the National Capital Commission and the department to give their input with respect to these principles.

As a designated project under the Impact Assessment Act, the project will follow the regulatory requirements of the act. The Impact Assessment Agency of Canada determined that the department can carry out legislated studies and obligations under the act without the Agency’s oversight. Our duty to consult Indigenous peoples remains under the Canadian Charter of Rights and Freedoms, and discussions with Indigenous communities and organizations continue to progress.

In May 2023, the project awarded a contract for a Technical Advisor to bring in industry expertise. The public will be able to participate in the design process through consultations that are expected to begin in 2024 with the presentation of conceptual designs. An independent panel of experts will review and recommend a preferred concept design and support a design competition to be held in the future. Final design approval is with the National Capital Commission as part of their legislated authority under the National Capital Act. Project and expenditure authorities are planned to be sought in 2024 to 2025 once bridge types and alignment are chosen.

Partners and stakeholders
Key challenges

While the Alexandra Bridge accommodates roughly 9% of the vehicular traffic (pre-pandemic), the interprovincial crossings and associated road networks are beyond capacity at peak hours. The period of deconstruction and construction of the replacement bridge is expected to take up to 4 years and managing traffic impacts will be a significant challenge.

Ottawa-Gatineau tramway

Mandate

Budget 2021 directed the National Capital Commission to create an interprovincial transit project office to study and plan for potential interprovincial tramway connections between Ottawa and Gatineau. The proposed tramway route would connect western Gatineau with downtown Ottawa via the Portage Bridge.

Key activities

The National Capital Commission has endorsed a route where the tramway would run along Wellington Street in Ottawa and also sees the possibility for a tramway loop that would extend the tramway to loop around via the Alexandra and Portage bridges.

Partners and stakeholders

The National Capital Commission’s Interprovincial Transit Office is collaborating with the Société de transport de l’Outaouais on the proposed interprovincial tramway, in addition to consulting and collaborating with municipal, provincial and transportation partners.

Key considerations

Funding for the interprovincial tramway remains to be determined. In March 2023, Housing, Infrastructure and Communities Canada announced that an agreement-in-principle had been reached with the Government of Québec that would see $2.7 billion in Québec’s remaining infrastructure envelope allocated to projects across the province, including major transit projects. However, no funding announcements pertaining to the Ottawa-Gatineau Tramway have been made.

Payments and accounting: Pay administration

Pay administration overview

Mandate

Under section 12 of the Department of Public Works and Government Services Act and Order in Council P.C. 2011-1550, the minister of Public Services and Procurement is mandated to administer the disbursement of pay to employees of the federal public administration. Within the department, key partners in pay administration include the Pay Administration Branch, and the Digital Services Branch–Pay solutions.

Key activities

The Pay Administration Branch is accountable for the administration of compensation and benefits for over 415,000 active and inactive federal employees (as of July 2023), as well as data integrity. This includes all federal public servants working in over 100 departments, agencies and Crown corporations, as well as members of Parliament and their staff. It also includes remittances of approximately $1 billion annually to third parties (for example, tax agencies, insurance companies, and unions). These employees and third parties are paid through the Phoenix pay system.

The branch is also responsible for the provision of compensation services for approximately 270,000 employees within 48 departments through the Public Service Pay Centre. Equally, the branch’s Client Contact Centre serves as the first point of contact support for current and former employees. The branch also provides support to the compensation community across the Government of Canada through training and communications.

Lastly, the branch is accountable for monitoring and oversight of activities and initiatives to stabilize human resources (HR)-to-pay. It supports the holistic project management of all initiatives impacting HR-to-pay through functions such as integrated planning, governance, analytics, change leadership, administrative services and strategic engagement.

The Digital Services Branch–Pay solutions is accountable for the information management and information technology functions, and solutions supporting the stabilization of the pay system. The branch also leads the work on a web-based human resources platform called MyGCHR. It also manages contractual arrangements related to in-service support. The current vendor, IBM, is on contract until March 2024 (with 10 additional one-year options that can be exercised on an as-needed basis).

Partners and stakeholders

Departments and agencies, and bargaining agents are key partners in the management of pay operations initiatives.

PSPC and the Treasury Board of Canada Secretariat are working with other departments and agencies to improve the timeliness and accuracy of human resources data submitted to the pay system. PSPC is responsible for reporting monthly to other departments and agencies on the timeliness of transactions. The department also works with the Treasury Board of Canada Secretariat to minimize the impact of future collective agreements on pay.

Key considerations

Budget 2023 allocated $517 million for fiscal year 2023 to 2024 and $521 million for fiscal year 2024 to 2025 to increase compensation advisor resources as the department continues its work to resolve outstanding pay transactions.

This includes hiring 350 additional compensation advisors between April and September 2023, as well as an additional wave of hiring to account for attrition in the fall. This additional hiring, in combination with improvements to operations, has resulted in the Pay Centre exceeding manual output pace required to keep up with new intake for the last 4 consecutive pay periods. PSPC’s target is to have no cases over one year old in the Pay Centre queue by March 31, 2026. Currently, there are approximately 200,000 cases in the one-year plus backlog (as of July 19, 2023).

Budget 2023 funding recognizes the critical nature of the mandate to deliver timely and accurate bi-weekly pay, while resolving outstanding transactions.

We continue to focus on projects that drive program optimisation and that will promote greater performance and improved efficiency, while strengthening human resources behaviours–specifically timeliness of human resources transactions. PSPC is establishing a funding mechanism to sufficiently support Pay Administration in the current environment, and investigating other measures to reinforce the impact of untimely submissions on pay operations.

The Pay Administration Branch teams are managing a number of key risks to project success. These include the recent and sustained increase in new intake at the Pay Centre, which challenges efforts to eliminate the backlog, compensation workforce retention and recruitment challenges, ongoing government-wide human resource priorities, and associated scrutiny and public criticism of project efforts. For example, key files such as the recovery of salary overpayments from employees are generating public interest and reaction from key stakeholders including employees and bargaining agents.

The Pay Administration Branch is part of the integrated team under the newly established Enterprise Pay Coordination Office, and the integrated strategy is currently in development.

Enterprise pay coordination

Mandate

In May 2023, the prime minister announced the creation of the Enterprise Pay Coordination Office within PSPC, under the leadership of Associate Deputy Minister Alex Benay. Its mandate is to lead, coordinate and implement the development of an integrated, enterprise strategy on human resources and pay moving forward.

Key activities

PSPC, through the Enterprise Pay Coordination Office, will oversee an integrated team working across federal organizations, which will be key to the Government of Canada’s success on enterprise human resources and pay.

The work will center on efforts to address the business, governance, data, culture and human resources challenges across the enterprise. Four program pillars are being established to address current and future challenges and needs. Data, pay, human resources and governance and business have been determined as foundational priorities for the development of an integration strategy.

The work of the Enterprise Pay Coordination Office aligns with PSPC’s immediate actions following the announcement of Budget 2023, which allocated $1.038 billion over 2 fiscal years to increase pay processing capacity at the Pay Centre and address persistent queue management challenges. This investment supports the Pay Centre’s ability to keep pace with intake and address the backlog of cases over one year old. It also supports PSPC’s efforts to drive program optimization, establish a funding model, and sustain broad support for strengthened human resources behaviours across the enterprise, including investigating new measures that reinforce the impact of untimely submissions on pay processing.

Teams working on the next generation of the pay system will now functionally report to PSPC’s Enterprise Pay Coordination Office and the department will establish a new project management approach with a clear business owner and integrated delivery team. Bringing the work and integrated teams together will improve coordination and support this ambitious mandate.

Partners and stakeholders

PSPC’s enterprise pay coordination will work closely with key departmental partners (the Pay Administration Branch, the Digital Services Branch), the team working on the Next Generation, the Treasury Board Secretariat’s Office of the Chief Human Resources Officer, and the Office of the Chief Information Officer.

Key considerations

Processing and delivering public service pay requires ongoing support across the entire human resources to pay to pension ecosystem. It is critical that program partners participate in the development of the integrated strategy at an operational and program management level to ensure it is addressing challenges, highlighting dependencies, consolidating the business process, regaining employee trust and shifting the culture.

This is not solely a pay problem. To evolve people management, including human resources and pay, the Government of Canada requires a new business maturity to shift from an industrial digital era to one that is integrated and operates in real-time.

Next steps

Three immediate next steps have been assessed and established for the next 90 days:

IBM Phoenix

Mandate

As Phoenix’s designer and prime implementer, IBM’s expertise and operational support are critical to long-term stabilization of the system. IBM provides functional and technical support by managing the daily administration of pay. In addition, IBM assists with strategic initiatives designed to contribute to stabilization such as advanced analytics, the implementation of robotic process automation, and the automation of business processes.

Key activities

In June 2011, after a competitive process, IBM was awarded the contract for the new pay system. Under this contract, the department paid $170 million to IBM Canada (2011 to 2018) towards the design and implementation of the Phoenix pay system. There were 50 amendments to the original contract for a total contract value of $545 million (taxes included).

Since the original contract was issued, the Crown has moved towards an application managed service model. Under this outcome-based model, IBM has taken on an enhanced role in delivering more of the day-to-day operations and that has allowed the department to focus on strategic improvements and processes. Below is a list of benefits to date:

In February 2019, the department received funding and contracting authority for the IBM operational support contract for a 3-year period that ended on March 31, 2022.

The contract included services for:

To ensure ongoing pay operations and support beyond 2022, the department initiated a process to re-tender the operational support contract.

In May 2019, a request for information was posted on Buyandsell.gc.ca to gauge industry interest and capacity to provide ongoing operational maintenance and support services. This was followed by an Industry Day in June 2019 with private-sector vendors. Ongoing industry engagement was key to ensuring fair and equal opportunity to all interested suppliers and a successful procurement process. To maximize the market response, the department incorporated lessons learned from previous industry consultations in this area.

Following the request for information, an invitation to qualify was issued in May 2020 on Buyandsell.gc.ca.

After a thorough evaluation, it was determined that only IBM met the mandatory requirements of the procurement process. Based on the results of this process, the department established a new pay system support contract that is in place until March 2024, with a value of $108.9 million (including taxes and contingency). The contract contains 10 additional one-year options that can be exercised on an as-needed basis.

In June 2022, the department received funding and contracting authority for 4 of the one-year option periods, ending on March 31, 2026.

This contract will provide ongoing services to stabilize the pay system, eliminate the backlog of outstanding pay issues and ensure a smooth transition to the Next Generation Human Resources and Pay System. An independent fairness monitor observed the procurement process and has not raised any fairness concerns.

Crown Corporations

Canada Post Corporation

Future of Canada Post

Mandate

Canada Post has a dual mandate to operate on a financially self-sustaining basis while providing a standard of service that meets the needs of Canadians, including in rural and remote areas when they are unprofitable.

Key challenges

In 2016, the Government of Canada launched an independent review of Canada Post to ensure Canadians receive quality postal services at a reasonable price. The Canada Post Review Secretariat was formed to oversee the review.

On January 24, 2018, the minister of Public Service and Procurement announced the new service-first vision for Canada Post drawing from the findings of the review. As part of the new vision, Canada Post was asked to embrace innovation, experimentation and pilot projects, and to meet the evolving expectations of Canadians. It was also asked to explore partnership opportunities to leverage Canada Post’s unique retail network to enhance access to government services, especially in rural and remote areas. Aligned with the service-first vision, the program to convert home delivery to community mailboxes was also terminated.

Since the 2018 announcement, Canada Post’s financial situation has deteriorated, and they have reported 5 consecutive years of before tax losses, totaling $2.2 billion. In 2022 alone, Canada Post reported a before tax loss of $548 million, and is forecasting a 6th year of operating losses in 2023, reporting a before tax loss of $107 million for the first quarter of 2023.

The department is working closely with Canada Post to examine opportunities to improve the financial sustainability of its important operations.

Canadian Postal Service charter (service charter)

In 2009, the government established the Canadian Postal Service Charter (Service Charter) to describe its expectations and provide transparency regarding service standards and related activities in providing postal services that ensure these remain universal, affordable, reliable, convenient, secure and responsive to the needs in Canada. It includes a variety of costly service obligations that have not changed since 2009 (for example, daily delivery of letters, uniform postage rates for letters, number of days to deliver a letter between provinces, rural moratorium, etc.).

The government committed to review the Service Charter every 5 years to assess the need to adapt the Charter to changing requirements.

In 2018, the government affirmed that Canada Post was expected to continue to meet the existing expectations. The next review of the service charter should take place in 2023.

Rural Moratorium

The Service Charter includes the 1994 moratorium on the franchising / closure of post offices in rural areas and small towns (often referred to as the “Rural Moratorium”).

Between 1987 and 1994, thousands of post offices were closed by Canada Post, mostly in rural areas and smaller towns and villages, leading to public outcry in rural Canada. As a response, a moratorium on the closure of post offices in rural areas and small towns was put into place in 1994.

This moratorium protects a list of 3,000+ corporate post offices. This list was not based on a definition of rural, has never been updated and continues to protect corporate post offices which are no longer/never were rural. Many protected locations are now located in suburban communities, and some areas are comparatively over-serviced while others lack postal services altogether. While the moratorium allows closures in some circumstances (for example, fire or death of the postmaster), it does not allow changes based on service needs, sustainability, or demographic shifts.

Overall, corporate post offices operate at a loss, whereas franchises generate a profit.

Franchises generally have better hours, locations and parking than corporate post offices; however, they are staffed by employees of host businesses. 2022 Public Opinion Research results show openness to franchising and updating the rural moratorium; however, results also show significant opposition to reducing the number of post offices.

Despite the ongoing moratorium, the number of post offices has continued to decline.

Community mailboxes

In 2013, as part of its 5-point action plan, Canada Post announced that it would convert all addresses with door-to-door delivery to community mailboxes. It was expected to generate $400 million to $500 million in annual savings. Before the program was in 2015, roughly 830,000 addresses were converted, generating $80 million in annual savings.

The service-first vision announced in 2018 ended the community mailbox conversion program; however, community mailboxes continue to be installed in new subdivisions. Canada Post was also directed to develop an enhanced accessible delivery program for those with mobility issues, who are served by community mailboxes. Conversion to community mailboxes represents a significant cost reduction opportunity and would enable a meaningful improvement in financial performance.

2022 public opinion research

In spring 2022, PSPC engaged 3 firms to do public opinion research with Canadians, Businesses, and Indigenous peoples on various questions related to their expectations of Canada Post, how Canada Post serves them today and how they wish to be served into the future.

The results of the public opinion research will enable the government’s 5 year review of the Canadian Postal Service Charter that is next due in 2023.

The results of the public opinion research show some openness to change (particularly around franchising and lettermail delivery), and high levels of support for providing government funding.

2022 public opinion research with Canadians–Highlights

Level of support for different options to address Canada Posts losses:

Changes to the rural moratorium:

Challenges faced by rural residents:

The number 1 challenge was the cost of shipping parcels (49% said this posed a moderate to high challenge).

Stamp increases

Through regulations under the Canada Post Corporation Act, Canada Post has the authority to set postage rates for letters and registered mail destined domestically, to the United States and internationally. The act requires that regulated postage rates must be fair and reasonable, and consistent so far as possible with providing revenue, together with any revenue from other sources, sufficient to offset costs incurred by Canada Post in its operations.

Any changes to the stamp rates must follow a regulatory process and are subject to approval by the Governor in Council. The act sets out the process for seeking approval to change which includes publishing in the Canada Gazette to provide the public with an opportunity to provide feedback. Once the regulations have been approved by Canada Post’s board of directors, they are submitted to the minister of Public Services and Procurement, as the minister responsible for the Corporation, for the regulations to be submitted for the approval of the Governor in Council.

The last increase to regulated stamp rates was in January 2020 and rates have been maintained at those levels despite inflationary pressure. The current price of a stamp is $1.07 when sold individually, or $0.92/stamp in booklets. Maintaining rates at 2020 levels has negatively impacted revenues and contributed to Canada Post’s poor financial performance. Canada’s domestic lettermail stamp prices are amongst the lowest internationally.

2023 domestic postage rate for first class / priority mail (in Canadian dollars as of the conversion of date June 9, 2023)

Figure 1: 2023 Domestic postage rate for first class / Priority mail in canadian dollars as of the conversion of date June 9, 2023. Long description below.
2023 domestic postage rate for first class / priority mail (in Canadian dollars as of the conversion of date June 9, 2023)

Canada’s domestic regulated lettermail stamp prices are amongst the lowest internationally. The 2023 domestic postage rate for first class / priority mail (in Canadian dollars as of the conversion date of June 9, 2023) for various countries, in chronological order, from highest to lowest is as follows:

  • Finland $3.29
  • Sweden $1.84
  • United Kingdom $1.84
  • Italy $1.72
  • France $1.66
  • Austria $1.43
  • New Zealand $1.39
  • Germany $1.22
  • Australia $1.08
  • Canada (booklet) $0.92
  • United States $0.84
 

National Capital Commission

Official residences

Mandate

The National Capital Commission is responsible for the official residence portfolio which includes 6 official residences:

The entire portfolio also includes 49 secondary buildings, with a total gross area of about 25,000 square metres.

Key activities and challenges
Building conditions overall

In 2017, the National Capital Commission commissioned in-depth building condition reports for the largest and most complex buildings in the official residences portfolio. These reports, made public in 2018, found that 58% of the assets in the official residences portfolio were considered to be in ‘poor’ to ‘critical’ condition, including half of the main residences. This analysis was refreshed in 2021 using the same methodology. The findings are laid out in the Official Residences of Canada: 2021 Asset Portfolio Condition Report. The latest findings confirm that the overall condition of the portfolio continues to deteriorate with only 24% of the assets considered to be in “good” condition, down from 34% in 2018. The report was presented to the National Capital Commission’s board of directors on June 23, 2021, and subsequently published on its website.

The report highlights the shortfall in funding required to restore and maintain the heritage buildings in this asset portfolio. Since the 2018 report, the National Capital Commission has invested approximately $26 million in capital funding on rehabilitation work. Despite these investments, the cost of addressing the portfolio’s deferred maintenance deficit has increased and it is now estimated that a one-time injection of $17.5 million per year, over 10 years—for a total of $175 million—is needed to close the deferred maintenance gap. In addition to this sum, the report identifies a need for $26.1 million in annual funding to cover ongoing maintenance, repair and renovation costs. The report notes that, should the National Capital Commission's official residences asset portfolio continue to deteriorate, more of the official residences will come to resemble 24 Sussex.

In the 2022 Fall Economic Statement, the National Capital Commission received funding for protecting heritage assets. The department is working with National Capital Commission to ensure this new funding will address the deferred maintenance within the official residences.

Building conditions: 24 Sussex

First built in 1868 as a private residence, it was purchased by the federal government and refurbished as an official residence for the prime minister in 1950.

24 Sussex Drive is the only main residence within the official residences portfolio that is in “critical” condition. Over the last decade, the Commission has completed some urgently required work to address key health and safety issues. However, there has not been any significant investment in the property in over 70 years. Major work required includes: rehabilitation of the building envelope, replacement of mechanical and electrical systems, and construction of universally accessible entrances and washrooms. All buildings on the site require extensive recapitalization not only the residence.

24 Sussex was shut down in spring 2023 and employees relocated to begin urgent abatement work.

The department is currently working closely with the National Capital Commission, the Royal Canadian Mounted Police (RCMP) and central agencies on a plan for the future of the prime minister’s residence and anticipates having options for consideration in the fall of 2023.

Communications: Hot files

Hot files

National Shipbuilding Strategy

Third shipyard selection process

On April 4, 2023, the prime minister announced that Chantier Davie will become the third strategic partner under the National Shipbuilding Strategy, joining Seaspan in Vancouver and Irving in Halifax. Chantier Davie will build 6 program icebreakers and 1 polar icebreaker for the Canadian Coast Guard. Negotiations are ongoing for the contracts to build these vessels.

Communications implications

The role of Chantier Davie in the National Shipbuilding Strategy has garnered significant media interest within Quebec and nationally, since the inception of the strategy in 2012.

Shipbuilding project budgets and schedules

Over the past 10 years, the National Shipbuilding Strategy has experienced ongoing project delays and budget increases. This is due to the fact that original budgets for large vessel construction projects were set many years ago and were guided by limited experience and projections. Recently, the COVID-19 pandemic has further impacted budgets and timelines. The Government of Canada continues to work closely with shipyards and industry to address ongoing challenges, including costs, estimated timelines and productivity.

Communications implications

This topic is covered regularly by national media and defence experts. Coverage centres around project delays and cost increases. The Department of National Defence and the Canadian Coast Guard lead on answering questions related to project budgets and requirements.

Defence procurement

Future fighter capability project

In December 2017, the government launched a procurement process to purchase 88 advanced fighter jets for the Royal Canadian Air Force.

Officials conducted extensive industry engagement with suppliers to maximize the likelihood that Canada received competitive proposals, and with Canadian industry to ensure that they were well positioned to participate in the procurement process.

Following a rigorous and comprehensive procurement process, on January 9, 2023, the Government of Canada announced that an agreement was finalized with the United States (US) Government, Lockheed Martin and Pratt & Whitney for the acquisition of F-35 fighter jets.

The first deliveries of the aircraft are anticipated to begin in 2026.

Communications implications

This project has garnered significant media interest nationally since it was launched in 2015. The conflict in the Ukraine has brought added attention to Canada’s military spending and defence procurement projects.

Canadian multi-mission aircraft

The Department of National Defence has a requirement to replace its aging CP-140 Aurora aircraft fleet with a new fleet that will provide long-range, long-endurance and multi-mission capability. On December 22, 2022, Canada submitted a Letter of Request via the United States government’s Foreign Military Sales program to receive an offer for a potential purchase of up to 16 P-8A Poseidon aircraft.

On June 27, 2023, the United States Government issued a Congressional Notification, informing members of the U.S. Congress and the public about the potential sale of this defence capability to Canada.

Communications implications

This project has garnered significant national media interest in recent months, mainly as a result of pressure from Premiers and Canadian industry asking the Government of Canada to proceed with a competitive bidding process for these aircraft, rather than purchasing the P-8A Poseidon aircraft via the U.S. Government.

Commercial procurement

Canadian Dental Care Plan

PSPC continues to support Health Canada in establishing the Canadian Dental Care Program.

Following an invitation to qualify in October 2022, the department qualified 3 suppliers to participate in a request for proposal. On June 21, 2023, PSPC announced that the request for proposal was issued directly to the 3 qualified suppliers. Suppliers had until July 20, 2023, to submit their proposal.

A contract award is expected this fall.

Communications implications

The Canadian Dental Care Plan has received significant media attention since it was announced as a key mandate commitment for the Government. A high-profile ministerial announcement will be planned with Health Canada once a contract is awarded.

McKinsey & Company

Following media attention on the increase of contracts between the Government of Canada and McKinsey & Company, the Standing Committee on Government Operations and Estimates (OGGO) launched a study into procurement activities with this supplier.

On January 11, 2023, the prime minister directed the president of the Treasury Board and the minister of Public Services and Procurement to undertake a review of contracts awarded to McKinsey.

On June 27, 2023, ministers announced the completion of their review, and the report and action plan were published online.

Communications implications

This file has garnered a significant amount of attention from the media in the last year. The department continues to work collaboratively with the Treasury Board of Canada Secretariat to manage communications on this file.

Real Property

Additional crossing in the National Capital Region

Work toward an additional crossing between Ottawa and Gatineau has been ongoing for more than a decade, with multiple phases and iterations of studies. The objective of these studies was to gather information on alternatives to improve interprovincial transportation capacity, including heavy commercial vehicle traffic across the Ottawa River.

PSPC and the National Capital Commission are working in close collaboration to gather new information to assess the necessity and potential options for an additional National Capital Region crossing.

Communications implications

This file continues to be of interest to local media in the National Capital Region. PSPC works closely with the National Capital Commission to manage communications.

Alexandra Bridge replacement project

The Alexandra Bridge is more than 120 years old and is nearing the end of its lifecycle. Over the last few years, the state of the bridge has continued to deteriorate. This has and will continue to result in more frequent closures to perform the necessary rehabilitation and repair work to keep serving users.

As part of a broader effort to improve interprovincial transportation in the National Capital Region, Budget 2019 included a commitment to replace the bridge. This project is expected to take 10 years to complete.

Communications implications

There has been significant local media coverage with stakeholder groups arguing that the bridge should be maintained.

Lac-Mégantic

In May 2018, Transport Canada announced the Lac-Mégantic bypass project, in response to the tragedy that occurred in July 2013. As part of this project, Transport Canada mandated PSPC to acquire plots of land belonging to 43 different landowners in Lac-Mégantic , Frontenac and Nantes.

On June 14, 2023, Transport Canada confirmed its intention to proceed with expropriation to acquire the land needed for the project. PSPC is managing the expropriation process on behalf of the Transport Canada.

Communications implications

This file continues to generate significant interest from the media and the general public, particularly in the 3 municipalities and towns affected. The department works closely with Transport Canada on communications activities.

Disposal of federal buildings

As part of its long-term real estate portfolio plan, PSPC is working to identify buildings that could be disposed of. Considering a building for disposal is a process that can take several years.

In May 2023, the department publicly released a list of 10 buildings in the National Capital Region that are in various stages of the disposal process.

Communications implications

The publication of the list of 10 buildings has resulted in a great deal of local and national media attention, particularly given the Government of Canada’s move to hybrid work.

Pay

Pay stabilization

While progress has been made on stabilizing pay operations since its launch and roll out of the Phoenix pay system in 2016 to 2018, problems with public servants’ pay files persist. Media is not as focused on Phoenix as it once was, but the Public Service Pay Centre dashboard, which is showing steady increases in both the backlog of cases not yet processed as well as the queue of financial transactions received since summer 2021, may generate a return of critical media stories.

Communications implications

There has been significant negative media, political and union attention on the Phoenix pay system since its launch. This attention is expected to continue. The department works closely with the Treasury Board of Canada Secretariat to manage communications.

Parliamentary Precinct

Future of Wellington Street

Public and media interest on the future of Wellington Street was high in the days following the illegal protests in Ottawa in early 2022. Interest has since turned to discussion of the use of the Emergencies Act.

Federal and municipal legislators have pressed for the permanent closure of Wellington Street to vehicular traffic and several parliamentary committees have considered evidence on the issue.

With additional committee meetings scheduled for the fall, the Government of Canada is working with Parliamentary partners, the National Capital Commission and the City of Ottawa to address governance, accessibility and security issues.

Communications implications

The future of Wellington Street as attracted significant local media attention in the National Capital Region–especially given recent conversations between the federal government and the City of Ottawa regarding a potential transfer of ownership.

PSPC works closely with the House of Commons, the Senate, the Privy Council Office and the City of Ottawa to manage the communications strategy.

Top 5 media issues

Defence and marine procurement

Files of interest:

Reporters / outlets:

General procurement

Files of interest:

Reporters / outlets:

Real Property management

Files of interest:

Reporters / outlets:

Parliament Hill rehabilitation

Files of interest:

Reporters / outlets:

Interpretation services (Translation Bureau)

Files of interest:

Reporters / outlets:

Early decisions (next 60 days)

Canadian multi-mission aircraft project

Mandate

The aim of the Canadian multi-mission aircraft project is to replace the CP-140 Aurora fleet with a new fleet that will provide long-range, long-endurance and multi-mission capability. The current CP-140 Aurora fleet consists of 14 aircraft which were originally procured in 1980 primarily for maritime patrol and anti-submarine warfare. The estimated life expectancy of the CP-140 Aurora fleet is 2030.

Key activities

In February 2022, the Government of Canada published a Request for Information to determine the best available options that can meet the project’s requirements. Following engagements with industry and Canada’s closest allies, the government has determined that the P-8A Poseidon is the only readily available aircraft that meets all of the operational requirements. The P-8A Poseidon aircraft is a proven capability that is operated by several of Canada’s defence partners including all of its 5 eyes allies—the United States, United Kingdom, Australia, New Zealand—as well as Norway, South Korea and Germany.

On December 22, 2022, Canada submitted a letter of request to the United States Government to explore the option of acquiring 14 to 16 P-8A Poseidon aircraft with associated spare parts, support equipment, training, training devices, associated mission equipment and initial sustainment for up to 3 years in support of the Canadian multi-mission aircraft project. Concurrently, Canada engaged the United States’ contractor, The Boeing Company, for a side-agreement to meet the Industrial and Technological Benefits requirements.

On July 14, 2023, in response to Canada’s letter of request, the United States Government provided a letter of offer and Acceptance outlining the price and delivery schedule for the operational requirements.

Neither the issuance of the letter of request nor the receipt of the letter of offer and Acceptance commit Canada to purchasing the P-8A Poseidon. Canada’s final decision will be based on the capability offered, availability, pricing and benefits to Canadian industry.

Partners and stakeholders

PSPC is the contracting authority for addressing the Canadian multi-mission aircraft project’s requirements. The Department of National Defence and the Royal Canadian Aircraft Force are responsible for defining the requirements and implementing the project.

In addition, Innovation, Science and Economic Development Canada oversees the applicability of the Industrial and Technological Benefits Policy and value proposition for the project.

As part of the Foreign Military Sales program, United States Navy is Canada’s counterpart for the potential acquisition of the P-8A Poseidon aircraft. PSPC–Washington Sector works closely with the United States Navy to obtain the information necessary for Canada to determine the next steps.

Abbotsford airshow

Mandate

Originating in 1962, the Abbotsford International Airshow (the airshow) is Canada’s largest airshow. It was declared “Canada’s National Airshow” in 1970 by then Prime Minister Pierre Trudeau. The airshow is operated by the Abbotsford International Airshow Society, a British Columbia non-profit entity managed by a small staff and overseen by a Board of Directors.

The airshow is an annual public event that typically draws over 125,000 visitors, including national and regional political officials, senior military personnel, industry representatives and the general public. This year, it is held from August 11 to 13, 2023. This event could provide an opportunity for the minister to engage with key members of Canada’s aerospace sector.

Key activities

The airshow will have numerous aerial performances including:

An affiliated trade show, the Aerospace Defence and Security Expo (ADSE), will also be taking place in Abbotsford on August 10 and 11, 2023, focusing on the aerospace industry expertise of Canadian companies. The keynote speakers include the Honorable Brenda Bailey, Minister of Jobs, Economic Development and Innovation of British Columbia, and Lieutenant-General Jennie Carignan, Chief of Professional Conduct and Culture in the Canadian Armed Forces. PSPC’s Assistant Deputy Minister, Defence and Marine Procurement, Simon Page, will also attend as a speaker.

Partners and stakeholders

The event’s sponsors include many aerospace companies that are current or potential future participants in ongoing or anticipated defence procurements. These include:

Key challenges

The Government of Canada continues to take action with a bold plan to bolster Canada’s strategic aerospace sector. A House of Commons Standing Committee on Industry and Technology report included a recommendation to develop a national strategy. Innovation, Science and Economic Development Canada responded, in consultation with PSPC, that the government continues to support the industry by protecting Canada’s competitive global advantage, driving investments for employment, and stimulating innovation and technology developments. Specific questions regarding a national aerospace strategy are better directed to Innovation, Science and Economic Development Canada.

Canadian Dental Care Plan

Overview

Budget 2022 committed $5.3 billion over 5 years to provide dental coverage to an estimated 7 to 9 million Canadians who are unable to afford access to proper dental care. Interim support started in 2022 for children under 12-years-old, and is expected to expand to under 18-year-olds, seniors, and persons living with a disability in 2023, with full implementation by 2025. The program is restricted to families with an annual income of less than $90,000, with no co-pays for those with annual income less than $70,000.

Mandate

The Canadian Dental Care Plan is led by Health Canada. PSPC is responsible for managing the procurement to select a private partner for the delivery of dental claims processing. This involves engaging with industry, developing procurement documentation, conducting the procurement process and managing the resulting contract(s) associated with the program.

Key activities

The procurement timeline is very aggressive, with contract award targeted for fall 2023. PSPC issued a request for information on July 25, 2022. The request for information closed on August 22, 2022, with 26 responses from dental care organizations addressing 37 questions on diverse topics. This feedback helped guide the development of a long-term dental care program. The next phase was the invitation to qualify which was issued on October 28, 2022 and closed on December 5, 2022, and invited dental and health claims processing suppliers to show interest. The Government of Canada selected 3 qualified suppliers in January 2023: Express Scripts Canada, Medavie Inc., and Sun Life Financial Inc. From January to May 2023, a Review and Refine Requirements process occurred. PSPC and Health Canada collaborated with the 3 suppliers, gathering feedback to enhance program requirements. Suppliers provided recommendations for the best approach to deliver this large-scale program.

The request for proposal phase began on June 20, 2023, when the 3 qualified suppliers received the Request for Proposal directly. It closed on July 20, 2023, with contract award anticipated by October 2023.

Partners and stakeholders

As the department responsible for providing dental care coverage to Canadians, Health Canada is the program authority and main partner for the Canadian Dental Care Plan.

Other partners include:

Health Canada has also engaged and collaborated with external stakeholders including academic experts in oral health and oral public health, national professional organizations (such as the Canadian Dental Association), provinces and territories, dental care providers, and the insurance and claims processing industry.

Key considerations

In line with Budget 2022's pledge of timely access to improved dental care for Canadians, the Canadian Dental Care Plan endeavours to go live by April 2024. This timeline puts significant pressure to move swiftly, while maintaining adherence to standard safeguards in the government's procurement process. The department is committed to ensuring fairness, transparency, and compliance with strict rules and regulations, while embracing an agile and collaborative approach to expedite the program's implementation. By doing so, the Canadian Dental Care Plan aims to deliver value for money and improve access to dental care services for Canadians.

Ensuring security and privacy measures is crucial. To uphold the highest standards of protection, and build trust with Canadians regarding the handling of sensitive data, actions are being taken to strengthen security protocols. Canada offered the pre-qualified suppliers an early commencement to the security and privacy assessment processes to provide additional time to meet the security and privacy requirements before launch.

Integrity Regime

Mandate

PSPC centrally administers the government-wide Integrity Regime for procurement and real property transactions. Under this regime, unethical suppliers may be determined to be ineligible or suspended from conducting business with the Government of Canada.

Key activities

Introduced in 2015, the Integrity Regime is a rules-based system that is designed to help ensure that the Government of Canada conducts business with ethical suppliers in Canada and abroad. The central component of the regime is the Ineligibility and Suspension Policy (the Policy) which determines when and how a supplier may be declared ineligible or suspended from doing business with the government.

The regime applies to all federal departments and agencies listed in schedule I, I.1 and II of the Financial Administration Act and can be adopted by other federal entities (such as Crown corporations) on a voluntary basis. In 2022 to 2023, PSPC conducted over 27,000 integrity verification requests on approximately 694,020 individual names on behalf of federal organizations, to confirm whether a supplier was ineligible or suspended from conducting business with the federal government. Over 99% of these verifications were completed by the department within the program’s 4-hour client service standard.

All determinations of ineligibility or suspension are undertaken pursuant to the process set out in the policy and are rendered by the registrar of ineligibility and suspension, an assistant deputy minister-level position within the department. The names of ineligible or suspended suppliers are published on the departmental website.

In 2017, after 2 years of operations, the department initiated a comprehensive review of the regime. Following this review, the Government undertook a national consultation which included potential enhancements. The results of this consultation were reported publicly in February 2018. Following an announcement of planned enhancements to the regime, the department sought comments and feedback on the text of a draft revised policy that reflected the proposed modifications in fall 2018.

Subsequent to this consultation, public discourse increased regarding corporate wrongdoing and governments’ responses to this type of misconduct. As a result, the government announced that it was taking additional time to consider elements of the Regime and the feedback received to date.

In the interim, the current Ineligibility and Suspension Policy remains in effect while enhancements are being finalized.

Partners and stakeholders

The registrar applies the policy in partnership with federal government departments and Crown corporations that have signed memoranda of understanding with PSPC. Key stakeholders include federal, provincial and territorial governments, the general supplier community, industry associations, chambers of commerce, policy groups, procurement and debarment professionals, as well as foreign governments and international bodies (for example, the World Bank).

Key challenges

Given the evolving supplier community and complex nature of supply chains, the department requires a modern, effective Integrity Regime to further strengthen its efforts to mitigate the risk of suppliers of concern and protect the integrity of the federal procurement system. A number of recent reviews of federal contracts have recognized the need to update policies, processes and tools to further safeguard the federal procurements. Specifically, the department committed to review the conditions for participation in federal procurements to better understand who the Government of Canada does business with to further mitigate new and emerging risks posed by suppliers of concern. Proceeding with the enhancements to the Integrity Regime would be a key deliverable in this regard and one which the department is well positioned to implement in short order.

Future of Wellington

Mandate

The Minister of Public Services and Procurement is the custodian of the buildings and grounds in Canada’s Parliamentary Precinct and the federal lead for its planning, development and operations. Wellington Street is owned by City of Ottawa but runs through the federally-owned Parliamentary Precinct, and was the site of the 2022 protests referred to as the Freedom Convoy.

In response to the challenges imposed by the Convoy and the street’s location, the City of Ottawa passed motions in early 2022 to close Wellington Street to vehicular traffic and for City staff to engage the federal government on the possibility of transferring the street to federal ownership.

Key activities

A public Inquiry into the use of the Emergencies Act and a number of studies by Parliament yielded the Public Order Emergency Commission Report and a study by the House of Commons Standing Committee on Procedure and House Affairs made a series of recommendations, including considering changes to the division of responsibilities for policing and security in the National Capital Region. This would include Parliament Hill, expanding the boundaries of the Parliamentary Precinct, transferring ownership of Wellington Street from the City of Ottawa to the federal government, and restricting vehicle traffic on Wellington Street.

Formal governance was established at the political and officials levels in summer 2022 to guide discussions between parliamentary, federal and municipal stakeholders on the future of Wellington Street. The President of the King’s Privy Council is the chair of the political level body. The Minister of Public Services and Procurement, as well as the Speakers of the Senate and House of Commons are members.

In March 2023, the minister of Public Services and Procurement tabled in Parliament a government response to the study by the Committee on Procedure and House Affairs, committing to launch discussions with the City of Ottawa on acquiring Wellington Street. Crown ownership of the street would allow for vehicle restrictions to be reinstated to prevent vehicle-borne attacks, a long-standing risk to the operations of Canada’s national legislature and to the safety and security of those visiting and working in the Parliamentary Precinct. This risk has increased as parliamentary operations and offices are increasingly being located in the 3 city blocks across from Parliament Hill, on the south side of Wellington Street. The international and national threat and risk environment has also continued to evolve.

In April 2023, the president of the King’s Privy Council, minister for Public Services and Procurement and the mayor of Ottawa agreed to enter into a 60-day negotiation period that concluded on June 19, 2023 to establish an agreement to transfer Wellington Street and fairly compensate the City.

A draft framework agreement has been completed with the City of Ottawa, as well as several due diligence activities including a joint transportation study, funded by PSPC and led jointly with the city and the National Capital Commission.

Key considerations

At this point, no formal agreement has been reached with the City of Ottawa to transfer Wellington Street. PSPC presented a generous offer to the City of Ottawa in May 2023 on the basis of the independent appraisal and provisional costing of mitigations identified in the transportation study. No counterproposal has been presented by the city although a number of unrelated issues have been raised through the Wellington discussions. The department has proposed establishing a senior level governance body with the city, the National Capital Commission and the department.

As a first order of business, you may wish to meet with the Mayor of Ottawa to discuss a path forward. If an agreement is reached, the department, together with the City of Ottawa and the National Capital Commission, would launch a joint engagement strategy to solicit the input of the public, local businesses and indigenous groups on their views for a reimagined Wellington Street.

An update of plans for restoring and modernizing the Parliamentary Precinct is currently being prepared for presentation this year or early 2024. As committed in the Government Response to the Standing Committee on Procedure and House Affairs’ nineteenth report entitled Protecting the Parliamentary Precinct: Responding to Evolving Risks, it will include a proposal for redeveloping Wellington Street.

The objective is to re-imagine the use of Wellington Street in a manner that also makes Canada’s Parliament more of a destination for visitors. Redeveloping Wellington Street will require significant engagement and collaboration with the City of Ottawa, Indigenous partners, residents and the business community.

Many capital cities are facing similar challenges and have moved or are moving to restrict vehicle traffic and to pedestrianize streets adjacent to their national legislatures. Steps taken in many cities have not only enhanced security but have also created more vibrant public spaces that attract visitors and support local businesses.

Annex A: Wellington Street in the Parliamentary Precinct

Wellington Street

A map of the Parliamentary Precinct, highlighting Wellington Street in red. Long description below.
Long description of the image Wellington Street This image shows Wellington Street dividing the Parliamentary Precinct, with the main parliamentary buildings located to the north on Parliament Hill and to the south in the urban blocks facing Parliament Hill National Capital Region mobility.
 

Treasury Board submissions

[Redacted]

McKinsey & Company

Overview

There has been media and Parliamentary attention related to contracts awarded to McKinsey & Company. PSPC awarded 24 contracts to McKinsey & Company between 2011 and 2023. These contracts have recently been assessed via PSPC’s internal audit services and are also subject to ongoing reviews of the Office of the Procurement Ombudsman and the Auditor General.

Key activities

As central purchaser for the Government of Canada, PSPC awarded 24 contracts to McKinsey & Company with a total value of $104.6 million up to fall 2022. Of these contracts, 3 were awarded through competition and 19 were awarded as call-ups against a non-competitive standing offer that was established for McKinsey & Company’s benchmarking services. Two additional sole source contracts of low dollar value were awarded without using the standing offer. All 24 contracts were awarded in 2018 or later. The 3 competitive contracts represent more than half (53%) of the total value of contracts awarded to McKinsey & Company.

Review of contracts related to McKinsey & Company

On January 11, 2023, the prime minister tasked the president of the Treasury Board and the minister of Public Services and Procurement to undertake a review of contracts awarded to McKinsey & Company. The review examined whether the integrity of the procurement process was maintained and complied with government policies and control frameworks. As part of this process, PSPC’s Office of the Chief, Audit, Evaluation and Risk reviewed all contracts awarded to McKinsey & Company by the department, including those awarded on behalf of client departments as a common service provider.

The review determined that overall, the integrity of the procurement process was maintained and complied with the Values and Ethics Code for the Public Sector, Directive on Conflict of Interest, and supporting procurement policy instruments and procedures. Specifically, no instances of non-conformity were found with respect to conflict of interest regarding current or former public servants or public office holders as well as McKinsey & Company. However, it also found areas for improvement related to record management and contract administration.

PSPC has accepted all recommendations associated with this audit and has put in place a Management Action Plan. In addition, the department is reviewing all National Master Standing Offers related to Benchmarking data analytics and services and will replace these tools in the future with a procurement approach that ensures open, fair and transparent competition as a starting point.

The McKinsey & Company standing offer sunsets in February 2023 as planned and all other Standing Offers for benchmarking services sunset between February and September 2023.

At the request of the Minister of Public Services and Procurement, the Office of the Procurement Ombudsman is currently reviewing the procurement processes associated with the award of contracts to McKinsey & Company by all federal departments and agencies.

Partners and stakeholders

The decision to procure professional services to meet operational requirements rests with client departments, which can then request PSPC’s procurement services. Departments can also award contracts within their own authorities. Contracts must be issued according to laws, regulations, trade agreements and Treasury Board policies. Deputy heads are responsible for ensuring that their organizations have the appropriate controls, oversight and processes in place for contracts that their departments administer.

Ten departments that contracted with McKinsey & Company have been the focus of attention from the Treasury Board Secretariat and auditors including the Office of the Auditor General or the Office of the Procurement Ombudsman as follows:

PSPC procured various professional services including strategic advice, subject matter experts, benchmarking services and development of transformation strategies for 7 of these departments.

Key challenges

Tax fraud and actions abroad

PSPC is aware of allegations related to McKinsey & Company and its affiliates. The company’s status under the Integrity Regime remains unchanged at this time. Under the Government of Canada’s Integrity Regime, if a supplier is charged or convicted of one of the offences listed in the Ineligibility and Suspension Policy, the supplier may be suspended or determined to be ineligible to be awarded a contract. A suspension or determination of ineligibility would also be triggered by a foreign offence that is similar to one of the listed offences.

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