Standing Committee on Government Operations and Estimates: May 29, 2024

2024 to 2025 Main Estimates for Public Services and Procurement Canada (PSPC), its portfolio, and Shared Services Canada (SSC)

Date: May 29, 2024 16:30-17:30

Location: In person

Public Services and Procurement Canada

Minister’s opening statement

The Hon. Jean-Yves Duclos
Minister, Public Services and Procurement Canada

Standing Committee on Government Operations and Estimates
Main Estimates 2024-2025

May 29, 2024

Check against delivery
675 words

Opening

Thank you, Mr. Chair.

Before we begin, I would like to acknowledge that we are gathered on the traditional, unceded territory of the Algonquin Anishinaabe People.

On behalf of Public Services and Procurement Canada (PSPC) and Shared Services Canada (SSC), I am pleased to discuss our requests for funding in the Main Estimates for 2024-2025.

Main Estimates

PSPC is seeking a net increase of $448.6 million, bringing the total opening net budget to approximately $4.8 billion for 2024-2025.

Of that amount, more than $3.3 billion will be spent on property and infrastructure activities, including major rehabilitation projects across Canada.

The rest of the funds will support important areas of PSPC’s wide-ranging mandate such as pay administration, our many procurement initiatives, and the essential work of the Translation Bureau and the Office of the Procurement Ombud, to name a few.

Mr. Chair, for Shared Services Canada, reference levels will decrease by $112 million for a total of $2.48 billion.

The department is working with central agencies, partners and clients to build an efficient and modern information technology framework, with defined and optimized processes, as well as consolidated systems and networks. Work continues on eliminating non-standard and legacy services, while reinforcing cyber security resilience across the Government of Canada.

Priorities

PSPC and SSC have many priorities, including continued efforts to modernize procurement, with a focus on simplifying processes and increasing support for small and medium enterprises.

As this committee is well aware, there is also a need to improve oversight and integrity of federal procurement, particularly for professional services.

That is why PSPC has made important process changes to ensure decision-making and controls associated with professional service contracts uphold the highest standards.

Earlier this year, along with the President of the Treasury Board, I announced a series of new actions to strengthen the government’s procurement and integrity regimes.

I am pleased to update the committee that PSPC’s new Office of Supplier Integrity and Compliance will formally come into effect in two days – on May 31st.

This allows us to better respond to supplier misconduct and unethical behaviour.

We also have an eye on making procurement more efficient, particularly when it comes to defence. That is why, in Budget 2024, our Government committed to speeding up acquisition and advancing defence procurement reform to help us meet new commitments outlined in Canada’s defence policy update: Our North, Strong and Free.

Mr. Chair, service delivery remains a priority.

At PSPC, that includes resolving outstanding pay issues for public servants and advancing work on the next generation pay and human resources system.

At SSC, all efforts are made to ensure that departments are equipped with the digital tools they need to deliver programs and benefits to Canadians. SSC will continue providing the technological services that allow public servants to work collaboratively and seamlessly across Government.

Of course, one of my top priorities is to continue to support our government’s response to the housing crisis.

We’ve already taken action to accelerate the process of turning federal lands into housing.

And with our new Public Lands for Homes Plan announced in Budget 2024, we have the potential to unlock hundreds of thousand of new, affordable homes.

PSPC is leading on this plan and work is already underway. The plan includes identifying, and even acquiring, underutilized public lands and leasing them out to ensure they are set aside for the building of affordable homes that Canadians need.

Mr. Chair, we also continue to work in close collaboration with key partners to implement the Canadian dental care plan.

Not long ago, PSPC led a competitive process to select the third-party administrator for the Canadian Dental Care Plan.

Today, one million seniors can now book an appointment for dental care, covered by the federal plan. And twice that amount have already been approved for coverage—and that number will only grow as eligibility continues to expand.

Closing

These are only a few examples of the work underway at both PSPC and SSC.

The Main Estimates will allow us to continue this important work and more.

Thank you.

2024 to 2025 Main Estimates overview

The 2024 to 2025 Main Estimates were tabled in Parliament on February 29, 2024.

PSPC opening net budget is $4,784.2 million. Compared to the 2023 to 2024 opening net budget of $4,335.6 million, this is a net increase of $448.6 million which is attributable mainly to the combination of items outlined below. When taking into account revenues of $4,029.9 million, the Department’s gross budget will be $8,814.1 million.

Table 1: Items contributing to the increase and (decrease) of 2024 to 2025 Main Estimates vs. 2023 to 2024 Main Estimates^{Footnote 1}
Item	Variance (in millions)
Government of Canada’s pay administration program	$473.8
Collective bargaining	$113.7
Laboratories Canada (Federal Science and Technology Infrastructure Initiative)	$28.5
Non-discretionary expenses associated with Crown-owned buildings and leased spaces	$20.7
E-procurement solution	$15.8
Long Term Vision and Plan	$11.2
Card acceptance and postage fees	$7.8
Other (result of funding variances in miscellaneous projects and activities)	$1.0
Refocusing Government Spending	($148.2)
Employee Benefit Plan (EBP) adjustment	($55.4)
Long-term capital investment plan	($20.3)
Net increase	$448.6

The net increase is mainly due to the following year-over-year variances:

Government of Canada’s pay administration program

Increase of $473.8 million

Purpose of the funding

Budget 2023 announced total funding of $1,038.1 million to replace sunsetting funding to continue supporting pay administration operations and to decrease the outstanding pay transactions starting in fiscal year 2023 to 2024. $516.7 million was granted for 2023 to 2024 which was not reflected in the 2023 to 24 Main Estimates, and $521.4 million was granted for 2024 to 2025 and which appears in 2024 to 2025’s Main Estimates

Collective bargaining

Increase of $113.7 million

Purpose of the funding

Funding received from the Treasury Board Central Vote for Collective Bargaining as a result of the various collective agreements that were renewed, signed, and implemented following the 2023 to 2024 Main Estimates

Laboratories Canada (Federal Science and Technology Infrastructure Initiative)

Increase of $28.5 million

Purpose of the funding

The Laboratories Canada strategy (previously referred to as the Federal Science and Technology Infrastructure Initiative) was established in 2018 as a long-term initiative, delivered in phases, to renew federal laboratories and support a collaborative approach to conducting science and technology
This funding from Budget 2023 is to continue supporting the renewal of key science and technology infrastructure
Budget 2018 outlined $2.8 billion largely in capital funding, with additional funding being granted in Budget 2023 ($59 million over two consecutive years starting in 2023 to 2024). $29.5 million was granted for fiscal year 2023 to 2024 and was not reflected in the Main Estimates of that year; an additional $29.5 million was granted for fiscal year 2024 to 2025 which appears in the 2024 to 2025 Main Estimates

Non-discretionary expenses associated with Crown-owned buildings and leased spaces

Increase of $20.7 million

Purpose of the funding

This funding provides PSPC protection for accommodation costs which are beyond the department’s control such as inflation (price) and fluctuations in the number of public servants requiring accommodation (volume) within Crown-owned buildings and leased spaces. The costs relate to building operation items such as rent, utilities, and payments in lieu of taxes (PILT)
In return for this protection, unspent funds at year-end are returned to the Department of Finance fiscal framework

Electronic procurement solution

Increase of $15.8 million

Purpose of the funding

The Electronic Procurement Solution (EPS), which was completed on June 30, 2023, established a cloud-based solution that provides Canada with a powerful, accessible and modern digital procurement platform. This cloud-based ecosystem provides key enabling technologies such as: SAP Ariba & Fieldglass for core procurement functions, ServiceNow for help desk functionality, and the CanadaBuys portal as a single window to federal government and the broader public Canadian sector
Project funding for the EPS has sunset. New funding announced in Budget 2023 is for the steady-state operation of the EPS within PSPC, via an existing contract with Infosys Public Services Inc., for contractor-managed cloud service delivery including infrastructure maintenance, software licenses and operations support. It will also be used to maintain PSPC program resources necessary to support work related to contract and vendor performance management, in-service delivery oversight and training to align with evolving modernization of procurement practices

Long Term Vision and Plan

Increase of $11.2 million

Purpose of the funding

The Long Term Vision and Plan (LTVP) is a multi-decade strategy to restore and modernize Canada’s Parliament buildings to preserve their heritage and support modern parliamentary operations. [Redacted]
Funding will be used to continue implementation of the LTVP, in particular for the 100 Sparks/30 Metcalfe, the Block 2 Redevelopments, as well as pre-planning work on projects that have been identified as high priority by Parliament

Card acceptance and postage

Increase of $7.8 million

Purpose of the funding

The Receiver General incurs non-discretionary expenses from federal departments and agencies as a result of revenue collection via debit and credit cards, and postage fees to mail up to 20 million cheques to Canadians
Debit and credit card acceptance fees are dependent on the volume and the price per transaction based on card type
Postage fees are dependent on the volume of cheques mailed and the price of postage
Funding is for the Receiver General to pay for debit and credit card acceptance fees incurred by federal departments and agencies, and for postage fees to mail cheques to Canadians

Refocusing Government Spending

Decrease of $148.2 million

Purpose of the funding

In Budget 2023, the Government committed to reducing spending by $15.4 billion over the next five years, starting in 2023 to 2024, and by $4.5 billion annually after that
As part of this commitment, PSPC is planning to reduce its spending by $148.2 million in 2024-2025. This amount will be increased to $162.2 million in 2026-2027 and ongoing
PSPC will achieve these reductions by reducing operating, professional services and travel expenses following a principles-based approach:
horizontal opportunities for collaborations and consolidation of activities
adapting the workforce towards the needs of the future
leveraging new business models since the pandemic
automating processes and leveraging new technologies
reviewing program activities that may no longer be critical
other miscellaneous savings
As part of Budget 2021, PSPC’s travel budget was reduced by approximately $3 million per year on an ongoing basis
Other reductions relate to vacant positions not being backfilled for various reasons (streamlining functions, attrition, etc.) and to indirect costs related to operational reductions (such as reductions in costs associations with materials, supplies, rentals, repairs, maintenance, administration, etc.) are also being explored
Reductions in full time equivalents (FTES) relate to already vacant positions not being backfilled. No people are losing their jobs
The positions identified become vacant through attrition and individuals who leave the department are not being replaced due to changing operational needs. As a result, there is no impact on operations, PSPC employees, or Canadians

Employee Benefit Plan adjustment

Decrease of $55.4 million

Purpose of the funding

The net decrease relates to the Employee Benefit Plan (EBP) rate adjustments as per the Treasury Board of Canada Secretariat (TBS) instructions which is applied on the year-over-year change in funding received

Long-term capital investment plan

Decrease of $20.3 million

Purpose of the funding

The net decrease in capital vote 5^{Footnote 2} reflects the department’s current funding approval to deliver on its long-term capital funding plan. The department will seek updated approval as required in order to maintain the quality of its infrastructure for the benefit of all Canadians
Investments are made in two broad categories of assets:
Infrastructure investments: comprised of assets that enable the delivery of government programs and services administered by various client organizations and assets that are used by the general public. The four groups of assets are: parliamentary, office, science and engineering assets (e.g. bridges, roads, docks)
Enabling services investments: comprised of assets that enable PSPC to deliver its programs and services and other government operations. The two groups of assets are: digital assets (e.g. data modernization) and fleet assets (transition to zero emission vehicles)

Other

Net remaining increase of $1.0 million is immaterial and the result of funding variances in miscellaneous projects and activities.

Canada Post Corporation
2024 to 2025 Main Estimates Overview

Maintained at $22.2 million.

Purpose of the funding

Canada Post receives an annual appropriation of $22.2 million from the Government for the delivery of parliamentary mail and materials for the blind. This amount has been in place since January 2000 and has remained constant.

National Capital Commission
2024 to 2025 Main Estimates Overview

The National Capital Commission’s opening net budget is $94.8 million. This is comparable to the 2023 to 2024 opening net budget of $94.8 million. When taking into account revenues (which include revenues from rental operations and easements, user access fees as well as recoveries and contributions from third parties), of $62.6 million for the 2024-2025 fiscal year, the organization’s gross budget will be $157.4 million.

Budget 2024

Issue

Budget 2024 proposes over $52 billion in new spending over the next five years.

Key facts

Key messages

The government is building more apartments and affordable housing across the country and unlocking public lands and vacant government offices to build homes for Canadians
In addition to affordable daycare, new programs are being introduced to help with the cost of going to the dentist and pharmacy, including the cost of contraceptives and insulin, that will further ease the financial burden

If pressed on affordable housing:

$1.1 billion over ten years, starting in 2024-25, to reduce the office portfolio by 50 per cent to convert underused federal offices into homes
$35 million over five years starting in 2024-2025 for PSPC to scale up its centre of expertise on public lands and delivering the new Public Land Bank and geo-spatial mapping tool
$500 million over five years, starting in 2024-25 to launch a new Public Lands Acquisition Fund, which will purchase land from other orders of government to help spur sustainable, mixed-market housing
As part of its work to build homes on public lands, the government will seek to build homes on National Defence Lands and Canada Post Properties that have a high potential for homes

If pressed on federal assets managed by PSPC:

$6.7 billion over 20 years starting in 2024-25, in support of PSPC managing its portfolio of assets including the Parliamentary Precinct, Alaska Highway and laboratories`

If pressed on next generation human resources and pay:

$135 million to PSPC and TBS in 2024-25 in support of the Next Generation Human Resources and Pay initiative and measures to improve human resources and pay data management

Background

Budget 2024 focuses on more affordable homes; lifting up every generation; lowering everyday costs; economic growth for every generation; safer, healthier communities; a fair future for Indigenous Peoples; protecting Canadians and defending democracy; and tax fairness for every generation.

2024 to 2025 Departmental Plan

Issue

On February 29, 2024, the 2024 to 2025 Departmental Plan for PSPC was tabled in the House of Commons by the President of the Treasury Board.

Key facts

The Departmental Plan outlines the 2024 to 2025 planned activities that PSPC will undertake on behalf of Canadians and other federal organizations
To support the goals of the Government of Canada in refocusing government spending, PSPC is planning reductions of at least $464,514,000 over the next three years
Reductions will be mainly achieved by reducing operating, professional and travel expenditures, leveraging new business models and technologies, and shifting the composition of the workforce toward future core competencies

Key messages

In 2024 to 2025, PSPC will advance the modernization of procurement and increase the diversity of suppliers participating in federal procurement, including Indigenous suppliers
My department will develop a plan to right-size real property, modernize office space, estimate savings and transfer federal buildings for housing. PSPC will also advance greening initiatives and climate change strategies for its real property portfolio and infrastructure, while further supporting the hybrid work model
PSPC will continue its collaboration with key partners to ensure high-quality services for Canadians, including resolving pay issues for public servants, advancing the Next Generation Pay and Human Resources System, and implementing the Canadian Dental Care Plan
These are just a few of the examples of the many activities that PSPC has outlined in its Departmental Plan

Background

The Departmental Plan is a mechanism of ministerial accountability, communicating departmental expenditure plans for the next three years, as well as the organization’s priorities and expected results of the next fiscal year. The Plan is tabled annually in Parliament and published for all Canadians.

The 2024 to 2025 Departmental Plan outlines specific targets for 98% of the Departmental Result Indicators (DRIs), encompassing 41 out of 42 indicators. As a result of cumulative Departmental Results Framework (DRF) enhancements over the last few cycles, PSPC has developed meaningful indicators in support of its Departmental Results, for which targets are established and results will be available in subsequent Departmental Results Reports.

For information on PSPC performance for the last completed fiscal year, refer to the 2022 to 2023 Departmental Results Report.

Refocusing government spending

Explaining the ways PSPC is meeting its commitment to Refocusing Government Spending.

Key facts

Budget 2024 announced $1.1 billion over 10 years (from 2024-25 to 2033-34) for PSPC to support the Office Portfolio Reduction Plan of disposing 50 per cent of its office portfolio over ten years
A portion of the overall expected savings is being allocated to meet the Refocusing Government Spending commitment
As part of Budget 2021, PSPC reduced its travel budget by approximately $3 million on an on-going basis and it has been further reduced as part of Refocusing Government Spending
Pre-pandemic, PSPC spent approximately $24 million on travel annually, including $16 million in client related travel that is cost-recovered from other Government departments
In 2022-23, PSPC spent approximately $13 million on travel, a reduction of $11 million compared to pre-pandemic levels
PSPC’s 2023-2024 forecasted travel expenditures stand at $16.8 million

Key messages

The government remains committed to using taxpayer dollar wisely and spending where it can best serve Canadians
The efforts of my department are expected to generate saving of $148 million in fiscal year 2024-25, $154 million in 2025-2026, and then it will generate ongoing savings of $162 million each year after that
We are estimating a $42 million saving through a reduction in the use of consultants and other professional services, travel, and the natural attrition of employees. We will see an estimated $120 million in savings from the reduction in office space, which will assist in converting underused federal offices into homes

If pressed on professional services:

To help us meet these targets, PSPC is undergoing a comprehensive review of all professional services spending. Departments rely on professional services for specific and specialized expertise to undertake work that cannot be performed by public servants, so we are taking a hard look at how we do this

If pressed on reduction of full time equivalents:

This refocusing of spending is not about cutting jobs that employees are in. Reductions will be done through the elimination of positions which are already vacant and will not be backfilled, which means that no public servants will lose their job
Individuals who leave their position will not be automatically replaced, we will look at operational needs and shifting priorities to determine next steps. The goal is that there will be no impact on operations, current public servants employees, or Canadians
There is a target reduction of 223 of these positions; however, this figure may be adjusted as we learn more

Background

In Budget 2023, the government committed to reducing spending by $15.4 billion over the next 5 years, starting in 2023 to 2024, and by $4.5 billion annually after that.

As part of meeting this commitment, PSPC is planning the following spending reductions:

2024 to 2025: $148 million
2025 to 2026: $154 million
2026 to 2027 and after: $162 million

PSPC pursued a principles based approach to meet its commitment, including:

optimizing its office portfolio
reviewing its investment activities
pursuing opportunities for synergies and consolidation of activities
shifting composition of workforce towards future core competencies
leveraging new business models since the pandemic
process automation and leveraging new technologies
reviewing program activities that may no longer be critical

PSPC’s Professional Services reduction amount is a combination of Capital and Operating funding reductions. PSPC completed a prioritization exercise in terms of professional services that include architecture, engineering and construction services focusing on health and safety initiatives and departmental priorities and is able to provide savings from its Capital funding envelop under the program “Property and Infrastructure”. PSPC is also able to reduce spending in professional services from its Operating funding.

Changes in Procurement services in response to the Procurement Ombud’s and Auditor General’s reports

Issue

On November 2, 2022, a motion was passed by the House of Commons that called on the Office of the Auditor General of Canada to conduct a performance audit on ArriveCAN, including on contracts and subcontracts, as well as payments under those contracts.

Reports resulting from a review carried out by the Office of the Procurement Ombud (OPO) and an audit conducted by the Office of the Auditor General (OAG) were tabled on January 29, 2024, and February 12, 2024, respectively. The reports highlight serious concerns regarding project management and offer recommendations pertaining to procurement, specifically with regard to professional services.

Key facts

The Procurement Ombud report made 14 recommendations based on the analysis of information and documentation provided to OPO by the Canada Border Services Agency (CBSA), PSPC and SSC during the course of the review; PSPC responded to 8 recommendations
The Auditor General (AG) report made 8 recommendations, 1 of which relates to PSPC (jointly with CBSA)

Key messages

PSPC takes the conclusions of the Auditor General (AG) and of the Office of the Procurement Ombud (OPO) very seriously and is acting on the recommendations, in line with our commitment to open, fair and transparent procurement processes, while obtaining value for Canadian taxpayers
Over the past year, PSPC has taken concrete actions to strengthen oversight on all professional services contracts falling under PSPC authority
In light of the OPO and AG reports, PSPC instituted measures and controls on new and existing professional services contracts to strengthen contract management practices and is actively engaging with client departments and agencies to ensure that these new measures are implemented quickly and efficiently
Collectively, these measures will help us continue to strengthen and enhance federal procurement processes to promote greater competition, particularly in the field of Information Technology (IT) consulting services

If pressed on immediate actions that PSPC is taking to strengthen existing controls and oversight for professional services contracting:

PSPC has implemented the following changes:
Requiring increased clarity from business owners on the scope, tasks and deliverables of new professional services contracts and task authorizations
Improving evaluation requirements to more effectively validate that all resources have the required work experience and valid security clearances
Improving documentation requirements at the time of contract award and when Task Authorizations are issued
Suspending delegated authorities for departmental issuance of Task Authorizations against contracts awarded by PSPC until PSPC’s newly mandated professional services measures are implemented by departments
The department is actively engaging with client departments and agencies to ensure that these new measures are implemented quickly and efficiently

If pressed on the actions being taken in response to the Auditor General report:

PSPC accepts recommendation 73, and has already taken action:
PSPC provided direction to procurement staff in a December 4, 2023 communiqué to ensure that Task Authorizations include clear tasks and deliverables, in addition to identifying the specific project(s) or initiative(s) that are included in the scope of contracts
Additionally, PSPC sent a directive to its client departments, via their Senior Designated Official for the Management of Procurement, indicating that this change was brought into effect for professional services contracts as of November 28, 2023
PSPC will also update the Guide to Preparing and Administering Task Authorizations, as well as the Record of Agreement template for clients, by April 2024
If pressed on the actions being taken in response to the Procurement Ombud’s review
The Procurement Ombud’s report made 13 recommendations, 8 of which were assigned to PSPC
PSPC has taken immediate action in response to the recommendations to strengthen existing controls around the administration of professional services contracts:
PSPC has implemented a new checklist for Task Authorizations to ensure that contracts include specific criteria for Technical Authorities to assess resource qualifications and criteria
PSPC will ensure that Task Authorizations include clear tasks and deliverables and identify the specific project or initiative on which a resource will be working
PSPC will ensure more robust procurement files, by, for example, obtaining security clearance confirmation, copies of résumés and evaluation grids that demonstrate that resources meet qualification and experience requirements, copies of invoices accompanied by time sheets.
PSPC is also reviewing the “Substantiation of Professional Services Rates” clause that permits Canada to require bidders to substantiate proposed rates that fall below the lower limit of the median band

If pressed on Indigenous contracting:

The Government of Canada is committed to economic Reconciliation with Indigenous Peoples. As part of this commitment, we will promote socio-economic outcomes by increasing economic opportunities for First Nations, Inuit and Métis businesses through the federal procurement process
Indigenous Services Canada (ISC) administers the Procurement Strategy for Indigenous Businesses and is responsible for assessing suppliers' eligibility for the program and for maintaining the Indigenous Business Directory
When awarding contracts under the Procurement Strategy for Indigenous Businesses program, PSPC relies on pre-award audits performed by ISC to verify if the Indigenous business meets the ownership and control criteria
Post-award audits are optional under the program. These audits re-examine ownership and control criteria and Indigenous content criteria, including the requirement that 33% of the work be performed by the Indigenous partner in a joint venture

Background

Under its authorities, PSPC awarded contracts in support of ArriveCAN and was responsible for providing procurement guidance to the client department. The Canada Border Services Agency (CBSA) was responsible for developing and managing the ArriveCAN tool based on the Public Health Agency of Canada’s health requirements enforced by the Quarantine Act.

A total of 46 different contracts were used in support of ArriveCAN. Of these 46 contracts, 31 were awarded by PSPC under its authorities:

19 contracts were competitive under normal contracting authorities, including 6 that were set-aside for Indigenous businesses under the Procurement Strategy for Indigenous Business program
12 contracts were non-competitive, including 8 contracts to procure software licenses that were sole sourced due to intellectual property rights or urgent need
Of the 12 non-competitive contracts, 4 used COVID-19 emergency contracting authorities for the contracting of IT consultants
11 of the 31 competitive and non-competitive contracts that PSPC issued were awarded before the COVID-19 pandemic and were leveraged by the CBSA to bring in resources to work on ArriveCAN

On November 14, 2022, the House of Commons Standing Committee on Government Operations and Estimates (OGGO) adopted a motion recommending that the Procurement Ombud conduct a review of contracts awarded in relation to the ArriveCAN application.

On January 13, 2023, the Office of the Procurement Ombud determined that there were reasonable grounds to launch a review of procurement activities associated with the creation, implementation and maintenance of ArriveCAN.

In light of the findings of the review and audit, PSPC took immediate action to strengthen existing controls around the administration of professional services contracts. On November 28, 2023, other government departments and agencies were informed of new measures, introducing a common set of principles and mandatory procedures that clients must abide by to use PSPC’s professional services contracting instruments.

These changes closely align with the recommendations in the OAG and OPO reports and are echoed in the resultant management action plans to which PSPC has committed.

Contracts awarded to McKinsey & Company

Issue

There has been recent media and Parliamentary attention related to contracts awarded to McKinsey & Company.

Note:

All questions related to McKinsey’s work on Robotic Process Automation and Accelerator Services are in a separate question period note (Phoenix IBM and pay stabilization)

Key facts

As central purchaser for the Government of Canada, PSPC awarded 24 contracts to McKinsey & Company since 2011, with a total value of $104.6 million
Of the 24 services contracts awarded by PSPC, 3 contracts were awarded through competition, 19 were undertaken as call-ups against a non-competitive standing offer that was established for McKinsey & Company’s benchmarking services and which ended as planned in February 2023, and 2 other sole source contracts, of low dollar value, were awarded outside 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
In January 2023, the Prime Minister tasked the President of the Treasury Board and the Minister of PSPC with reviewing contracts awarded to McKinsey. Internal audits were completed and posted publicly in March 2023. The review’s final report, published on June 27, 2023, noted that the integrity of the procurement process was maintained, that there was compliance with the Values and Ethics Code for the Public Sector, the Directive on Conflict of Interest, and the procurement policy. It also noted areas for improvement related to record management and contract administration
On February 3, 2023 the Minister of PSPC requested to the Office of the Procurement Ombud to review all federal contracts with McKinsey & Company
On Monday April 15, 2024, the Procurement Ombud published its procurement practice review report for contracts awarded to McKinsey & Company

Key messages

PSPC is committed to open, fair and transparent procurement processes, while obtaining the best possible value for Canadian taxpayers
The decision to procure professional services to meet operational requirements rests with client departments, which can then request PSPC’s procurement services or award contracts within their own authorities
PSPC accepts the OPO recommendations in their entirety, and has developed action plans to strengthen and modernize its procurement policies and processes and to provide training opportunities for its procurement workforce

If pressed on reviews of contracts to McKinsey & Company:

My department has taken significant action in the context of the audits of contracts with McKinsey & Company, and questions raised about professional services contracting more broadly, and will continue to do so
The review of federal contracts with McKinsey & Company by officials from the Treasury Board Secretariat and my Department found that the integrity of the procurement process was maintained and that there was compliance with the Values and Ethics Code and the Conflict of Interest directive
PSPC has accepted all the recommendations from the relevant audits and reviews and has prepared Management Action Plans to address the areas of improvement identified
PSPC also continues to collaborate with the Office of the Auditor General on its audit

If pressed on allegations of tax fraud and actions abroad that McKinsey is facing:

We are aware of the adverse information related to McKinsey & Company and its affiliates. The company’s status under the Integrity Regime remains unchanged at this time
Under the Government’s Integrity Regime, if a supplier is charged or convicted of an offence 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

Background

PSPC awarded 24 contracts to McKinsey & Company between 2011 and 2023. These contracts have recently been assessed by PSPC’s internal audit services and the Office of the Procurement Ombud and are also subject to ongoing reviews by the Office of the Auditor General.

The internal review determined that, overall, the integrity of the procurement process was maintained and complied with the Values and Ethics Code for the Public Sector, the 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 has reviewed 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 expired in February 2023, as planned, and all other existing Standing Offers for benchmarking services will end between February and June 2024.

The Treasury Board of Canada Secretariat and auditors, including the Office of the Auditor General and the Office of the Procurement Ombud have been focussing on 10 departments that contracted with McKinsey & Company under their own delegation. PSPC procured various professional services, including strategic advice, subject matter experts, benchmarking services and services for the development of transformation strategies, for 7 of these departments.

Office of the Procurement Ombud Report on McKinsey

Issue

On Monday, April 15, 2024, the Office of the Procurement Ombud (OPO) published its procurement practice review report for contracts awarded to McKinsey & Company.

Key facts

PSPC awarded 24 contracts to McKinsey & Company since 2011, with a total value of $104.6 million
Of the 24 services contracts awarded by PSPC, 3 contracts were awarded through competition, 19 were undertaken as call-ups against a non-competitive standing offer and 2 directed contracts, of low dollar value, were awarded outside 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

Key messages

I am glad that the Procurement Ombud has released his review of all contracts awarded to McKinsey, as requested by my predecessor in February 2023
PSPC accepts the OPO’s recommendations, and has developed action plans to strengthen its procurement policies and processes and to provide training opportunities for its procurement workforce
I would also like to highlight some of the positive findings in the report, including the availability of proper documentation that supported fair enquiry processes during the solicitation period, and the consistency with which PSPC invoked and documented sole-sourcing decisions in low dollar value non-competitive contracts

If pressed on recommendation 2, security clearances:

PSPC can confirm that all resources added through task authorizations had the required security level to perform work on the contracts, as well as to access sensitive information and assets. The Procurement Ombud’s report reflects the information available at the time of the review and did not take into account pending confirmations
Nonetheless, PSPC agrees that security clearance records have not been consistently included in procurement files, and will be taking further action to promote recordkeeping diligence
We have communicated clear expectations to PSPC clients and procurement teams in relation to documenting these security validations before issuing contracts or call-ups and during contract management
We have also introduced a checklist for professional services procurement files that includes the requirement for PSPC and client contracting authorities to retain proof of security requirements

If pressed on recommendation 4: non-competitive national master standing offer (NMSO) for professional services:

Establishing a non-competitive NMSO with McKinsey was an effective approach, at the time, to support departments in the management and delivery of complex projects and programs, but we recognize that a review and modernization of this procurement vehicle was overdue
In light of this, PSPC made significant process changes in its administration of non-competitive standing offers for benchmarking professional services
These changes include requiring that client departments draft all Statements of Work themselves and that a sole-source justification be provided for every contract awarded under a non-competitive standing offer for benchmarking services

If pressed on recommendation 5: non-competitive call-up procedures:

PSPC is also taking action to strengthen call-up procedures for professional services, including instructing authorized users to prepare a Statement of Work specific to their requirement and requiring written justification for issuing a call-up without competition

If pressed on lack of documentation:

PSPC agrees that procurement files should include documentation that outlines decisions; the rationale for making the decision cannot be assumed without evidence
We are taking action to better document client driven decisions and actions and to promote recordkeeping diligence

Background

On February 3, 2023, the Minister of Public Services and Procurement requested that the Procurement Ombud conduct a review of all contracts awarded to McKinsey & Company. On March 16, 2023, after considering available information and determining that there were reasonable grounds to do so, the Procurement Ombud launched a review of the procurement practices of departments within his mandate to look at the award of contracts to McKinsey to assess fairness, openness, and transparency and compliance with legislative, regulatory, policy, and procedural requirements.

On January 18, 2023, the House of Commons Standing Committee on Government Operations and Estimates (OGGO) adopted a motion for the Auditor General to conduct “a performance and value for money audit of the contracts awarded to
McKinsey & Company since January 1, 2011, by any department, agency or Crown corporation.” The Committee’s motion was accepted by the House of Commons on February 7, 2023.Further, on February 8, 2023, the Office of the Comptroller General of Canada (OCG) directed the Chief Audit Executives of government organizations that had contracted with McKinsey to conduct internal audits of the related procurement processes. The results of these departmental audits were released in March 2023.

Fraudulent billing

Issue

The Government of Canada was fraudulently billed an estimated $5 million by individuals who worked as subcontractors for suppliers on professional services contracts.

Key messages

My department has detected several fraudulent billing schemes undertaken by individuals who worked as subcontractors on federal professional services contracts. This has been the result of PSPC’s efforts over the last five years to strengthen its approach to detecting fraudulent activity and other types of wrongdoing
PSPC took swift action to suspend the security clearances of the individuals in question. This prevents these individuals from doing business with the Government on contracts with security requirements
These cases have required months of efforts by officials within my department as these schemes spanned multiple organizations and suppliers across multiple contracts
PSPC is pursuing efforts to recover illegitimate amounts billed to the Government of Canada
These cases have been referred to the RCMP, so I will not comment further

If pressed on more details about the cases referred to the RCMP:

The department has referred the cases to the RCMP and officials are trying to balance the need to be transparent while also protecting the integrity of ongoing investigations. Basic information was shared with the public as soon as the investigative process permitted us to do so
Key components of the department’s approach to managing the risk of fraud are associated with prevention, detection and enforcement
The department is sending a clear message to the marketplace that this type of behaviour is unacceptable. We are taking the necessary steps to detect and deter those individuals who perpetrate this type of wrongdoing against the Government

If pressed on the providing the names of the three individuals:

As you would expect, I am not in a position to provide that level of information at this time, but what I can say is that the wrongdoing in these cases occurred mainly within the IT consulting services sector

If pressed on the consequences for the three individuals:

The security statuses of the individuals were suspended when PSPC’s investigations provided sufficient grounds to believe that overbilling had taken place. This limits their ability to do business on federal contracts
PSPC continues to closely monitor this situation and will make the necessary adjustments to our approach as new information becomes available

If pressed on the consequences for the prime contractors:

At this time, the department is assessing whether there will be measures imposed on the prime contractors involved with these three subcontractors
While these investigations are case-specific, the department has a framework of fraud detection tools and activities, which enables PSPC to continually monitor the procurement system for potential instances of fraud and wrongdoing
This includes active measures associated with ongoing data analytics to identify potential instances of fraudulent billing. And when an issue is detected, we respond quickly to mitigate the risk

If pressed on providing the departments impacted by this fraudulent activity:

A total of 36 departments, agencies and Crown Corporations were impacted by this fraudulent activity. In order to protect the integrity of ongoing investigations, additional details cannot be provided at this time

Background

PSPC uncovered three cases of fraudulent billing by professional services subcontractors (i.e. individuals who were subcontracted) who were employed by prime contractors that held multiple contracts with a number of federal departments and agencies:

An IT subcontractor fraudulently billed eight departments between May of 2020 and June of 2022
A second IT subcontractor fraudulently billed a total of 20 departments between April 2018 and May 2022
The third subcontractor provided professional services as a business architect from April 2019 until December 2022 and fraudulently billed a total of 24 departments

Administrative investigations were launched and found that the subcontractors’ actions resulted in 36 federal departments, agencies and Crown corporations being fraudulently billed. Illegitimate payments are estimated to be $5 million.

These three cases have been referred to the RCMP for further investigation.

PSPC has a framework in place to prevent, detect and respond to wrongdoing in order to safeguard the integrity of the federal procurement system. This approach includes the use of a variety of tools to actively detect fraudulent activity, and respond to alleged misconduct that the Government of Canada is being defrauded in either a specific contract or on a broader scale.

PSPC employs active measures to raise awareness among procurement officers on how to identify potential instances as well as the use of data analytics and tips from the public to identify potential instances of fraud and wrongdoing. In order to respond to alleged instances, the department has an investigatory capacity to examine allegations that the Government of Canada is being or has been defrauded within its procurements.

The identified three cases demonstrates that departmental approach and techniques to prevent, detect and respond to instances of fraudulent activity are working.

The department will continue to refine and expand the use of our tools to detect and address wrongdoing and ensure that individuals or entities engaging in fraud or other illegal activities are held accountable for their actions and return monies owed to the Crown.

Office of Supplier Integrity and Compliance

Issue

The marketplace has greatly evolved in recent years, and gaps in the current Integrity Regime have impacted the government’s ability to fully mitigate the risk posed by some suppliers. PSPC has announced the launch of a new Office of Supplier Integrity and Compliance.

Key facts

Key messages

The Government of Canada is committed to taking action against improper and unethical business practices, and to holding companies accountable for their misconduct while protecting federal expenditures
The Government of Canada announced the launch of the Office of Supplier Integrity and Compliance, which will come into effect in May 2024, replacing the existing Integrity Regime
The new Office will improve the government’s ability to respond to emerging risks of misconduct and fraud while protecting the integrity of the federal procurement and real property systems
The Office will provide new tools to address corporate misconduct, and support federal efforts to eradicate forced labour from Canadian supply chains, in addition to targeting financing of terrorism, human trafficking and offences under federal environmental laws. The Office will also further strengthen PSPC’s use of data analytics to help detect fraudulent schemes
My department is currently engaging with key stakeholder groups, and we will work with them to ensure that industry partners understand the program changes and requirements

Background

The Integrity Regime was introduced in 2015 as a government-wide policy-based debarment system designed to further protect the integrity of the Government of Canada’s contracts and real property transactions.

The current Regime is a government-wide debarment system that is designed to help ensure that the Government of Canada conducts business with ethical suppliers in Canada and abroad. The program plays a significant role in safeguarding the federal procurement system, which encompasses approximately $20 billion annually for procurement contracts, real property agreements, the management of Crown-owned properties, and rental payments on 1,690 lease contracts across Canada.

The new Office of Supplier Integrity and Compliance program will provide an opportunity to modernize the Government of Canada’s debarment and suspension program and further strengthen its use of data analytics to identify potential instances of fraud and wrongdoing, and better leverage intelligence relevant to assessing the integrity of the vendors with whom the government contracts.

Further details concerning the launch of the new Office and the revised Ineligibility and Suspension Policy will be made available in the coming weeks, in advance of the new program coming into effect.

Daniel J. Macdonald building contract

Issue

On April 28, 2023, PSPC awarded a $93.1 million contract to Pomerleau Inc. for construction services related to the modernization of the Daniel J. MacDonald Building in Charlottetown, Prince Edward Island. The contract had been initially awarded to EllisDon for $98M, but that contract was terminated after PSPC determined that it had inadvertently and unknowingly erred during the procurement process.

Key facts

Two bids were received at tender close from Pomerleau, $93,108,346 (HST included) and EllisDon, $98,010,564 (HST included). Pomerleau’s bid was initially deemed non-compliant. EllisDon was awarded the contract on February 16, 2023
On March 9, 2023, Pomerleau filed a complaint with the Canadian International Trade Tribunal alleging that PSPC improperly awarded the contract to EllisDon. Following a close analysis of the documents provided as part of the complaint, PSPC was able to confirm that it erred in awarding the contract to EllisDon
On April 28, 2023, PSPC awarded the contract to Pomerleau Inc. The contract with EllisDon was terminated on May 1, 2023
Work commenced on July 10, 2023

Key messages

The Government of Canada is committed to providing a modern, sustainable and efficient workplace for Veterans Affairs Canada to continue to deliver important services and programs to veterans and their families
We became aware of the error in the award for the initial contract while reviewing the evidence submitted by the unsuccessful bidder as part of a complaint to the Canadian International Trade Tribunal
After PSPC determined it had inadvertently and unknowingly erred during the procurement process, the contract with EllisDon was terminated and a contract was subsequently awarded to Pomerleau
We are confident that this approach was the most efficient and fair option to resolve the error
As the matter is under judicial review, PSPC cannot comment further

If pressed on corrective measures:

PSPC has conducted an internal review to identify improvements to policies and procedures, and has sent out updated guidance in order to prevent a similar situation in the future.

Background

Pomerleau filed a complaint and provided evidence that an error occurred after being advised why they were deemed non-compliant. As such, PSPC [Redacted]. Pomerleau subsequently withdrew their Canadian International Trade Tribunal (CITT) complaint. The original contract with EllisDon was terminated on May 1, 2023.

Following the termination of the award of their contract, EllisDon in turn filed a CITT complaint.

On September 26, 2023, the CITT released its decision concluding that EllisDon’s complaint was valid and determining that EllisDon had missed out on the opportunity to bid on other projects while it was bound to the contract with PSPC. As a result, the Tribunal recommended that Canada negotiate with EllisDon to determine what compensation, if any, could be payable for “lost opportunity”, and if the parties could not arrive at a negotiated amount, the Tribunal would make a determination of the amount of the compensation. PSPC had issued a stop work order to EllisDon on February 22, 2023.

On October 25, 2023, Justice Canada filed an application for Judicial Review (JR) of the CITT’s decision.

On February 1, 2024, the CITT advised the parties that it was keeping the compensation phase of the complaint process on hold until the outcome of the JR application.

Public Service Health Care Plan

Issue

Beginning on July 1, 2023, when Canada transitioned the administration of claims processing from Sun Life to Canada Life, some Public Service Health Care Plan members have experienced difficulties obtaining assistance via the call centre.

Key facts

The contract was awarded to Canada Life on November 30, 2021, for the provision of claims processing services in support of the Public Service Health Care Plan
The estimated value of the contract is $514.45 million
The contract was comprised of a 20-month start-up phase (implementation period), an operations phase of 8 years, plus four 1-year option periods
The operations phase began on July 1, 2023
The Public Service Health Care Plan covers more than 1.7 million Canadians (federal public servants, federal public servant pensioners, and their eligible dependents), with total annual expenditures of approximately $1.46 billion
The Public Service Health Care Plan provides reimbursement for a range of health-related goods and services that are not provided through private insurance plans, provincial or territorial insured health, social or other publicly funded programs
The Treasury Board of Canada Secretariat implemented a series of plan design changes (e.g., mandatory generic drugs, changes to physiotherapy) that coincided with the launch of the Canada Life contract operations
The PSHCP also provides coverage to out of country members either through the PSHCP Emergency Travel Assistance Services or Comprehensive Coverage. These services are provided by Canada Life through their subcontractor, MSH International (Canada) Ltd. (MSH)
On February 9, 2024, a ransomware breach was discovered by MSH. MSH immediately paused their claims processing operations. Operations resumed February 26, 2024
Between March 17 and March 19, 2024, a privacy breach, known as a password-spraying attack was detected by Canada Life on their platform. On April 11, 2024, Canada Life confirmed there were 50 member accounts compromised
On April 7, 2024, the London Free Press reported that Canada Life will be outsourcing its technology department to HCLTech. The move will see 200 jobs cut across the country including 35 in London, Ontario
On April 25, 2024, Radio-Canada reported that Canada had imposed financial “sanctions” on Canada Life. The CBC reported on April 26, 2024, that PSPC, “is taking steps to address startup delays faced by Canada Life and has begun to apply financial consequence mechanisms under the contract

Key messages

Canada Life has been working collaboratively with Canada and has committed to implementing measures to improve member services
Senior officials continue to meet on a regular basis with Canada Life to discuss and monitor ongoing call-centre support issues

If pressed on impact of it job cuts at Canada Life:

PSPC will work with TBS to ensure that the recent announcement by Canada Life related to its IT support does not impact service to our health plan members
We encourage Canada Life to provide comprehensive support and resources to ensure that affected workers are taken care of during their transition

If pressed on improvements to the service levels:

To improve services, Canada Life has increased staff at its call centre, as well as extended its daily call centre hours, including opening on weekends
Canada Life has increased communication with individual pharmacies and their head offices
Canada Life implemented temporary changes to the positive enrolment process, allowing for easier claim reimbursement for a cohort of members who failed to complete their enrolment
Canada Life continues to update online communications to help answer frequently asked questions
Canada Life has implemented an escalation process to assist members with urgent claims inquiries
The measures implemented to date have lead to significant improvements in call centre service levels including a consistent decrease in average wait time which are now meeting or exceeding the service standard of 70% of calls answered in 20 seconds or less

If pressed on services for members abroad:

Canada Life is continuing its efforts to improve service delivery to out of country members either through the PSHCP Emergency Travel Assistance Services or Comprehensive Coverage
These services continue to fall below service standards and officials are working diligently with Canada Life to find solutions
Canada Life has developed an Action Plan to improve services; the proposed measures should help Canada Life address the current backlog sooner than anticipated

If pressed on the MSH data breach:

Following a ransomware breach, MSH claims processing operations resumed on February 26, 2024, when the situation was under control
Both Canada and Canada Life were assured that the servers were cleansed
MSH is currently doing further data analysis to determine what or if any personal information was jeopardized. Once data analysis is completed, members will be advised of the outcome

If pressed on the Canada Life attack:

Any members affected by this incident will be notified and provided the information needed so that appropriate mitigation measures can be taken
On April 18, 2024, Canada Life implemented mandatory 2-Factor Authentication to their platform, with an opt-out option

If pressed on financial consequences:

As part of its regular contract management responsibilities, PSPC is taking steps under the terms of the contract to address service delivery issues faced by Canada Life in order to ensure that Public Service Health Care Plan members receive the services that they deserve
We are unable to disclose any financial information at this time

Background

The source of member frustration can largely be attributed to an apparent deficiency in responding to larger than expected call volumes, which continues to be much higher than historical norms and modeling projections.

The higher call volumes have been the result of a combination of plan changes, user error (positive enrolment not completed properly or completely), and errors with pharmacies (some did not use proper codes, even if individuals completed their positive enrolment).

Canadian Dental Care Plan

Issue

PSPC is working with Health Canada to support the design and implementation of the new Canadian Dental Care Plan.

Note:

All questions regarding the collaboration with provincial and territorial partners and the design of the program should be directed to Health Canada

Key facts

A comprehensive multi-stage procurement process was initiated in July 2022 through a Request for Information and then an Invitation to Qualify
A Request for Proposals process closed on July 20, 2023, with the submission of one compliant bid
A contract valued at an estimated $750 million has been awarded to Sun Life

Key messages

PSPC worked with Health Canada and its partners to undertake an open, fair, transparent and competitive procurement process. Following extensive industry engagement, Sun Life Assurance Company of Canada (Sun Life) was selected as the claims processor for the new Canadian Dental Care Plan
A contract was awarded to Sun Life, valued at approximately $750 million for five years – from December 2023 to November 2028, to adjudicate and manage the payment of claims made under the Plan
The Operations phase of the Canadian Dental Care Plan began on May 1st and as such, member enrolment and an active contact centre service will continue as previously implemented but Claims are now being adjudicated and paid on a on-going basis
The implementation of key deliverables, such as the member portal, a Health Canada user interface and a robust fraud risk management program, will continue to move forward as scheduled

If pressed on the fairness of the procurement approach:

PSPC used an agile and collaborative procurement approach for the Canadian Dental Care Plan to ensure fairness, transparency, and compliance with procurement rules and regulations, while delivering value for money and timely access to dental care services for Canadians
Canada awarded an Early Work Agreement to Sun Life for preliminary tasks like staffing, information technology setup, space acquisition, and work plan development. This interim measure enabled Sun Life to undertake necessary pre-contractual work to ensure the timely launch and successful operation of the Canadian Dental Care Plan
Canada finalized the contractual details and awarded a Contract to Sun Life to continue the work required for the Canadian Dental Care Plan

Background

In Budget 2022, the Government of Canada committed $5.3 billion over five years to Health Canada to provide dental care for the estimated 7 to 9 million Canadians who are unable to access proper dental care because of the cost. This started with under 12-year-olds in 2022, expanding to under 18-year-olds, seniors, and persons living with a disability in 2023. Full implementation is expected by 2025. The program would be restricted to families with an income of less than $90,000 annually, with no co-pays for those under $70,000 annually in income.

PSPC was responsible for managing the procurement to select a private partner for the delivery of dental claims processing. This involved engaging with industry, developing procurement documentation, conducting the procurement process and managing the resulting contract(s) associated with the program.

PSPC issued a Request for Information on July 25, 2022. The Request for Information closed on August 22, 2022, and 26 responses were received from various organizations within the dental care community. The feedback received helped guide the development of a long-term dental care program. A subsequent Invitation to Qualify was issued on October 28, 2022, and closed on December 5, 2022. Once the evaluation was completed, three pre-qualified suppliers (Express Scripts Canada, Medavie Inc., and Sun Life Assurance Company of Canada) were announced in January 2023.

A collaborative process ensued from February to May 2023, refining requirements with suppliers’ input. A subsequent Request for Proposals was sent to the three pre-qualified suppliers on June 20, 2023, and closed on July 20, 2023, yielding one compliant proposal.

An Early Work Agreement was awarded to Sun Life on August 22, 2023, for necessary pre-contractual work while Canada finalized its due diligence. [Redacted]

Canada has finalized the details of the Contract and awarded it to Sun Life on December 1, 2023, in order for Sun Life to continue the work required for the Canadian Dental Care Plan.

Electronic procurement solution

Issue

In the context of the publication of recent reports, verifications, committee appearances on procurement process, PSPC is planning to leverage the Electronic Procurement Solution (EPS) to modernize procurement processes and to help address some of the shortfalls.

Key facts

More than 52,500 registered supplier accounts have been created. Among these 19% (9,900) have declared as part of an equity designated (ED) group, of which 6,135 supplier accounts have further identified as members of at east one specific ED group (noting that some belong to more than one group)
9350 contracts awarded in EPS for a total of $12.1B where 17,344 legacy contracts were operationalized in EPS and 98% of all core PSPC procurement activities is now conducted in EPS
The Provinces, Territories, Municipalities, Academia, School, Hospitals and Crown Corporations have a window into CanadaBuys and have posted 46,000+ notices on the web portal
PSPC procurement officers have an account on the platform where 253 training sessions have occurred, resulting in 1,987 current trained PSPC users

Key messages

PSPC is committed to modernizing procurement processes and to continue to ensure best value for Canadians and promote social procurement and supplier diversity
The Electronic Procurement Solution is a cloud-based ecosystem comprised of various technologies such as SAP procurement modules and the CanadaBuys web portal which are key to support this modernization effort, including professional services procurement tools
The Electronic Procurement Solution is not an AI solution but provides a range of capabilities that enables the centralization of contract management, and auditing functions that help to enhance the visibility, recording and storage of procurement transactions and key communications with suppliers
The Electronic Procurement Solution through the CanadaBuys web portal provides suppliers with a free and accessible single window to procurement opportunities for the broader Canadian public sector in accordance with the Canada-European Union Comprehensive Economic and Trade Agreement
In March 2024, suppliers were reminded of Values and Ethics via the CanadaBuys portal and through emails to Supplier Advisory Committee membership

If pressed on ArriveCAN and McKinsey:

PSPC procurement operations transitioned to the new EPS platform between late fall 2022 and June 2023
Only 2 of the contracts issued by PSPC in support of ArriveCAN were initiated in EPS. All other contracts were initiated in legacy systems and subsequently migrated after contracts were awarded. Only 9 of ArriveCAN related contracts are still active in EPS
Only 4 call-ups against the McKinsey NMSO were issued in EPS by PSPC

If pressed on auditing functions in EPS:

The SAP cloud-based solution provides the ability to record and store information regarding procurement activities
For example, it enhances the Department’s visibility and maintains a record of communications with suppliers created or received in SAP Ariba during tender processes including through questions and answers and electronic bids. This will help address shortfalls identified in past audit reviews.

If pressed on professional services overbilling:

EPS provides PSPC with the ability to manage and track work performed by professional service consultants/contractors
This feature is currently being tested and for potential broader use at PSPC

If pressed on how eps will help support Office of Supplier Integrity and Compliance (OSIC):

EPS, combined with other data sources, will help support the work of the OSIC by enhancing data analytics and fraud detection capability
EPS enables the centralization of contract management, and auditing functions for the Department. It will support the data analytics capacity and intelligence relevant to fraud detection, notably with respect to overbilling situations

Background

Under the Department of Public Works and Government Services Act, PSPC has the legislated mandate to provide acquisition services for federal departments and agencies.

PSPC launched the EPS project in 2018 to move to a cloud-base e-procurement platform. This project was completed in June 2023 and is a key component to the digital transformation in support of the Minister's mandate to modernize procurement. Following the Budget 2018 announcement, on July 4, 2018 PSPC awarded, through a competitive process, a five-year contract to implement EPS to Infosys Public Services (IPS) who proposed an SAP-based solution

CanadaBuys portal is the public facing component of the e-procurement platform that, since September 2022, provides suppliers with a free and accessible single window to view procurement opportunities across federal, provincial, territorial, and municipal jurisdictions.

Prior to the implementation of EPS, PSPC was heavily reliant on a array of obsolescent systems and manual processes to conduct procurement activities and safeguard key information related to procurement activities (emails, CD, Fax, e-post, hard copies and so on). The new e-procurement solution centralizes tendering, award and contract management functions at PSPC and provides enhanced and automated information management and auditing functions.

The EPS contract sourcing and management functionalities are only accessible to PSPC procurement officers. Bid evaluations and other procurement activities conducted by other government departments (OGDs) under they own authorities are currently conducted outside the EPS SAP environment.

The following are next steps planned by the Department regarding EPS:

Evolve the use of the platform and further modernize procurement practices. Continue to modernize PSPC Supply Arrangement and Standing Offer instruments to leverage EPS catalog functionality and enhance the management of professional service contracts (e.g., timesheets) at PSPC with a view to support more efficient detection of fraudulent practices
Continue adoption and transformation activities and complete onboarding the department
Promote social procurement and supplier diversity with better data collection

Vendor performance management

Issue

PSPC is developing a standardized framework for evaluating vendor performance against contractual obligations and hold vendors accountable for poor performance, in order to optimize best value for Canadians.

Key facts

The Vendor Performance Management (VPM) framework currently in development will provide a standardized management approach across PSPC, reinforcing the requirement for clear documentation and regular performance reviews that will be made accessible to procurement professionals
Pilots of the new vendor management framework began in 2021, and were applied to a limited number of contracts in five commodity areas (Apparel, Fairness Monitoring, Construction, TBIPS, Marine/Small Vessels). Comments received were positive

Key messages

Holding vendors accountable ensures delivery of goods and services of higher quality, increases competition, and lowers costs to Canadians. Measuring performance allows the Government of Canada to exclude underperforming vendors and incentivize good performance
PSPC is extending its VPM pilots, currently applied to a limited number of contracts, by developing a standardized framework to measure and document vendor performance during the lifecycle of the contract
VPM requires the completion of regular standardized evaluations throughout the duration of a contract, scoring the vendor on performance in four categories: cost, schedule, management, and quality
Consistent application of this framework and its tools would mitigate risks of a vendor defaulting on a contract, hold vendors accountable to their contractual obligations and inform decision on future contract award
The VPM framework complements the Office of Supplier Integrity and Compliance, whose primary focus is the ethical conduct of vendors, by managing vendor performance to improve goods and services delivery
Vendor Performance issues that are repetitive, serious or egregious will be escalated to the Office of Supplier Integrity and Compliance for further review and action as necessary

If pressed on VPM initiatives

PSPC piloted the VPM initiative and received feedback from industry across various commodity areas, including professional services. Pilots are being expanded to other commodity areas
Public Services and Procurement Canada has in place a Vendor Performance Corrective Measures policy, which will be enhanced when merged with the Vendor Performance Management framework, to provide an end-to-end contract management process

Background

The Minister of Public Services and Procurement’s 2017 and 2019 Mandate Letter directed that the Minister:

“…continue the development of better vendor management tools to ensure the Government is able to hold contractors accountable for poor performance or unacceptable behaviour…”

PSPC has been developing the VPM initiative through ongoing consultation and collaboration with stakeholders across the department, client departments and industry. Consultations began in 2016 and ended in 2020. Feedback received is used to develop a Vendor Performance Management policy that best reflects the needs of all participants in the procurement environment.

While PSPC has developed and piloted tools, training and guidance, the VPM framework has not yet been extended across the department and is currently not mandatory. Vendor Performance is currently assessed and enforced on a contract-by-contract basis, through contract administration best practices and a Vendor Performance Corrective Measures framework that is mandatory across all Public Service and Procurement Canada procurements.

The Department is however currently working on a Vendor Performance Management policy that will be mandatory for all contracts above certain thresholds and that will be implemented in phases across various commodity group areas.

Conflict of interest

Issue

Information has been requested regarding processes in PSPC for:

sensitizing new employees to conflict of interest concerns (e.g., training, Values and Ethics Code, etc.)
what happens when potential or real conflict of interest arises when a public servant is found to be contracting with the Government of Canada

The request follows a recent data request from the Standing Committee on Public Accounts (PACP) for a “list of government employees that also work as contractors”. Consolidated data was provided to PACP through the Treasury Board of Canada Secretariat’ Office of the Chief Human Resources Officer (TBS-OCHRO) with departments each providing information for their respective employees.

Key facts

PSPC reported 5 declarations of conflict of interest in 2022-2023 and 10 declarations of conflict of interest in 2023-2024 (situations where government employees also work as contractors)
In several cases, the individuals chose not to pursue the activity. In others, mitigation measures were put in place or the individual resigned

Key messages

Public Service and Procurement Canada takes its responsibilities regarding conflict of interest very seriously
My department deals with Conflict of Interest declarations in compliance with the Values and Ethics Code for the Public Sector and the Directive on Conflict of Interest
Employees that join our department, or move to a new position, are informed in their letters of offer of their obligation to report any real, potential or apparent conflict of interest
They then have access to training that helps them understand and respect these obligations
The Code of Conduct applies to all persons employed regardless of group and level of the employee
Conflict of interest declarations are individually assessed in accordance with PSPC’s Code of Conduct and Directive on Conflict of Interest, and employees are advised whether or not a real, potential or apparent conflict of interest exists and what they need to do to ensure compliance
Actions required to ensure compliance can include reminders of standard obligations, mitigations measures and instruction to cease the activity

If pressed on non-compliance:

Alleged non-compliance with obligations or mitigation measures are investigated and addressed through the discipline process, up to termination of employment

If pressed on changes to the policy:

Government Conflict of Interest policy instruments are under the authority of the Chief Human Resources Officer at the Treasury Board of Canada Secretariat. PSPC will align its policies to reflect any changes to Government of Canada policy instruments

Background

In March 2024, departments were asked to provide TBS-OCHRO with data on declarations of conflict of interest in 2022-2023 and 2023-2024 where government employees also work as contractors. This is a very narrow subset of declarations of outside employment by government employees. PSPC reported 5 such declarations in 2022-2023 and 10 in 2023-2024

Employees may engage in employment or activities outside the public service, provided that such employment or activities do not give rise to a real, apparent or potential conflict of interest, or compromise the impartiality of the public service or their own objectivity. Employees are required to file a conflict of interest declaration for any paid employment outside PSPC and for any company they own. In addition, for all of their outside activities, assets, liabilities and interests, employees must submit a conflict of interest declaration if they believe, or are uncertain, that they may be in a real, apparent or potential conflict of interest or may compromise the impartiality of the public service or their own objectivity. PSPC then determines whether the situation presents a real, apparent or potential conflict of interest, and may require the modification or abandonment of the interest, asset, liability, employment or outside activity.

Based on current context, PSPC is updating its conflict of interest processes and assessment tools, such as benchmarks. The Chief Human Resources Officer is reviewing the Directive on Conflict of Interest to ensure that the requirements are clear and effective, particularly as they relate to employees who engage in outside employment, including contracts with the Government of Canada.

The Office of the Chief Human Resources Officer is also examining guidance on conflict of interest provided to deputy heads to support the effective exercise of their authorities and responsibilities under this Directive, and as required, under the Policy on People Management. These activities could yield changes at the enterprise or organizational level that would impact future results. For example, departments could revise their lists of what constitutes a conflict of interest for individuals working in certain roles or business lines, which could increase the numbers of conflict of interest declarations. This targeted review has begun and is expected to be completed in the Fall. The approach will rely heavily on consultation with partners and stakeholders to identify gaps and potential areas for improvement, underpinned by research on current approaches in other jurisdictions.

National Shipbuilding Strategy

Issue

The National Shipbuilding Strategy is a long-term commitment to renew the vessel fleets of the Royal Canadian Navy and Canadian Coast Guard, create a sustainable marine sector, and generate economic benefits for Canadians.

Notes:

Questions on budget, requirements, timelines, international comparisons, and project management should be directed to the Minister of Fisheries and Oceans and the Canadian Coast Guard or the Minister of National Defence
Questions related to Canadian sanctions against Moscow should be directed to the Minister of Foreign Affairs

Key facts

As of December 31, 2023, we have awarded approximately $26.5 billion in contracts under the National Shipbuilding Strategy to businesses across the country and, of these, $1.36 billion went to small and medium businesses with less than 250 employees
National Shipbuilding Strategy contracts awarded between 2012 and 2023 are estimated to have contributed close to $30 billion ($2.3 billion annually) to Canada’s gross domestic product, and created or maintained approximately 20,400 jobs annually between 2012 and 2024

Key messages

The National Shipbuilding Strategy is about Canadians and Canadian businesses working together to strengthen and renew our Naval and Coast Guard fleets
So far, 7 large vessels and numerous small ships have been delivered, and many more are under construction across Canada
We will continue working closely with industry to manage costs and schedules, and ensure the best value is provided to Canadians throughout the duration of these projects

If pressed on chantier Davie Canada Inc.’s acquisition of Finland’s Helsinki Shipyard Oy:

On November 3, 2023, Chantier Davie announced that it had officially acquired Helsinki Shipyard Oy. This purchase was supported by funding from Investissement Québec
The Government of Canada was not involved in the purchase and did not provide funding
The National Shipbuilding Strategy umbrella agreement signed between the Government of Canada and Chantier Davie does not prevent the acquisition of international shipyards by Davie
The Government of Canada remains committed to building ships in Canada as part of the National Shipbuilding Strategy. Canada will continue to work with our strategic partners to ensure that members of the Royal Canadian Navy and Canadian Coast Guard have the equipment they need to do their jobs and protect Canadians, while maximizing economic benefits for the country

If pressed on the amount of contracts awarded to Chantier Davie Canada Inc.:

From 2012 to 2023, Chantier Davie was awarded approximately $2.89 billion in contracts, or 10.86% of the value of all National Shipbuilding Strategy contracts awarded across the country, of which approximately $1.99 billion was for repair, refit and maintenance activities

If pressed on the increase in the cost for the construction of the Offshore Oceanographic Science Vessel:

The budget for the Offshore Oceanographic Science Vessel was established in 2007, prior to the announcement of the National Shipbuilding Strategy and was never intended to represent the full construction cost of the ship. It was revised in 2009, 2016, 2021 and 2023
In June 2023, the project obtained additional build contract authorities to reflect new and updated information related to the impacts of COVID-19 to the shipyard, higher than anticipated inflation and global supply chain challenges, a more mature vessel design, and a better understanding of production and material costs

If pressed on contract amounts:

The National Shipbuilding Strategy is a long-term investment that is delivering results now: ships for the Royal Canadian Navy and the Canadian Coast Guard and jobs and economic growth for Canada
Across the country, opportunities exist for Canadian shipyards and businesses to win contracts for vessel construction, repair, refit and maintenance

If pressed on economic benefits:

The National Shipbuilding Strategy is generating economic benefits
In 2023 alone, the Government of Canada awarded approximately $1.88 billion in new contracts to Canadian companies under the Strategy, including approximately $238.1 million to small and medium businesses with fewer than 250 full-time employees
Contracts awarded in 2023 are estimated to contribute approximately $1.2 billion ($625 million annually) to Canada’s gross domestic product, and will create or maintain close to 5,600 jobs annually during 2023 and 2024

If pressed on the 3rd yard:

Following successful negotiations, the Government of Canada signed an Umbrella Agreement on April 4, 2023, with Chantier Davie Canada Inc. and announced that it has become the third strategic shipbuilding partner, joining Irving Shipbuilding Inc. and Seaspan’s Vancouver Shipyards Co. Ltd.
The third shipyard will build 1 of 2 Polar Icebreakers and 6 Program Icebreakers for the Canadian Coast Guard, and 2 Ferries for Transport Canada
The exact build schedules, sequence and costs will be negotiated and finalized during the individual contract negotiations

If pressed on the polar icebreakers:

On May 6, 2021, the Government of Canada announced its intention to move forward with the construction of 2 Polar Icebreakers
Vancouver Shipyards will engineer and construct one Polar Icebreaker while the other vessel will be engineered and constructed at Chantier Davie

If pressed on the program icebreakers:

On March 26, 2024, the Government of Canada announced that it has awarded a $19.6 million (including taxes) ancillary contract to Chantier Davie of Lévis, Quebec to initiate design activities for the Program Icebreakers
The new Program Icebreakers will replace the Canadian Coast Guard’s heavy and medium icebreakers that operate in Atlantic Canada and the St. Lawrence waterways during the winter and in the Arctic during the summer
This contract is expected to create and sustain approximately 35 jobs annually

If pressed on the Canadian International Trade Tribunal and federal court challenges to the award of the CCGS terry fox vessel life extension contract:

The Government of Canada recognizes the decision of the Canadian International Trade Tribunal
The Tribunal asked that the parties make best efforts to negotiate and report back to it by November 21, 2023, on the outcome of discussions regarding a compensation settlement amount
The parties reported back to the Tribunal that they were unable to reach an agreement, and subsequently filed submissions supporting their respective proposals. The Tribunal reserved jurisdiction in this matter and will provide a ruling on the settlement amount. There is no set timeline for the Canadian International Trade Tribunal ruling
The contract award remains with Ontario Shipyards (formerly Heddle Shipyards) and work continues in support of the Canadian Coast Guard’s mandate

If pressed on government funding of $463M in infrastructure upgrades at Irving shipbuilding:

On August 8, 2023, the Government of Canada announced an investment in the Canadian Surface Combatant project’s infrastructure at Irving Shipbuilding
Public Services and Procurement Canada, on behalf of the Department of National Defence, amended the Definition Contract with Irving Shipbuilding for an additional $463 million (including taxes) for the Canadian Surface Combatant project
This investment will enable the production and delivery of the Canadian Surface Combatant ships at the pace required to replace the ageing Halifax-class ships and meet the needs of the Royal Canadian Navy while delivering the best value for Canadians
The infrastructure enhancements were identified during the design phase and adopt specific accommodations identified by Australia and the United Kingdom in the construction of their ships that are based on the same design

Background

The National Shipbuilding Strategy is a long-term plan to renew the Royal Canadian Navy and Canadian Coast Guard fleets. It aims to eliminate the boom and bust cycles of vessel procurement that have slowed Canadian shipbuilding in the past.

In 2011, following a competitive, fair, open and transparent process, the government established long-term strategic relationships for the construction of large vessels with 2 Canadian shipyards: Irving Shipbuilding in Halifax, Nova Scotia, for the construction of combat vessels, and Vancouver Shipyards in British Columbia for the construction of non-combat vessels.

Following successful negotiations, the Government of Canada signed an Umbrella Agreement on April 4, 2023 with Chantier Davie. Chantier Davie will build 1 of 2 Polar Icebreakers and 6 Program Icebreakers for the Canadian Coast Guard, and 2 Ferries for Transport Canada.

All Canadian shipyards across the country, except the three strategic shipyards, can compete to win contracts for small vessel construction, whereas all Canadian shipyards can compete for repair, refit and maintenance contracts.

Original budgets for large vessel construction projects were set many years ago and were guided by limited experience and projections. Shipbuilding is highly complex and we continue to build on lessons learned to ensure future project budget and timeline projections are realistic and achievable. We continue to work closely with the shipyards and industry to address ongoing challenges including cost, time estimates and productivity.

Arctic and Offshore Patrol Ships costs

Issue

In December 2023, the Department of National Defence responded to a media inquiry regarding the issues and repairs underway on the Arctic and Offshore Patrol Ships (AOPS). As part of this response, 14 ongoing issues were proactively disclosed. These issues continue to draw media attention.

Key facts

Under the National Shipbuilding Strategy, the Government is delivering a total of 8 AOPS
6 AOPS for the Royal Canadian Navy (RCN) will conduct sovereignty and surveillance operations in Canada’s waters, including the Arctic; 4 of these vessels have been delivered, and the remaining 2 are under construction
2 AOPS for the Canadian Coast Guard (CCG) will be dedicated to a range of missions, including North Atlantic Fisheries Organization patrols, and will have ice-capable functionality that will allow the CCG to expand its patrol capability into the low Arctic
Construction on the first of the 2 CCG AOPS began on August 8, 2023
To date, the total warranty cost of the AOPS program is $8.9 million, with the cost and number of warranty issues decreasing significantly on each successive ship

Key messages

When building the first ship in a class, it is normal and expected that there will be issues identified throughout the building process – including after delivery – that require correction
The Arctic and Offshore Patrol Ship is the first warship built in Canada in the last 20 years. Much learning has taken place, resulting in a significant reduction in defects encountered on successive ships
Through testing and use after delivery, the Royal Canadian Navy has identified deficiencies in several areas and Canada is working collaboratively with the shipyard to resolve these issues and apply those lessons to improve the quality of our future ships

If pressed on repair costs to fix issues:

We are aware of the ongoing costs and concerns affecting the Arctic and Offshore Patrol Ships. The majority of the issues raised are either fully resolved or partially resolved with mitigation plans in place. We are working diligently to ensure these concerns are addressed and repairs completed

If pressed on our North, strong and free: a renewed vision for Canada’s defence:

We stand united in our commitment to the Arctic, an enduring symbol of our nation's resolve and strength. 'Our North, Strong and Free: A Renewed Vision for Canada's Defence' reflects this unwavering dedication, highlighting the critical role of the Arctic and Offshore Patrol Ships in the preservation of our Arctic sovereignty.
These advanced vessels are at the heart of our collective strategy for a contemporary, agile naval force, ready to meet the evolving challenges of the Arctic's dynamic environment and the increasing demands of global security

Background

Recent news articles have noted concerns regarding corrosion, mechanical failure, and severed flooding on AOPS. The government is aware of these ongoing issues and has established a plan to address them.

The technical issues affecting AOPS are being addressed by in-service support contracts for AOPS 1 and 2, which have already been delivered and accepted, and are no longer under warranty. The repair plan for these vessels is underway and costs are not currently available
AOPS 3 and 4 repairs are being conducted under warranty and mitigations are being implemented to ensure that similar issues do not occur on AOPS 5 to 8. These repairs are not yet complete and therefore the final costs are not currently available

Canada contracted for shipbuilding warranty periods that are typical for shipbuilding projects. The workmanship warranty period for the AOPS ships is 12 months after delivery. For ships out of the warranty period, the repairs are being conducted under the AOPS and Joint Support Ship In-Service Support Contract. To qualify as a warranty item, deficiencies must be identified prior to the end of the 12-month period post acceptance. The contractor remains responsible to address these issues, even if those repairs are completed after the warranty period.

Canada has worked collaboratively with the shipbuilder, the in-service community and with the members of the RCN to achieve these results.

The AOPS project will deliver 6 vessels to the RCN to conduct sovereignty and surveillance operations in Canada's waters, including the Arctic, as well as a wide variety of operations abroad. The project will also deliver 2 modified AOPS to the CCG to conduct sea-borne surveillance such as fisheries patrols as well as other missions, including emergency response, buoy tending, icebreaking support, and ocean science.

The vessels are able to perform a wide variety of tasks, such as: provide increased presence and conduct surveillance operations throughout Canada’s waters, including in the Arctic; support Canadian Armed Forces (CAF) sovereignty operations; participate in a wide variety of international operations, such as anti-smuggling, anti-piracy or international security and stability; contribute to humanitarian assistance, emergency response and disaster relief domestically or internationally; conduct Search and Rescue and facilitate communications among other ships; support CAF core missions including capacity building in support of other nations; and support other government departments in their ability to enforce their respective mandates.

Canadian Multi-Mission Aircraft project

Issue

On November 28, 2023, Canada entered into a government-to-government agreement with the United States (US) Government for the acquisition of up to 16 P-8A Poseidon aircraft for the Royal Canadian Air Force (RCAF). Fourteen multi-mission aircraft will be procured, with options for up to an additional two. The estimated value of this government-to-government agreement, which also includes associated equipment, training devices and initial sustainment, is $5.9 billion USD including contingency.

Notes:

All questions related to capability and costs should be answered by the Minister of National Defence
All questions related to industrial and technological benefits should be answered by the Minister of Innovation, Science and Economic Development

Key facts

On June 27, 2023, the United States Government issued a Congressional Notification announcing the potential sale of up to 16 P-8A aircraft with associated spare parts, support equipment, training, training devices, associated mission equipment and initial sustainment for up to three years to Canada. The notification included the estimated cost of purchase at $5.9 billion USD
On July 14, 2023, Canada received a response from the United States Government, in the form of a Letter of Offer and Acceptance, for 14 P-8A aircraft and associated equipment and services (including initial sustainment for up to three years). Canada has the option to obtain up to two more aircraft from the United States Government
Canada has reviewed the offer and determined that it meets all of Canada’s requirements. The offer was accepted on November 28, 2023, and Canada anticipates delivery of the first aircraft as early as 2026. The United States Government is currently initiating various contracts with its suppliers to implement the offer made to Canada
The long term plan for the sustainment of this aircraft is currently being assessed through a Sustainment Business Case Analysis
On November 24, 2023, the Standing Committee on National Defence submitted a report stating that “the committee is of the opinion that the government must proceed by way of a formal Request for Proposals before awarding any procurement contract of the new Canadian Multi‑Mission Aircraft”. The government response was tabled in the House of Commons April 8, 2024

Key messages

As part of Canada’s defence policy, Strong, Secure, Engaged, the Canadian Multi-Mission Aircraft project has been initiated to replace Canada’s CP-140 aircraft fleet
Between June and December 2021, Canada undertook numerous assessments of the requirements. A Request for Information was released in February 2022 to obtain information from industry. Canada also engaged with its closest allies to explore all available options
Following the assessments and engagements, the government has determined that the P-8A Poseidon is the only readily available military off-the-shelf capability that meets the Canadian Multi-Mission Aircraft requirements and allows the replacement of the CP-140 Aurora by 2030
On November 28, 2023, Canada accepted an offer from the United States Government for the acquisition of 14 P-8A aircraft with associated spare parts, support equipment, training, training devices, associated mission equipment and initial sustainment for up to three years. Canada has the option to obtain up to two more aircraft from the United States Government
Canada has also signed an agreement with the aircraft manufacturer, Boeing, to ensure important economic benefits to Canadian industry and Canadians

If pressed on why Canada did not undertake a competition notwithstanding the opinion of the standing committee on national defence:

The P-8A Poseidon is the only readily available military off-the-shelf capability that meets the Canadian Multi-Mission Aircraft requirements and allow the replacement of the CP-140 Aurora by 2030
It is essential to obtain that capability as rapidly as possible to provide our forces with the equipment they need to protect Canada and meet our international commitments
As it has been reasonably determined that only the P-8A Poseidon would meet Canada’s requirements, it would be counterproductive to proceed with a competitive procurement process. This would result in unnecessary additional costs and significant delays, and undermine Canada’s ability to acquire the only viable solution

Background

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.

Since its acquisition, the aircraft has been used for a variety of operations at home and abroad including surveillance of Canada’s coastal waters, anti-submarine warfare, maritime and overland intelligence, surveillance, strike coordination, disaster relief missions and many other functions.

Between June and December 2021, Canada contracted the services of a third-party consultant to assess the CMMA requirements. This multi-phased assessment concluded that the P-8A Poseidon is the only readily available military off-the-shelf capability that meets all of CMMA’s requirements.

Public Service and Procurement Canada, in collaboration with the Department of National Defence and Innovation, Science and Economic Development Canada, has engaged with industry and Canada’s closest allies to determine the best capability to replace the aging CP-140.

Information obtained by Canada demonstrated that the only solution that meets all of the CMMA requirements within the timeframe required to replace the CP-140 fleet by 2030 and avoid an increased capability gap is the Boeing P-8A Poseidon. It should be noted that the P-8A is also owned and operated by all of Canada’s closest defence partners.

Conversion of federal properties to housing

Issue

On November 7, 2023, the Government of Canada announced that 6 surplus federal properties will be developed into more than 2,800 new homes in Calgary, Alberta, Edmonton, Alberta and St. John’s, Newfoundland and Labrador and Ottawa, Ontario.

Key facts

As of March 2024, Canada Lands Company had enabled the construction of more than 13,000 new homes since 2016
Canada Lands Company is on track to enable the construction of more than 29,200 new homes over the next five years
Budget 2024 allocated $500 million over five years for PSPC to purchase parcels of municipal, provincial, or territorial land to support investment into social objectives as part of housing (re)development

Key messages

The Government of Canada is redoubling efforts in the face of Canada’s housing crisis on several fronts and doing everything it can to create more housing and make more housing affordable for Canadians from coast to coast to coast
My department is committed to ensuring sound stewardship of our real property through the reduction of the office portfolio, and to delivering on the significant additional measures to unlock federal lands for housing announced in Budget 2024
These measures include reviewing the federal portfolio and identifying underutilized public lands as well as acquiring new lands, launching a new public land bank and mapping tool, and enhancing legislation to facilitate leveraging public lands in support of housing and other community needs
Public Services and Procurement Canada is accelerating and streamlining the disposal process to enable the redevelopment of surplus federal properties into housing. We are continuing to work with the Canada Lands Company and the Canada Mortgage and Housing Corporation to enable the construction of housing units
PSPC, in close consultation with the Canada Lands Company and Infrastructure Canada, is working on the development of a Federal Land Acquisition Program using the $500 million committed in Budget 2024 to acquire land from other orders of government to help spur sustainable, mixed-market housing

Background

PSPC is the federal government’s administrator of real property and is responsible for approximately 6.9 million square meters of space across Canada. This includes the office portfolio, special purpose buildings, and other assets. About 6.2 million square meters is considered office space. PSPC is working to right-size, modernize and green the federal office portfolio, which will result in the disposal of assets that are no longer required.

In support of Budget 2024, PSPC is also:

Launching the new Public Lands Acquisition Fund to purchase land from other orders of government to help spur sustainable, mixed-market housing
The Program funds will be used to purchase parcels of municipal, provincial, or territorial land and lease them back to the same governments (or third parties) to support investment into social objectives as part of housing (re)development
Continuing to collaborate with Canada Mortgage and Housing Corporation (CMHC), on the Federal Lands Initiative
Collaborating with Infrastructure Canada on a new Public Land Bank and geo-spatial mapping tool
Continuing to collaborate with CMHC and the Canada Lands Company (CLC), on the National Housing Strategy
Scaling-up PSPC’s centre of expertise on disposals
Continuing to work on the disposal process of its assets that are declared surplus and continue to assessed underutilized properties for housing development potential (including Canada Post properties)

CLC is a self-financing, federal, Crown corporation specialized in real estate development and attractions management. By the end of March 2024, CLC will have enabled the construction of more than 13,000 new homes since 2016. It is now on track to enable the construction of more than 29,200 new homes over the next five years and has a new minimum affordable housing target of 20 per cent across projects in its residential pipeline. Pending the approval of CLC’s corporate plan, the new affordability requirement would apply where a municipal minimum requirement for affordable housing is lower or does not already exist.

Hybrid workplace

Issue

PSPC will continue to provide sufficient office space to accommodate federal public service employees in its offices.

Key facts

As per the Horizontal fixed Asset Review, the management of the federal real property portfolio is currently distributed across 16 departments, 11 agencies and 38 Crown corporations
PSPC is custodian of approximately 25% (6.9 million square metres) of the Government of Canada’s real property assets and about 6 million square metres is considered office buildings
Over 50% of our office portfolio is within the National Capital Region
Prior to the pandemic, PSPC office space was underutilized by approximately 40%

Key messages

Public Services and Procurement Canada will continue to provide sufficient office space to support federal departments and agencies to deliver on their programs and mandate and for federal public service employees to accomplish their work
PSPC will continue to provide safe and functional office space that respects legislative health and safety requirements
PSPC will work with employees and partners across federal organizations to ensure we are providing office space aligned with a high performing public service delivering for Canadians
PSPC is working with client departments and agencies to meet their future office needs. For the vast majority, this will mean the use of unassigned office space by default allowing flexibility for in-office and remote work
Office portfolio reductions will continue to be aligned with Treasury Board of Canada Secretariat direction on prescribed presence in the workplace

Background

PSPC frequently reviews how efficiently it uses public funds when providing work environments for federal public servants to deliver programs and services to Canadians.

The shift to a hybrid work environment and unassigned seating by default permits more effective utilization of office space that was simply not possible before when desks were assigned to public servants on a one-for-one basis. Allowing employees to choose the workspace that best suits their needs, based on their tasks at hand and their preferences, resulted in greater flexibility.

Budget 2024 proposes to provide $1.1 billion over ten years, starting in 2024-25, to Public Services and Procurement Canada to reduce its office portfolio by 50 per cent. PSPC will achieve this reduction by disposing of surplus properties with potential for housing. We are currently working with federal departments and agencies to establish their long-term office accommodation plans to inform our future plans.

Creating more housing on federal properties – Canada Lands Company

Issue

Budget 2024 introduced Public Lands for Homes initiative which includes measures to address Canada’s housing crisis by expanding mandates and investing in the government’s real estate arm, Canada Lands Company.

Key facts

Budget 2024 proposes to provide a total of $9 million over three years, starting in 2024-25, to support Canada Lands Company by expanding its activities to build more homes on public lands

Key messages

The Government of Canada is redoubling efforts in the face of Canada’s housing crisis on several fronts and doing everything it can to create more, and more affordable housing for Canadians from coast to coast to coast
The Government is using all of its available tools to accelerate housing development on federal land, while making it more affordable for not-for-profit housing providers to get their projects off the ground
With almost 30 years of successful real estate expertise creating positive outcomes for Canadians, Canada Lands Company will now provide be able to accelerate its work and enable housing and affordable housing faster
My department, Public Services and Procurement Canada, is committed to ensuring sound stewardship of our real property portfolio, including the identification of surplus and underutilized properties to enable housing outcomes as outlined in Budget 2024

Background

Canada Lands Company is a self-financing, federal Crown corporation specialized in real estate development and attractions management. Canada Lands Company will have enabled the construction of more than 13,000 new homes since 2016. Canada Lands Company is on track to enable the construction of more than 29,200 new homes over the next five years and with the proposals outlined in Budget 2024 will endeavour to exceed this target. Canada Lands Company has a new minimum affordable housing target of 20 per cent across projects in its residential pipeline. The new affordability requirement would apply where a municipal minimum requirement for affordable housing is lower or does not already exist.

Budget 2024 proposes to provide a total of $9 million over three years, starting in 2024-25, to support Canada Lands Company by expanding its activities to build more homes on public lands. These reforms will seek to:

Cut approval times in half, while abiding by constitutional obligations
Bundle multiple federal properties to be transferred at once
Provide leases, including long-term, low-cost leases, for housing providers
Transform underused government offices into multi-use properties
Transfer land from the government to Canada Lands Company for $1, whenever possible, to support more affordable housing
Enable housing development on actively used federal properties
Work with Crown corporations to redevelop their surplus, underutilized, or actively used properties for housing
Enable temporary housing on Canada Lands properties ($4 million)

Status of the Long Term Vision and Plan for the Parliamentary Precinct

Issue

Public Services and Procurement Canada is implementing the Long Term Vision and Plan – a multi-decade strategy to restore and modernize the Parliamentary Precinct. The core of the Parliamentary Precinct includes the grounds and buildings on Parliament Hill and the three city blocks directly facing it.

The Department is also supporting Crown-Indigenous Relations and Northern Affairs Canada to develop a national space for Indigenous Peoples within the Parliamentary Precinct. The project includes the re-development of the former United States Embassy (located at 100 Wellington Street), the CIBC building (located at 119 Sparks Street) and an infill space between the two buildings.

Note:

Questions related to a national space for Indigenous Peoples (100 Wellington, 119 Sparks and a dedicated Algonquin space) should be directed to the Minister of Crown-Indigenous Relations and Northern Affairs as the overall lead for a national space for Indigenous Peoples
Questions related to funding announced in Budget 2024 to bolster the Ottawa Police Services’ presence around the Parliamentary campus should be directed to the Minister of Public Safety

Key facts

Public Services and Procurement Canada has invested approximately $4.9 billion in the Parliamentary Precinct to date. This has created approximately 70,000 jobs (person-years of employment) to date
Over 200 projects have been completed, including 26 major projects such as West Block, Wellington Building and the Senate of Canada Building
The Centre Block Rehabilitation Program remains on track to complete main construction in the 2030-31 timeframe and within the estimated $4.5 to 5 billion budget
$6.8 million has been awarded to Indigenous businesses through the Centre Block Rehabilitation Program
The Parliamentary Precinct Greenhouse Gas Emissions have already been reduced by 63% below 2005 levels and are on track to meet net zero carbon targets

Key messages

Public Services and Procurement Canada is restoring the Parliamentary Precinct for future generations of Canadians, making it more modern, safe, green and accessible. We are working with Parliament to ensure that their requirements are being met
Work is advancing on track to restore and modernize the Centre Block and construct Canada’s new Parliament Welcome Centre, the largest and most complex heritage rehabilitation project in Canada’s history
Work on redeveloping Block 2 for Parliament will commence in 2024. Contracts have now been awarded for both design and construction management services. Construction activities are targeted to begin in fall 2024

If pressed on Wellington Street:

As committed to in March 2023, my department has launched discussions with the City of Ottawa on acquiring Wellington Street as a critical first step to addressing longstanding security challenges in the Parliamentary Precinct
Through this collaborative engagement, we aim to create a plan for Wellington Street that preserves the Parliamentary Precinct as a safe, open and accessible place in a manner that works for local residents, supports vibrant business activity and creates an improved visitor experience in the capital
If a transfer occurs, any future plans for Wellington Street would ensure it is an accessible and engaging space and planning would be made in consultation with the City, residents and businesses, as well as Indigenous partners
The Mayor of Ottawa met with the Prime Minister on April 18, 2024, to discuss key areas of federal-municipal cooperation – both leaders reiterated their shared interest in creating a vibrant capital city and commitment to work together on a plan for Wellington Street and the revitalization of the capital

If pressed on the transportation study:

To support discussions and informed decision-making around Wellington Street, PSPC has funded and undertaken a joint transportation study with the City of Ottawa and the National Capital Commission to understand the impact of reinstating vehicle restrictions on the street to the City’s transportation network
I am encouraged by the results of the study, which underlined that the street would offer an exceptional environment to pedestrians. The study also found that, should traffic volumes increase, the implementation of mitigation measures would be sufficient for the transportation network to meet the City’s Level of Service
PSPC is committed to working collaboratively with the City to ensure the surrounding area remains usable and safe for all, including vehicles and public transit users, pedestrians, as well as cyclists

If pressed on the purchase of 181 Queen Street:

Following the completion of much due diligence [Redacted], PSPC has purchased the building located at 181 Queen Street in Ottawa, to provide long-term accommodations for the House of Commons as part of the Long Term Vision and Plan for the Parliamentary Precinct
This building space has been leased for use by the House of Commons since 2004. This is a critical space for the House and a sound investment to support future parliamentary operations that will result in long-term cost savings

If pressed on the semi-annual update to Parliament:

PSPC works with Parliament to plan and deliver the Long Term Vision and Plan. As part of this collaborative process, each House of Parliament is responsible for establishing requirements and priorities to support their parliamentary operations
As recommended by the Auditor General, my department is submitting a progress update to the Speakers of the Senate and House of Commons twice a year. This report is focused on updating Parliament, as well as identifying and prioritizing the key decisions required from Parliament to maintain momentum
I will soon be submitting a second update, following the first update sent in October 2023. Thanks to the collaborative efforts of our institutions, significant progress was made since the fall, and we are well positioned for continued success if the pace of decision-making is maintained

If pressed on the Centre Block Rehabilitation Program:

The project continues to advance within estimated costs and schedule. Design work continues to mature to support the construction work, which is well underway
Detailed excavation work for the new Parliament Welcome Centre is approximately 75% complete and the interior demolition and removal of hazardous materials is completed. Other ongoing work includes masonry rehabilitation, and replacement of the Level one floor slab
The rehabilitated Centre Block will provide modern infrastructure to support Parliament, be significantly more accessible, and will be carbon neutral

If pressed on the Auditor General’s report 3 – rehabilitation of Parliament’s Centre Block:

A year ago, in March 2023, the Auditor General of Canada published an audit on the Centre Block Rehabilitation Program and I was encouraged by her positive observations on the management of this historic project
The Audit found that PSPC has successfully managed cost and scope of the project and kept work within targeted timelines despite challenges brought on by the pandemic. It also recognizes our effort to collaborate and engage with Indigenous partners and stakeholders, including Parliamentarians and experts
PSPC has completed the three recommendations. The first semi-annual update was submitted in October 2023, the 2022-2023 LTVP Annual Report was publicly released in December 2023, and a gender-based analysis plus for the Centre Block Rehabilitation Program was completed in 2023

If pressed on parking garage:

At the request of Parliament, the current landscape design for the Centre Block includes 109 surface parking spots
PSPC, in collaboration with Parliament, remains committed to reducing parking, over time, in alignment with Parliamentary requirements
We will continue to work hand-in-hand with Parliament and the National Capital Commission to find solutions that support parliamentary operations and preserve Parliament Hill’s heritage landscape

If pressed on the redevelopment of Block 2:

The redevelopment of Block 2 will transform a mix of functionally obsolete heritage buildings and two vacant lots into a modern, sustainable and accessible facility to meet the needs of a 21st century Parliament
The design contract was awarded to the winner of the Block 2 Design Competition, Zeidler Architecture, in May 2023. In December 2023, my department also awarded the construction management services contract for this project to Pomerleau Inc.
Next steps include establishing detailed requirements with Parliament to create a baseline project budget and schedule, continue advancing the design, and begin construction

If pressed on a National space for Indigenous Peoples (100 Wellington, 119 Sparks and a dedicated Algonquin space):

PSPC continues to support Crown Indigenous Relations and Northern Affairs Canada and Indigenous partners in developing a national space for Indigenous Peoples in the Parliamentary Precinct
As the overall lead for a national space for Indigenous Peoples, Crown-Indigenous Relations and Northern Affairs Canada is best positioned to answer questions on the status of space and about a dedicated Algonquin space

Background

The Long Term Vision and Plan (LTVP) was first approved in 2001 and updated in 2006 for the restoration and modernization of Canada’s Parliamentary Precinct. This program supports the mandate commitment of advancing work to rehabilitate and reinvigorate places and buildings of national significance. Key priorities underway include the rehabilitation of the Centre Block and the construction of a new Parliament Welcome Centre, the redevelopment of Block 2 (the city block directly south of Parliament Hill), and finalizing the next update to the LTVP. All major projects continue to track on time and budget, including the rehabilitation of Centre Block.

In 2017, the LTVP began shifting from a building-by-building strategy to a campus-based approach, for which the redevelopment of Block 2 is a crucial first step. Approved by all Parliamentary Partners, this approach takes into consideration important and interconnected elements including security, the visitor experience, urban design and the landscape, material handling, the movement of people and vehicles, environmental sustainability, and accessibility. The LTVP is currently undergoing an update to transform the Precinct into an integrated campus beyond Parliament Hill which will be ready for consideration by Parliament and Government in 2024. As part of this update and the ongoing landscape design for the Centre Block, PSPC is working with Parliament and the National Capital Commission to resolve misaligned expectations with respect to parking as a top priority.

Since the Library of Parliament in 2006, PSPC has successfully delivered 26 major capital LTVP projects, including the restored West Block and Senate of Canada Building and the new Parliament Welcome Centre (Phase 1), which were transferred to Parliament in fall 2018. These projects followed the completion of the 180 Wellington Building (2016) and the Sir John A Macdonald Building (2015).

Wellington Street

Discussions with the City of Ottawa on the future of Wellington Street were launched in April 2023 and remain ongoing. PSPC has undertaken a number of due diligence activities in support of a possible transfer of the street to federal jurisdiction, including a land survey and independent appraisal of the portion of the street in question, as well as a now completed joint transportation study with the City and the National Capital Commission.

The study shows that reinstating vehicle restrictions on Wellington Street will have negligible impacts on City operations and traffic flows in the downtown core. It estimates the cost of potential mitigation measures from $0 to $26 million based on 3 traffic volume scenarios: low (no change in traffic conditions, which are currently 75% of pre-pandemic levels – zero cost); medium (auto demand growth returns to 2019 peak traffic volumes – $4.6 million to $10.6 million); and high (110% of 2019 peak traffic volumes by 2046 – $10.1 million to $26 million). City officials briefed the Transportation Committee on February 22, 2024, on the results of the study. In March 2024, the government published its response to the Public Order Emergency Commission, in which it renewed its commitment to work with the City on a transfer of Wellington Street into federal control. A meeting between the Prime Minister and the Mayor of Ottawa took place on April 18, 2024, in which both leaders reiterated their commitment to building a vibrant capital city and working together on the future of Wellington.

181 Queen Street

The building located at 181 Queen Street was purpose-built for use by the House of Commons in 2004 and has been in use by House administration ever since (leased space). The House has confirmed its long term requirement for the space, and its desire to remain in-situ upon the expiry of the lease.

[Redacted]. This purchase closed on February 29, 2024, and has secured long-term accommodations for the House of Commons administration. This will yield millions of dollars in cost savings for Canadians and contribute to making the Precinct more sustainable and accessible.

Centre Block Rehabilitation Program

Work is underway to restore and modernize the Centre Block, which is the largest, most complex heritage rehabilitation project ever seen in Canada. 50% design development milestones were achieved for the Centre Block and landscape design in fall 2023, with the Parliament Welcome Centre following in March 2024. On the inside of Centre Block, demolition and abatement has been substantially completed, setting the stage for re-building efforts to begin, starting with structural upgrades. Detailed excavation for the Parliamentary Welcome Centre is approximately 75% complete.

In March 2023, the Auditor General of Canada released her report on the Centre Block, finding that PSPC had effectively managed the scope, schedule and costs through its flexible management approaches, and that it had collaborated with stakeholders and experts, including Parliamentarians and Indigenous partners. Three recommendations were made: to conduct a GBA+ assessment specifically for the Centre Block; to submit a semi-annual report to the Speakers of the Senate of Canada and House of Commons outlining key risks and mitigations, and key decisions required, in order to address complex governance challenges; and to publish the LTVP annual report within the calendar year. The recommendations have since been addressed and implemented.

Block 2 Redevelopment

The rehabilitation and modernization of Block 2, the city block across from the Centre Block, is a keystone LTVP project that will transform functionally obsolete heritage buildings into modern, sustainable, and accessible facilities for Parliament, while also playing a key role in the transformation of the Parliamentary Precinct into an integrated campus. In the short term, the redevelopment of Block 2 will enable key buildings, such as the East Block and Confederation buildings, to be emptied and proceed with their restoration. In the long term, Block 2 will provide permanent parliamentary accommodations, and enable the consolidation of Parliament into a campus centered around Wellington Street.

Following the completion of an international design competition, the architectural and engineering contract for the project was awarded to Zeidler Architecture Inc. (Toronto, Canada), in association with David Chipperfield Architects (London, United Kingdom) in 2023. In December 2023, PSPC awarded the construction management services contract to Pomerleau Inc.

The project has achieved the 20% schematic design milestone – which realigns the design competition concept design with the current project scope and requirements – and is targeting the 50% milestone for summer 2024. The on-site investigation program advanced to support the understanding of the existing building conditions. The commencement of construction activities is targeted for fall 2024.

Indigenous Procurement

With a goal of reaching of 5% of procurement with Indigenous businesses, Public Services and Procurement Canada has established agreements with organizations, such as the National Aboriginal Capital Corporations Association, the Canadian Council for Aboriginal Business, the Council for the Advancement of Native Development Officers, the Aboriginal Apprenticeship Board of Ontario and the Anishinabeg Algonquin Nation Tribal Council to assist with fulfilling that target as it pertains to the Parliamentary Precinct. To date, $6.8 million has been awarded to Indigenous businesses through the Centre Block Rehabilitation Program.

Update on pay stabilization – support for employees and investments

Issue

This note focuses on efforts and progress to date to provide support to employees and stabilize the administration of pay, and on financial investments in Phoenix.

Notes:

All questions related to the mental health of public servants, collective agreements and compensation for Phoenix damages agreements should be directed to the President of the Treasury Board
Issues related to income tax are under the purview of the Canada Revenue Agency

Key facts

We have put in place a significant number of system enhancements and fixes, which have helped bring increased stability to the pay system and overall pay administration environment
To date, $3.65 billion has been invested in Phoenix

Key messages

The Government of Canada is committed to supporting employees and continues to take action on all fronts to resolve public service pay issues
Since the launch of Phoenix, we have implemented a series of measures and made consistent progress towards pay stabilization
These measures will ensure that we will continue to progress towards our goal of processing new transactions within service standards 95% of the time, and having no outstanding transactions over one year old
The Government has also tested and confirmed the technical viability of a commercial integrated human resources and pay solution that could meet the varied and complex HR and pay needs of the Government of Canada
The confirmation of the technical viability of the solution, and the findings from the testing of that solution will be used to inform a recommendation to the Government of Canada regarding whether or not it should replace the current pay system and the 32 human resource systems that are currently in use

If pressed on Dayforce:

The Government has been exploring options to move to a new human resources and pay system that meets the needs of its employees
Since 2022, we have been testing the Dayforce application, a commercial off-the-shelf global software-as-a-service human resources and pay solution
The testing is done in a simulated environment, against the complex HR and pay landscape that currently exists across departments and agencies
It has demonstrated that Dayforce is a technically viable option for the next modern HR and pay system for the Government of Canada
To ensure best results, improvements to the way the federal public service manages HR and pay processes will also be required
Over the coming months, the Government will continue to expand testing, and will design the system to its specific needs, while exploring options for simplifying HR processes and procedures
To support this work, Budget 2024 proposes $135 million in support of the Next Generation Human Resources and Pay initiative, including measures to improve human resources and pay data management
A final recommendation on the way forward for HR and pay is expected later this year

If pressed on the backlog:

As of April 24, 2024, the overall queue of transactions waiting to be processed at the Pay Centre has decreased by 33% since the peak of January 2018, representing a reduction of 208,000 transactions
As of April 24, 2024, there are 213,000 outstanding transactions over one year old, a decrease of 1,000 from the previous month
Progress in reducing the queue of outstanding transactions has slowed as a result of significant increases in transactions received at the Pay Centre
I note that significant staffing efforts have been underway to build capacity at the Pay Centre. Since September 2022, the Pay Centre has onboarded approximately 1,100 new compensation employees to support Pay Operations, while also expanding the skillsets of its existing workforce. We expect ongoing improvements as recent hires become more proficient in pay processing
We continue to review the future resource needs of the Pay Centre to ensure public servants are paid accurately and on time

If pressed on renewed public dashboard:

The reason for the renewed and improved Public Service Pay Dashboard is to better reflect the experience of public servants and the current reality of our pay operations
Our goals of processing 95% of transactions within service standards, and having no transactions older than one year, remain unchanged
Instead of reporting against a fixed volume of cases deemed to be ‘normal’ workload, our new measures recognize that Pay Centre workload fluctuates in accordance with seasonality of HR activity, and also provides improved transparency on how we’re doing against set service standards
The Dashboard is now focused on the total number and age of outstanding transactions at the Pay Centre, presented in a user-friendly format

If pressed on collective agreement implementation – 2022 contracts:

Implementation of the 2022 round of collective agreements (CA) is well underway
Public Services and Procurement Canada continues to implement new salary rates, mass retroactive payments and other provisions within negotiated timelines
As of April 22, 2024, new rates of pay have been updated in the pay system for approximately 319,000 employees
New salary rates were updated within 4 to 6 weeks of the agreement signature
The Pay system began executing the mass retroactive process for the Program Administrative services (PA) group October 7
Retroactive payments for approximately 157,000 active and inactive employees were paid on October 25
The first batch of $2,500 lump-sum payments were paid to eligible employees on November 8, 2023, for various groups
As of February 26, 2024, retroactive payments have been paid to over 320,000 active and inactive employees

If pressed on support to employees:

Public Services and Procurement Canada has implemented a series of measures focused on stabilizing the administration of pay. These include providing employees with greater support through our Client Contact Centre, introducing the Pay Pods model, and implementing technical fixes that have improved payroll processing, such as increased automation of transactions
Improved automation has helped mitigate some of intake’s growth. Between 2019 and 2024, net intake increased by 64%, but manual workload only increased by 47%
Financial support is and will remain available for employees missing any of their pay. This support includes an emergency salary advance or priority payment. Flexible measures have been put in place to help minimize financial hardships for employees for the repayment of overpayments related to Phoenix pay system issues

If pressed on specific actions:

We have introduced MyGCPay to all departments and agencies served by Phoenix. MyGCPay is a web application that provides employees with a centralized and simplified view of their pay and benefits, to help employees better understand their pay
We implemented a Retro Redesign Solution that further automates processing of individual late transactions and eligible mass retro payments
In April 2021 we launched the MyGCPay stub – designed to be more user-friendly and to help employees better understand their pay
In July 2023, we introduced external access to MyGCPay, so employees on leave or former employees can have secure access to the tool outside of the Government of Canada network
We continue to focus on addressing outstanding transactions while also working towards processing new transactions within service standards 95% of the time. For example, from December 2020 to February 14, 2024, pre-2020 outstanding transactions decreased from 117,000 to 39,000 (67%)
In addition, we are increasingly meeting service standards. In 2023, the Pay Centre met service standards 83% of the time on average, on par with 2022, and improved from 80% in 2021, and 72% in 2020

Background

Stabilizing the administration of pay

Since the launch of Phoenix, Public Services and Procurement Canada has implemented a series of measures focused on stabilizing the administration of pay.

In addition, we are focusing on other operational priorities in pay administration including pension arrears, terminations, and overpayments. We have improved service standard compliance while managing sustained increases of transactions submitted to the Pay Centre by departments and agencies, starting in 2021 and expected to continue going forward.

Employees who have been underpaid can request emergency salary advances or priority payments from their departments.

NextGen HR and Pay Initiative

In November 2023, the Next Generation Human Resources and Pay (NextGen HR and Pay) Initiative team, formerly with SSC, officially joined Public Services and Procurement Canada.

The mandate of the NextGen HR and Pay Initiative was to assess the viability of adopting a commercially available, integrated Human Resources and pay Software-as-a-Service (SaaS) solution given the complexities of the Government of Canada’s human resources and pay requirements.

After the testing with pilot departments within government as part of phase 1, the Dayforce solution was deemed technically viable to provide human resources and pay services for the Government of Canada. The enterprise strategy will build on the testing results and findings to complete further design, planning, testing and validation on the scalability of this solution. These activities are needed to deliver an evidence-based recommendation to the Government of Canada on the future of HR and Pay.

Collective agreement implementation – 2018 and 2022 contracts

The 2018 round of Collective Agreement Implementation includes agreements signed in 2018 through 2023, and is nearly complete. To date, 2018 Collective Agreement Implementation salary adjustments and retroactive payments have been completed through the automated process for 147 Treasury Board of Canada Secretariat and separate employer agreements, representing over $2 billion in payments to employees (as of April 2023).

The implementation of the 2022 round of collective agreement started in 2022, and in the summer 2023, the Government of Canada began processing the first wave of signed agreements from the recent rounds of collective bargaining for major groups. As of February 26, 2024, the new rates of pay have been updated in the pay system for approximately 269,000 employees.

For the 2022 round of collective agreement implementations, and similar to the 2018 round, we expect an overall average of approximately 10% of employees will see at least one transaction needing manual intervention. The results of each retroactive payment process are expected to vary due to a combination of many factors, including agreement complexity. We are on track to complete the 2022 collective agreement implementation within negotiated timeframes.

MyGCPay

MyGCPay is a web application developed by Public Services and Procurement Canada to help rebuild federal government employees’ confidence in the integrity of their pay. It provides employees with a centralized and simplified view of their pay and benefits. It helps employees identify pay issues earlier and allows them to monitor their open cases with more detail.

In July 2023, we introduced external access to MyGCPay, providing inactive employees, former employees and employees without access to the GC network (i.e., Phoenix Self-Service or CWA) secure access to their pay and benefits information.

Processing of pay transactions

Issue

This note focuses on the efforts and progress to stabilize the administration of pay, manage intake of pay transactions, and the ongoing reduction of the backlog.

Key facts

Public Services and Procurement Canada administers payroll for more than 422,000 current and former employees
The Public Service Pay Centre provides full compensation advisory services to approximately 250,000 active employees

Key messages

Canada’s public servants deserve to be paid accurately and on time
The Public Service has grown in recent years. This, combined with increased human resources activity and employee movement, has resulted in significant increases in intake at the Pay Centre starting in 2021 and throughout 2022 and 2023
The Government of Canada remains committed to resolving pay issues for public servants, reducing the number of outstanding transactions and continuing to implement numerous measures to improve pay delivery and support pay stabilization

If pressed on the increase of the backlog:

Progress in reducing the backlog of outstanding transactions has slowed as a result of significant increases in transactions received at the Pay Centre
We are working hard to manage new transactions within service standards to minimize and prevent the creation of new backlog cases
Many outstanding transactions are complex and require processing by experienced staff
We are ensuring that the most complex cases are assigned to our most experienced staff, and we are fast-tracking hiring efforts to fill vacancies
I would note that significant staffing efforts have been underway to build capacity within the Pay Centre
Since September 2022, the Pay Centre has onboarded approximately 1,100 new compensation employees to support Pay Operations, while continuing to expand skillsets of its seasoned workforce
Although managing intake continues to be the top case-processing priority, the Pay Centre initiated a renewed, focused effort towards backlog elimination, beginning in Fall 2023
We remain committed to processing the most critical outstanding transactions first, prioritized by transaction age and impact on the employee

Background

Queue and backlog

Since January 2018, Public Services and Procurement Canada’s Pay Centre has made significant progress in reducing the overall queue and backlog of pay transactions, Despite productivity improvements, high intake levels have outpaced pay processing capacity, leading to increases in the queue as well as in the backlog of cases that are a year old or more.

Intake and workload at the Pay Centre has grown. Intake for the 2023 calendar year was almost 1.44 million cases, surpassing the intake for 2019 (1 million) by 44%, 2020’s intake (865,000) by 66%, 2021’s intake (1.04 million) by 38%, and 2022’s intake (1.24 million) by 16%.

Public Services and Procurement Canada continues to make progress on older cases, but that progress has slowed as intake, and therefore the overall volume of work, has grown. These outstanding transactions, both intake and backlog, are not errors – they represent the normal pay administration work we do to support our client population.

The number of transactions processed each month varies based on a number of factors, such as the complexity of cases and collective agreement implementation. Intake also shows seasonal trends, with peaks at the end of the calendar year, the end of the fiscal year, and the end of summer, which marks the completion of many casual and student work terms.

In 2023, the Pay Centre processed 247,000 more transactions compared to 2022. However, the increase in output was met by an increase in intake of 203,000 transactions, offsetting the impact of the increase in productivity. The growth in intake is driven by the increase in the population of departments served by the Pay Centre as well as changes in per capita intake trends. Per capita intake is now higher than it was in 2019, having fully rebounded from the dip that began in March 2020.

In addition, new challenges have been affecting progress to eliminate outstanding transactions and keep up with new intake since March 2021. These challenges include the high complexity of transactions that remain in the backlog, changing employee and enterprise behaviour such as increased HR activity and employee movement, as well as government-wide operational and human resources policy priorities which have contributed to workload increases. Examples include classification conversion, implementation of the mandatory vaccination policy and associated leave without pay processing, vacation/compensatory leave cash-out, and others including strike-period leave without pay processing in 2023.

Health, safety and interpretation capacity of the Translation Bureau

Issue

The Translation Bureau supports hybrid sittings of Parliament by providing interpretation services. Since the start of the pandemic, the Translation Bureau has implemented several measures to protect the health and safety of interpreters. Although there has been a decrease in sound-related incidents, they continue to occur on occasion. Additional measures will be added gradually to those put in place as the Translation Bureau responds to the results of ongoing expert studies. The Translation Bureau sometimes faces capacity issues that impact parliamentary committee meetings. These issues have been the subject of numerous discussions, notably during parliamentary committee meetings. The fact that the interpretation profession is in great shortage in Canada and throughout the world contributes to this lack of interpretation capacity.

Key facts

Key messages

The Translation Bureau is committed to providing quality interpretation services in support of Parliament and federal government departments and agencies while ensuring a safe environment for staff and freelance interpreters
The Translation Bureau has put in place several measures to safeguard interpreters in collaboration with its parliamentary partners
The working conditions of interpreters continue to improve thanks to the sustained efforts of the Translation Bureau and its parliamentary partners

If pressed on sound protection measures:

Sound-related incidents during in-person meetings are mainly the result of human error when handling audio equipment available to participants
The Translation Bureau is continuing to raise awareness of the precautions to be taken, and is continually improving its prevention, follow-ups and incident management protocols
The Translation Bureau continues to collaborate with all key partners and consult hearing and sound experts to collect conclusive data to improve its protection measures as well as protocols

If pressed on capacity:

The Translation Bureau is doing everything possible to increase its capacity and respond to Parliament's requests, including extended or unscheduled meetings
The Translation Bureau is committed to continuing research with experts to adapt to the hybrid Parliament and to understand the source of the issues, and it continues to work with Parliament to improve the working conditions of interpreters. This will help prevent incidents, prevent injury, and prevent interpreters from being absent for extended periods
The Translation Bureau is also working with stakeholders in the Canadian language sector, including universities and professional associations, to find ways to foster a succession of certified interpreters and, eventually, the implementation of new interpretation programs

Background

The Translation Bureau is working closely with the House Administration to provide hybrid sessions. Demand for interpretation services can fluctuate greatly. To better meet demand, the Translation Bureau collaborates with its clients to plan and prioritize their needs in advance, retains the services of freelancers as required. The Translation Bureau services Parliament as a priority and works closely with the House Administration, which determines where resources are allocated based on House priorities.

Directions and continuous improvements

Following a complaint filed on January 31, 2022 by the Canadian Association of Professional Employees under the Canada Labor Code, the Translation Bureau received two directions from the Labor Program of Employment and Social Development Canada on February 1, 2023, regarding the mandatory use of ISO-compliant microphones. The second direction ordered random tests in the workplace. The directions were closed in August of 2023, and the Translation Bureau is committed to follow up on all the recommendations from experts, several of which have already been implemented. It will continue relying on its evidence-based approach to protection and will explore new lines of research, suggested by experts, to shed light on this recent issue that the scientific community has just begun to examine.

Following the ratification of the new TR group collective agreement in spring 2023, the Translation Bureau held discussions to find ways to increase the Bureau's interpretation capacity while protecting health and safety interpreters.

In 2022, the Bureau established a contract with Ms. Josée Lagacé, audiologist at the University of Ottawa, to assess the hearing health of interpreters. She submitted her first report in November 2023. The Bureau agreed with Ms. Lagacé, in light of her recommendations, that it was preferable to wait for data from the next phase of her study before increasing interpretation hours in hybrid mode. In the meantime, the Bureau has decided to return to a practice that had been in place for many years, namely the assignment of translation tasks to fill the time in the full working day not devoted to interpreting or authorized administrative tasks.

The Translation Bureau, with the House of Commons Administration, is testing the provision of interpretation by interpreters located off the parliamentary premises, enabling it to use freelancers located outside the National Capital Region to better meet Parliament’s needs.

Canada Post Corporation financial stability

Issue

On May 3, 2024, Canada Post Corporation released its Annual Report and recorded a loss before tax of $748 million for 2023. Canada Post’s mandate is to be financially self-sufficient and it is striving for ways to do that while facing continued challenges of lower revenue and volume trends. Canada Post continues to provide Canadians with affordable postal rates.

Key facts

Canada Post recorded a loss before tax of $748 million in 2023
In 2023, revenue fell by $240 million, or 3.3 per cent, compared to the prior year, dropping across all three lines of business – Parcels, Transaction Mail and Direct Marketing. The 2023 loss before tax was $200 million more than the $548 million loss before tax in 2022

Key messages

Canada Post is a Crown Corporation that operates at arm’s length from the Government and its operations are funded by the revenue generated by the sale of its products and services, not taxpayer dollars
But like so many other businesses, Canada Post needs to adapt to the dramatic changes in how Canadians live and work today to remain relevant and viable
Over the last 20 years, the amount of mail Canadians receive has declined by more than 50 per cent, while the number of addresses has increased by more than three million. This has resulted in lower revenues and higher costs
Canada Post connects the country from coast to coast to coast
We continue to work with the corporation to examine opportunities to improve the financial sustainability of its important operations

If pressed on financial situation:

Results were negatively impacted by the post-pandemic surge in parcel delivery competition, the ongoing erosion of Transaction Mail, and continued growth in addresses and delivery costs
Since 2019, Canada Post has been increasing parcel capacity and improving service across the country, as consumers have shifted to more retail spending online
However, growth in the parcel delivery business has not been enough to make up for the declining mail volumes and revenues
Intensifying competition in the parcel delivery landscape has created significant new challenges that the Corporation must address to ensure the viability of the national postal service

If pressed on increase to postage rates:

Canada Post understands the importance of the delivery service it provides and works to minimize the impact of price changes on all customers, ensuring any increases are fair and reasonable
On May 6, 2024 the price of postage stamps purchased in a booklet, coil or pane increased by 7 cents to 99 cents per stamp. The price of a single domestic stamp increased by 8 cents, to $1.07

Background

The operations of Canada Post are funded by the revenue generated by the sale of its products and services, not taxpayer dollars.

Parcels 

In 2023, Parcels revenue declined by $91 million, or 2.5 per cent, as volumes rose by 10 million pieces, or 3.7 per cent, compared to 2022. Volumes rose due to increased competitive offerings, higher online shopping returns, and additional business from new and existing ecommerce customers. Improved service performance, the introduction of late induction in key markets like the Greater Toronto Area, and the 2023 launch of carbon-neutral shipping, also contributed to domestic volume growth. Domestic Parcels revenue declined despite an increase in commercial rates. The decline in revenue was partly due to decreased consumer spending, more lightweight items moving through the Canada Post network, and a decline in fuel surcharges linked to market rates. Competitive commercial consolidators also took more business from the conventional inbound postal network.

Transaction Mail 

Transaction Mail revenue fell by $126 million, or 5.2 per cent, in 2023 as volumes declined by 117 million pieces, or 5.0 per cent, compared to 2022. This was largely the result of consumers and mailers continuing to shift to digital channels. Throughout 2023, regulated stamp prices remained at 2020 levels. In April 2024, Canada Post received Governor in Council approval to increase its regulated postage rates, which take effect May 6, 2024.

Direct Marketing 

Direct Marketing revenue declined by $3 million, or 0.4 per cent, in 2023 as volumes increased by 17 million pieces, or 0.4 per cent, compared to the prior year. Total volumes in 2023 were below pre-pandemic levels, with the decline in revenue driven by economic uncertainty and businesses choosing digital marketing options. Canada Post Neighbourhood Mail™ revenue increased mainly due to new customer relationships and product development. Direct Marketing remains an important revenue generator as the company continues to look at solutions to help businesses and consumers connect.

Group of Companies 

In 2023, the Canada Post Group of Companies recorded a loss before tax of $529 million, compared to a loss before tax of $292 million the previous year. The Group of Companies results were due to the Canada Post segment loss. Purolator recorded a profit before tax of $293 million compared to $317 million in 2022, while SCI’s profit before tax was $14 million compared to $16 million the previous year.

In early 2024, Canada Post and Purolator announced the divestiture of 100 per cent of the shares of SCI Group Inc. (SCI) and Innovapost Inc. (Innovapost). The SCI transaction closed March 1 and the Innovapost divestiture closed April 15.

Rural postal service

Issue

Questions have been raised in the past on the level of postal service in rural communities and on the moratorium on rural post office closures. On February 6, 2024, the Government Operations and Estimates Committee passed a motion to study the decline of rural postal services

Key messages

Canada Post is a Crown Corporation that operates at arm’s length from the Government and its operations are funded by the revenue generated by the sale of its products and services, not taxpayer dollars
Canada Post is committed to quality postal services in every corner of this country
The Canadian Postal Service Charter confirms that providing postal services in rural settings is an integral part of Canada Post’s universal service

If pressed on postal service:

Unavoidable situations affecting the operation of a post office in small communities may arise, such as retirement, illness or a fire. In these circumstances, Canada Post consults with the community to find solutions to ensure they continue to receive postal services
The Rural Moratorium has been in place since 1994, and has remained unchanged, meaning rural post offices are protected
Canada Post has been expanding services right across the country, including in rural areas
Community Hubs have been a successful model for rural, northern and Indigenous communities
Canada Post opened Hubs in Little Current, ON; Membertou, NS; High Prairie, AB; and Fort Qu’Appelle, SK

If pressed on deliveries and returns:

Canada Post works hard to serve northern and remote communities, and understands the importance of the service provided to these communities
The Corporation goes to great lengths to serve these communities, moving mail on 280 flights a week on average
While Canada Post makes its best efforts to deliver all mail and parcels, they cannot guarantee that all items will be delivered. Decisions to return an item to the sender are not taken lightly and are only done for one of two reasons – that it has an incorrect address or it contains non-mailable matter and has been pulled from the mail stream
It’s also important to note that the price a customer pays for shipping when buying an online item is not set by Canada Post. It’s set by the retailer based on the address provided. If that address is incorrect, it may not cover the actual shipping cost, which may result in the item being returned to sender

Background

The operations of Canada Post are funded by the revenue generated by the sale of its products and services, not taxpayer dollars.

Rural Moratorium

In 1994, the Government announced that no rural or small town post offices would be closed or converted to franchised postal outlets and thus established an indefinite moratorium on rural post office closures.

In 1999, the Government confirmed that the moratorium was to remain in place and in 2009 introduced the Canadian Postal Service Charter. This charter reflects the Government’s commitment to a universal, effective and economically viable postal service for all Canadians, rural and urban. Canada Post continue to meet all of our obligations under the Canadian Postal Service Charter. This ensures postal services remain universal, affordable and reliable. Canada Post serve all 17.2 million residential and business addresses in Canada, including rural and remote regions. Canada Post provide five-day-a-week delivery while maintaining an extensive network of post offices.

The Charter recognizes that situations affecting the operation of some small post offices do unfortunately arise, whether the office is corporately or privately operated. Retirements, illness, death, fire, termination of a lease or sale of a business occurs and it is unavoidable that service at small rural post offices will be affected. Canada Post has established an assessment and consultation process to manage these changes in rural communities.

Canada Post’s first priority is always to ensure that local mail delivery is maintained without interruption while the options available to meet the postal needs of the community are explored. In some cases, emergency temporary arrangements are put into place to ensure that mail delivery is not interrupted. If a dealer operates the post office, Canada Post attempts to replace the dealer. Canada Post proceeds to immediately staff the corporate post office where:

There are other businesses in the community
The community is the acknowledged central hub of a farming area,or
The affected post office is far from the next post office

Canada Post consults with elected officials from communities where:

There are no other businesses left in the community, and
The distance to the next post office is not unreasonable

Decisions are made on a case-by-case basis, and the approach is to find solutions that are satisfactory to the community by providing the service required in a practical manner. All affected Members of Parliament and municipal officials are informed when a situation affecting a post office arise. In 2022, there were 135 events potentially affecting ongoing operation of rural post offices. In 77% of cases, retail services were maintained within the same community. The other 23%of cases were resolved through services provided in nearby towns.

Assault-Style Firearms Compensation Program

Issue

In December 2023, the Government of Canada launched a competitive process to procure services for the collection, storage, validation, verification and destruction of firearms in support of a mandatory compensation program of assault-style firearms that were prohibited on May 1, 2020.

Note: All questions related to capability, requirements and costing should be answered by the Minister of Public Safety.

Key facts

As of May 1, 2020, an Amnesty Order is in place to protect lawful owners of the now-prohibited firearms. The amnesty period will expire on October 30, 2025

Key messages

The Government of Canada is committed to ensuring public safety in our communities
The primary intent of the Assault-Style Firearms Compensation Program is to safely collect now prohibited firearms from Canadians and businesses, while offering fair compensation to businesses and lawful owners impacted by the prohibition
The Assault-Style Firearms Compensation Program will require collection, storage, verification, validation, transportation, and destruction services for prohibited assault-style firearms
On December 7, 2023, PSPC launched a competitive process to procure these services in support of the mandatory compensation program of assault-style firearms that were prohibited on May 1, 2020
The Government continues to engage with multiple stakeholders on the most efficient and cost effective options for the compensation program, and is taking the time necessary to ensure the program prioritizes public safety

Background

On May 1, 2020, the Government of Canada announced a prohibition on more than 1,500 models and variants of assault-style firearms, such as the AR-15. Since then, approximately 500 additional variants of these prohibited firearms have also been prohibited. These firearms can no longer be legally used, imported, or sold in Canada.

The 2021 Speech from the Throne and mandate letter for the Minister of Public Safety reiterated the commitment of the Government of Canada to make it mandatory for owners to dispose of their prohibited assault-style firearms (ASF), by surrendering them to the Government for the purposes of destruction or having them deactivated at the Government’s expense.

The estimated volume of these firearms held by businesses is within the range of 10,000 to 15,000, and the estimated volume held by individuals is within the range of 125,000 to 175,000.

On December 7, 2023, PSPC launched an Invitation to Qualify to procure services for the collection, storage, verification, validation, transportation, and destruction of firearms in support of a mandatory compensation program of assault-style firearms that were prohibited on May 1, 2020.

In April 2024, this resulted in a pool of Qualified Suppliers eligible to participate in the subsequent steps of the procurement process for both the Business and Individuals Phases.

There will initially be one Request for Proposal for the Business Phase, which includes stock from resellers such as sporting goods stores, and one subsequent Request for Proposal for the Individuals Phase, which will cover prohibited firearms owned by individuals that will apply lessons learned from the Business Phase

On April 26, 2024, PSPC initiated the draft Request for Proposal process with Qualified Suppliers for the Business Phase. This will include one-on-one meetings with those suppliers and the opportunity for them to provide their feedback to PSPC.

Rehabilitation of National Capital Commission assets

Issue

The Official Residences of Canada: 2021 Asset Portfolio Condition Report was released by the National Capital Commission in 2021 and identified a requirement for an injection of $175 million over 10 years to address the deferred maintenance deficit for all six official residences.

Key facts

The 2021 report found 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 National Capital Commission completed works at Harrington Lake (known in French as Lac Mousseau) in December 2020 with an overall cost of $5.8 million, which is less than the original budget of $6.1 million. The asset is no longer considered to be in “critical’ condition

Key messages

The Government of Canada recognize the importance of the official residences and their heritage and cultural value
The National Capital Commission is an independent Crown Corporation and is responsible for year-round maintenance and operations for the six official residences in Canada’s National Capital Region
The National Capital Commission is committed to full transparency and reports annually on capital expenditures incurred at the official residences

If pressed on the National Capital Commission’s asset portfolio condition report:

The National Capital Commission released this report in June 2021 to remain transparent and open with the Canadian public and it remains committed to working with its partners to ensure that issues related to security, heritage preservation, sustainability, and accessibility are addressed
Of the six main official residences, four are in “fair” condition (Rideau Hall, Harrington Lake, Stornoway, 7 Rideau Gate), and the Farm is in “poor” condition while 24 Sussex remains in “critical” condition
As an independent Crown corporation led by its Board of Directors, the National Capital Commission plans, initiates, and implements the works and investments related to the Official Residences to ensure their continued operation and to safeguard their national heritage

If pressed on 24 Sussex:

We continue to work closely with the National Capital Commission to develop a plan for the future of the Prime Minister’s Official Residence
24 Sussex is in critical condition and has been closed to protect the health and safety of residence staff, as well as to ensure the integrity of this Classified Heritage Asset
The NCC continues to undertake projects to ensure the integrity of the site, and has completed an abatement of designated substances, as well as the removal of obsolete systems. Remaining work includes the insulation of the exterior walls and the installation of electric heat pumps to protect the building
The estimated cost of this project is $4.3 million
In the coming months, the NCC will continue its work to ensure the integrity of other assets on the 24 Sussex site, including the building located at 10 Sussex Dr
These projects are necessary and must be undertaken regardless of any decision taken on the future of the residence

If pressed on Harrington Lake:

The National Capital Commission completed works in December 2020 at Harrington Lake as part of a broader program to preserve, maintain, and restore all official residences under National Capital Commission management
The National Capital Commission completed works at Harrington Lake (known in French as Lac Mousseau) in December 2020 with an overall cost of $5.8 million, which is less than the original budget of $6.1 million. The asset is no longer considered to be in “critical’ condition
As an independent Crown corporation led by its Board of Directors, the National Capital Commission plans, initiates, and implements the works and investments related to the Official Residences to ensure their continued operation and to safeguard their national heritage
While the 2018 Asset Portfolio Condition Report released by the National Capital Commission, assessed the Harrington Lake main cottage to be in “critical” condition, with the recent works the asset is now deemed to be in “Fair” condition

If pressed on Stornoway:

The National Capital Commission works in close collaboration with the offices of each future resident of an Official Residence - including Leaders of the Official Opposition destined to live at Stornoway - to determine the timing and logistical details of their move, including required updates to the residence
During transitions, typical moving tasks are performed to ensure the residence is clean and appropriately furnished so that occupants can feel at home and are able to execute their official duties as soon as they move in. Moving costs are not associated with the occupant’s personal belongings

If pressed on Rideau Hall:

All National Capital Commission projects that are planned or underway at an official residence are important to ensure the residence’s continued operation and to safeguard its national heritage
The National Capital Commission works in close collaboration with the Office of the Secretary to the Governor General to ensure the effective implementation of planned projects

Background

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, which details the current state of all six official residences and their ancillary buildings under the stewardship of the National Capital Commission. 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 the National Capital Commission’s 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 an 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.

Recent government budget investments in the National Capital Commission were not targeted towards assets in the Official Residences portfolio. Canada’s official residences remain in dire need of rehabilitation.

Shared Services Canada

Main Estimates 2024-25

Overview

SSC is seeking a total of $2,480B through the 2024-25 Main Estimates to support SSC’s role as the information technology (IT) service provider across the Government of Canada (GC). This amount represents a net decrease of $112M compared to the 2023-24 Main Estimates of $2.59B. The available funding for 2024-25 is net of $853M in revenue.

Table 2: Items sought in 2024-25 Main Estimates Amount in Millions
New funding
Funding for core IT services	$106.0
Funding for reinforcing the GC Cyber Security (Fall Economic Statement 2022)	$24.7
Funding for safeguarding access to high performance computing for Canada’s Hydro-Meteorological Services (Fall Economic Statement 2022)	$22.2
Reprofiled funds
Funding for the Workload Modernization and Migration Program (Budget 2021)	$40.9
Funding for the Cyber and IT Security Project: Government of Canada Secret Infrastructure (GCSI) (Budget 2018)	$14.1
Transfers
From other departments
From PSPC for a reimbursement related to reduced accommodation requirements due to data centre consolidations	$0.6
From Employment and Social Development Canada (ESDC) related to the cost of providing core IT services	$0.5
To other departments
To the Treasury Board of Canada Secretariat (TBS) for financial community developmental programs and initiatives	($0.04)
To PSPC, Innovation, Science and Economic Development Canada (ISED), and the Canadian Nuclear Safety Commission (CNSC) for the GC IT Enterprise Service Model for revenue in lieu of appropriation	($10.1)
Other adjustments
Funding for compensation adjustments	$61.5
Realignment of funding from Vote 1 Operating to Vote 1 Personnel to support SSC’s human resources requirements	($1.6)
Budget 2023 Reductions to refocus government spending
Budget 2023 Reduction – operating efficiencies	($2.2)
Budget 2023 Reduction – non-standard and legacy services	($9.8)
Budget 2023 Reduction – professional services and travel	($66.2)
Adjustments in funding related to multi-year initiatives and projects
Adjustments in funding related to multi-year initiatives and projects where funding profiles changed	($290.2)
Statutory Appropriations
Employee Benefit Plan (EBP)	($2.4)
Total	($112.0)

New funding: $152.9 million increase

(A) Funding for Core IT Services

$105,966,343M

Purpose

The funding of close to $106M is to support the onboarding of new full-time equivalents (FTE) with core IT services including standardized network services, procuring software and hardware for workplace technology devices, and providing technology-related services.

(B) Funding for Reinforcing the GC’s Cyber Security (Fall Economic Statement 2022)

$24,701,536M

Purpose

The funding of $24.7M will be used to strengthen protection of the GC’s IT infrastructure against ever-evolving cyber threats.

(C) Funding for Safeguarding Access to High Performance Computing for Canada’s Hydro-Meteorological Services (Fall Economic Statement 2022)

$22,234,718M

Purpose

The funding of $22.2M is to cover the costs of the optional period of the existing contract with IBM Canada Ltd, optional services for the development of the Science Booster System, and initial procurement planning for the future replacement contract.

Reprofiled funds: $55 million increase

(D) Funding for the Workload Modernization and Migration Program (Budget 2021)

Reprofile of $40,894,788M

Purpose

A total of $40.9M is being reprofiled from the 2023-24 funding for the Workload Modernization and Migration Program (WLM) and the data centre closure activities. The WLM Program has experienced project delays with [Redacted] project which requires funds in 2024-25 to ensure completion. Emergency Small Site Closures (ESSC) encountered supply chain issues and resource shortages in 2022-23, delaying future year data centre closures.

(E) Funding for the Cyber and IT Security Project: Government of Canada Secret Infrastructure (Budget 2018)

Reprofile of $14,119,508M

Purpose

A total of $14.1M is being reprofiled from the 2023-24 funding for the Cyber and IT Security Project: GCSI expansion. This is due to delays in procurement for networking, computer and storage hardware which resulted in a change to project timelines.

Transfers: ($9 million) decrease

(F) From PSPC for Reduced Accommodation Requirements due to Data Centre Consolidations

Transfer of $656,448

Purpose

An increase of over $650,000 from PSPC representing a reimbursement related to reduced accommodation requirements due to data centre consolidations. Under an agreement with PSPC, SSC receives an amount for power and space savings achieved from data centre closures, less the identified decommissioning costs forecasted by PSPC.

(G) From Employment and Social Development Canada for the Cost of Providing Core IT Services

Transfer of $511,283

Purpose

An increase of a little over half a million dollars from ESDC for the cost of providing core IT services.

(H) To Treasury Board Secretariat for the Financial Community Developmental Programs and Initiatives

Transfer of ($37,351)

Purpose

A transfer of over $37,000 to TBS representing SSC’s continued contribution to the Office of the Comptroller General’s financial community development initiatives.

(I) To Various Departments for the Government IT Operations Enterprise Service Model

Transfer of ($10,109,203M)

Purpose

A transfer of ($10.1M) for the GC IT Operations (Enterprise Service Model) for revenue in lieu of appropriation. Given that SSC and its stakeholders continue to work on the implementation of the ESM, the transfer is an extension of the 2022-23 agreement. The agreement recognizes that for revenue-dependent departments, a portion of the initial Budget 2021 transfer will be returned, and SSC will invoice these departments in 2024-25 as follows:

($7.9M) to PSPC
($1.9M) to ISED
($0.3M) to the CNSC

Other Adjustments: ($308.5 million) decrease

(J) Funding for Compensation Adjustments

$61,524,202M

Purpose

An increase of $61.5M for compensation adjustments for SSC employees associated with the signature of the collective agreements for Comptrollership (CT) group, Educational and Library Sciences (EB), Economics and Social Science Services (EC), Electronics (EL), Program and Administration Services (PA), Operational Services (SV),Technical Services (TC), Personnel Administration (PE), Senior leaders (EX) and the Information Technology (IT) groups.

(K) Realignment of funding from Vote 1 Operating to Vote 1 Personnel

($1,614,685M)

Purpose

A decrease of ($1.6M) for the conversion of funds from Vote 1 Operating to Personnel to meet human resource requirements within the department. This adjustment will cover the related costs of the Employee Benefit Plan (EBP).

(L) Budget 2023 Reduction – Operating Efficiencies

($2,237,000M)

Purpose

SSC has been able to optimize resources due to cyber security initiatives that have developed ways to collaborate, use common solutions, enhanced technology and consolidation and streamlining where and when appropriate. This has resulted in an operating cost decrease of $2.2M.

(M) Budget 2023 Reduction – Non-Standard and Legacy Services

($9,812,000M)

Purpose

A decrease of ($9.8M) representing Budget 2023 Reductions for savings. These savings were generated by accelerating client solutions to eliminate and/or reduce costly non-standard and legacy services. SSC will work closely with central agencies to strategically standardize, and clearly communicate the benefits of moving away from non-standard and legacy services to gain buy-in.

(N) Budget 2023 Reduction – Professional Services and Travel

($66,159,000M)

Purpose

The overall budget has seen a decrease of $66.2M, as required through Budget 2023. This decrease was achieved through a reduction in management consulting and service staff augmentation as well as, a reduction in travel for less critical operational requirements and further reductions in discretionary spending.

(O) Adjustments in Funding Related to Multi-year Initiatives and Projects

($290,191,229M)

Purpose

A net decrease of ($290.2M) due to changes to funding profiles for multi-year initiatives and projects. The changes are a result of time-limited funding or variations in funding from year-to-year. These adjustments are due to:

An increase of $19.4M for the Secure Cloud Enablement and Defence Evolution and Departmental Connectivity and Monitoring initiative (Budget 2021) due to changes in the funding profile from 2023‑24 ($44.2M to $63.6M)
A decrease of ($27.6M) for the Network Modernization and Implementation Fund (Budget 2021) due to changes in the funding profile from 2023‑24 ($67.4M to $39.8M)
A decrease of ($36.0M) for the IT Repair and Replacement Program (Budget 2021) due to changes in the funding profile from 2023‑24 ($97.5M to $61.5M)
A decrease of ($110.7M) for the Workload Modernization and Migration Program (Budget 2021) due to changes in the funding profile from 2023‑24 ($117.5M to $6.8 M)
A decrease of ($74.7M) for Cyber and IT Security Projects due to changes in the funding profile from 2023‑24 ($125.1M to $50.4M)
A decrease of ($46.0M) for mission-critical projects (2017 Fall Economic Statement) as this was a time-limited initiative and the funding ended in 2023-24
A net decrease of ($14.6M) for various projects and initiatives

Statutory appropriations: ($2.4 million) decrease

(P) Statutory Appropriations

($2,378,023M)

Purpose

The decrease to SSC’s statutory appropriations of ($2.4M) is related to the EBP contributions, and the decrease in FTEs. This reduction is offset by increases in salary funding for new projects, initiatives, compensation adjustments and realignments. A breakdown of this adjustment is as follows:

An increase of $3.6M in EBP related to added items in the 2024-25 Main Estimates, including:
An increase of $2.6M for reinforcing the GC’s Cyber Security
An increase of $1M for safeguarding access to high performance computing for Canada’s Hydro-Meteorological Services
An increase of $10.4M for compensation adjustments
An increase of $1.6M for the realignment within Vote 1, from Operating to Personnel
A decrease of ($15.6M) for adjustments to SSC’s EBP rate
A net decrease of ($2.4M) in EBP related to changes in salary funding for multi-year initiatives and/or projects

Shared Services Canada’s involvement in ArriveCAN

Issue

The ArriveCAN application continues to face scrutiny. The Royal Canadian Mounted Police (RCMP) confirmed in late March that an investigation is underway into allegations of fraud in the development of the application.

Key facts

ArriveCAN was developed for the Government of Canada (GC) to assist with border screening measures during the COVID-19 pandemic
SSC awarded 7 contracts on behalf of the Canada Border Services Agency (CBSA) in support of ArriveCAN

Key messages

The ArriveCAN application was developed in a collaboration between the Public Health Agency of Canada (PHAC) and CBSA.
SSC’s role was supportive and limited to:
enabling the application to exchange information between the cloud and GC data centres
housing the application in the cloud
routing network traffic through secure infrastructure to protect data
providing CBSA with contracting mechanisms to acquire information technology (IT) goods and services in support of ArriveCAN

If pressed on

If pressed on contracts with Dalian and Coradix for ArriveCAN

SSC did not award any contracts to either Dalian Enterprises (Dalian), Coradix Technology Consulting Ltd, or Dalian and Coradix Technology Consulting (Coradix) in joint venture in support of ArriveCAN

Background

SSC supports other organizations to develop applications aligned to their specific mandate by ensuring that the applications they develop are securely hosted in GC data centres or, if hosted in the cloud, can communicate securely with GC data centres.

SSC leveraged one pre-existing GC enterprise-wide contract to provide backbone network connectivity for the ArriveCAN application. The contract was valued at $87,000.

Shared Services Canada contracts with Dalian and Coradix

Issue

Three contractors have come under particular examination from parliamentarians and the media: GC Strategies, Dalian and Coradix.

Key facts

On March 1, 2024, SSC terminated 6 active contracts and contract vehicles with Dalian, as well as with Dalian and Coradix in joint venture
In addition, SSC took action on 10 Dalian contracts for which maintenance and support already paid for would continue to be provided. Since then, one contract expired and one contract was cancelled, leaving 8 where maintenance and support will continue
In order to avoid paying twice for the services, these contracts will end once the maintenance period runs out. At that time, they will be deemed terminated on the basis of default
The maintenance and support will continue to be provided directly by the Original Equipment Manufacturer and not directly by Dalian

Key messages

As the common IT service provider for the Government of Canada (GC), SSC puts in place contracts to enable partner departments and agencies to deliver their mandates and provide digital services to Canadians
SSC took swift action on its contracts with Coradix, Dalian, as well as with Dalian and Coradix in Joint Venture
On March 1, 2024, SSC terminated 6 active contracts and contract vehicles with Dalian, and Dalian and Coradix in Joint Venture
On March 1st, 2024, SSC terminated or suspended all of its contracts and contracting vehicles with Dalian
On March 6, 2024, SSC terminated its only active professional services contract with Coradix, providing Workload Migration IT Professional Services
The termination or suspension of these contracts will not impact the delivery of any programs and services to Canadians
In addition, SSC took action on 10 contracts awarded to Dalian for maintenance and support. These contracts were for IT hardware provided by the Original Equipment Manufacturers
Since payments were already made for these maintenance and support contracts, the service will continue to be provided
The GC will not pay twice for maintenance and supports
No additional work or orders will be added to these contracts

If pressed on

If pressed on the revocation of Dalian’s clearance:

On 23 April, SSC was informed by PSPC that Dalian security clearance had been officially revoked
The outstanding maintenance and support contracts with Dalian did not require security clearances
These contracts provide the GC as-needed 24/7 technical support and software/firmware updates
The support is provided directly by the Original Equipment Manufacturer to the GC, subcontracted through Dalian
Since no Dalian employees have access to the IT infrastructure, there is no risk to the GC, even if the security of Dalian was revoked
7 out of the 8 contracts will expire by January 2025, and 1 will expire in 2028 because of the maintenance and support “warranty”
No future payments will be made against these contracts

If pressed on ArriveCAN:

None of SSC’s contracts with Dalian and Coradix were related to the ArriveCAN project

Background

SSC had 186 contracts with Dalian and/or Dalian in Joint Venture with Coradix with a value (including amendments) of $76,846,588.84 from 2012 to 2024.

SSC had 16 contracts with Coradix with a value (including amendments) of $22,926,932.45 from 2012 to 2024.

SSC had no contracts with GC Strategies.

The Procurement Ombud’s review of ArriveCAN contracts

Issue

The Office of the Procurement Ombud (OPO) undertook a review of contracts awarded by the Government of Canada (GC) in relation to the ArriveCAN application.

Key facts

The review aimed to determine whether procurement practices pertaining to contracts associated with the creation, implementation, or maintenance of ArriveCAN were conducted in a fair, open and transparent manner
The review focused on 41 competitive and sole-sourced contracts
The review made 13 recommendations to the departments involved, including one for SSC:

Recommendation 6: SSC should critically examine all aspects of its Cloud Brokering Service procedures to ensure procurements conducted (i.e., Service Orders issued) under the GC Cloud Framework Agreements and its successors promote fairness, openness, and transparency.

Key messages

SSC agrees with the OPO recommendation regarding cloud brokering and has already introduced two new contracting processes to support access to cloud services by federal departments and agencies
These new processes ensure that records are maintained appropriately to demonstrate that procurement of cloud services promotes fairness, openness and transparency:
The new Training and Advisory Services process requires that additional information be provided by partners to ensure that all suppliers have equal access to procurement opportunities
A new Due Diligence process incorporates best contracting practices into the Cloud Brokering Allocation Process and confirms that new Service Order requests comply with contracting policies

If pressed on

If pressed on what SSC has done to address recommendation 6:

SSC will continue to improve procurement processes to further promote openness, transparency and fairness
The updated GC Cloud Application Hosting Strategy 2024 will further improve the way the GC procures, funds and governs application hosting
Aligned to the Strategy, SSC has already begun work to establish next generation procurement pathways to replace the current Cloud Framework Agreements, incorporating lessons learned from the OPO review
The initial solicitation for Infrastructure as a Service cloud services was published on CanadaBuys on April 19, 2024, and will close on May 28, 2024. SSC actively engaged vendors during the development of this solicitation
While new procurement vehicles are being established, SSC has also enhanced current processes to add additional challenge steps and align to best practices

Background

On November 14, 2022, the Standing Committee on Government Operations and Estimates (OGGO) adopted a motion recommending OPO conduct a review of contracts awarded in relation to the ArriveCAN application.

OPO examined whether the procurement practices of these contracts were consistent with the Financial Administration Act and the regulations made under it, Treasury Board policy and, where applicable, organizational policies and guidelines. The report was released and OPO officials appeared in front of OGGO on January 31, 2024, to discuss their findings.

Shared Services Canada procurement

Issue

This note explains SSC’s general procurement practices and achievements.

Key facts

In 2022-23, SSC awarded a total of 8,535 contracts valued at approximately $2.8B
65% (by volume) and 86% (by value) were competitively sourced contracts

Key messages

In delivering digital services to Government of Canada (GC) departments and agencies, SSC ensures that goods and services are of high quality, procured at the best value, and provided in a timely fashion.
SSC conducts fair, open and transparent procurement in accordance with domestic and international trade agreements and within the GC’s procurement policy framework.
Whenever possible, SSC uses a competitive bid process to get the best value for Canadians.
As information technology (IT) service delivery is modernized, the government is making procurement more agile, collaborative and inclusive, to promote social values, as well as environmental sustainability.

If pressed on

If pressed on sole-sourcing:

It is sometimes necessary for SSC to issue a non-competitive contract, for example where equipment must be compatible with existing IT infrastructure
In all instances, non-competitive procurement strategies are fully justified with a reference to the applicable exception to competitive bidding under the Government Contracts Regulations (GCR) of the Financial Administration Act (FAA)
In the case of procurements subject to one or more trade agreements, non-competitive procurement strategies are also justified using the limited tendering provisions of Canada’s national and international trade agreements

If pressed on no substitution:

In some situations, for reasons of compatibility and interoperability with existing infrastructure, there are requirements to procure equipment from specific original equipment manufacturers. These situations are avoided whenever possible. When required, such procurement has to be supported by technical justification and will be competed among resellers when possible.

If pressed on sole-source authority:

The basic sole-source authority of SSC is limited to $5.75M for services and $3.75M for goods. In addition, SSC has an exceptional contracting limit authority to award sole-source contracts up to $22.5M to support IT operations for the GC where the intellectual property rights of the supplier prevent the contract from being completed. Beyond these values, SSC has to seek authority from the Treasury Board to award sole-source contracts

If pressed on SSC software procurement for other departments:

SSC procures software in 2 different ways for other departments:
Enterprise software
Requests from other departments for business-specific software
These are usually smaller purchases and they are 100% funded by the requesting departments
The requirements are defined by the departments and reviewed by SSC

If pressed on the performance of contractors:

When SSC has contracted with a prime vendor who may, on their part, subcontract portions of the work, it is the prime vendor’s responsibility to manage the work of their subcontracts. It is the prime contractor who is accountable to SSC
SSC does not centrally report or track vendor performance

If pressed on the use of resellers:

Most original equipment manufacturers work with a network of partners to distribute their products (software and hardware). Many of these original equipment manufacturers are unwilling to contract directly with the government.
In the majority of cases, when SSC proceeds with a competitive bidding process to acquire products, it does not dictate that bidders must be an original equipment manufacturer or a reseller—the market decides. In some cases, SSC has bids from resellers and original equipment manufacturers

If pressed on professional services contracts:

SSC uses professional services to support programs and projects, for example, to provide surge capacity for meeting delivery targets
When needed, SSC will use additional resources from industry to complement its current program and project staff/resources to support the planning and execution of those programs and projects

Background

Work is in motion within SSC and the Government of Canada to modernize procurement to be more agile, collaborative, and inclusive. There are significant opportunities to continue to ‘buy better’ and transform how IT procurement and service delivery is done within Canada:

Diversity and Inclusion: Establishing a model for IT procurements and service delivery to drive fair and inclusive business practices in Canada, level the playing field for small and medium-sized enterprises (SMEs), as well as Indigenous and underrepresented groups, and vendors operating across Canada, including in rural and remote communities, and broaden participation in IT service design and delivery.

Greening Government Strategy: Sending strong market signals that government is serious about protecting the environment, incentivizing an accelerated transition to greening and circularity for the IT sector and beyond, by setting ambitious greening targets and requirements, and taking action to ensure new private sector accountability.

Innovation, Growth and Digital Enablement: Strategically establishing SSC as a convener of IT innovators and service providers, a first-in-class adopter of emerging technology and IT infrastructure, and a catalyst for the digital enablement of all Canadians.

Outsourcing information technology services

Issue

Media reports have focused on the year-over-year increase in general outsourcing by federal departments.

Key facts

Key messages

SSC works to ensure the operation of secure, modern and reliable government information technology (IT) infrastructure and systems
SSC uses a robust process to assess all potential options for the delivery of IT services. This process considers best practices, existing capacity and solutions to determine whether:
a solution should be built and operated in-house
a commercial solution should be leveraged
if external expertise is needed to achieve the desired outcome
Accessing some digital services and technologies through contracts enables SSC to provide effective digital solutions and services that are aligned with global best practices
By accessing digital services and technologies through industry, SSC is able to provide secure and cost-effective solutions to meet the needs of partner and client departments
Working with industry allows SSC to leverage the large-scale investments that these firms have made in other public sector and private markets to obtain cost‑effective, secure and reliable off-the-shelf products and highly specialized solutions

If pressed on

If pressed on management consulting :

SSC is committed to providing high-quality services to Canadians while ensuring the best value for taxpayers. The procurement of professional services, including management consulting services, is sometimes needed to acquire special expertise
Work performed by management consultants is diverse and can include providing advice on technology roadmaps, performing third-party reviews of business cases and supporting SSC to develop processes and tools for enterprise services
SSC exercises due diligence when contracting for goods or services. All contracts are issued in accordance with Treasury Board policies, as well as regulations, guidelines and procedures

If pressed on reasons for “outsourcing” technologies:

In some cases, following a robust assessment, SSC determines that a commercial solution is the best option to deliver a particular digital service
For example, satellite services are a highly specialized domain where industry excels, and the technology is better and more cost effectively delivered by the private sector
Another example is the high-performance computing capacity required to generate environment and weather forecasts, advisories and warnings. Supercomputer services are a highly specialized domain that would cost more if delivered by SSC in-house

If pressed on reasons for “outsourcing” work:

In some cases, SSC uses temporary professional services for specialized IT expertise to complement its internal capacity, particularly to support programs and projects that have limited periods and require surge capacity for delivery
SSC uses temporary professional services responsibly and aligned with procurement policies

In no way does the use of temporary professional services impact SSC’s commitment to invest in maintaining a high‑performing workforce with the technical skills needed to deliver world‑class digital services for government

Background

SSC is frequently criticized for using temporary professional services, as opposed to building in-house capacity within the public service. Media reports have focused on the year-over-year increase in general outsourcing by federal departments. Outsourcing has previously been studied by parliamentary committees.

More recently, revelations around firms engaged to build the ArriveCAN application have resulted in heightened scrutiny around IT procurement, and outsourcing, by the federal government.

Canada Border Services Agency Assessment and Revenue Management Program

Issue

The Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM) project has recently come under scrutiny from the Standing Committee for Government Operations (OGGO).

Key facts

Key messages

The CBSA CARM program will transform the collection of duties and taxes for goods imported into Canada
The CARM application was developed by CBSA and its commercial partner Deloitte
SSC’s role was to implement the information technology (IT) and cloud infrastructure required to host the application, including enabling cloud connectivity, testing the flow of data to and from the cloud, and monitoring the performance of IT infrastructure

If pressed on

The cost of the project:

SSC was allocated $6.3M for the CARM project. As of March 31, 2024, SSC had spent about $4.2M
SSC forecasts an additional $300,000 in spending on CARM for 2024-25, with an additional $300,000 of remaining funding available
There was a decrease to the SSC project budget of $1.5M, which was transferred back to the CBSA through 2023-24 Supplementary Estimates C

If pressed on contracts for CARM:

SSC put in place two contracts to deliver CARM, for a total of $896,000. These contracts were established competitively, in line with SSCs Cloud Framework Agreement
SSC also put in place a competitive professional services contract to access the services of a Business Architect
The Business Architect designed, reviewed and developed data migration strategies to move partner data, applications, functions and databases to the cloud
The contract was valued at $112,800
Other SSC work on the CARM program was undertaken with existing SSC employees and financial resources

Background

The CARM program is a multi-year initiative ($372M) that will transform the collection of duties and taxes for goods imported into Canada.

CBSA is responsible for managing the flow of commercial goods into Canada, including assessing and collecting duties and taxes on the commercial imports.

CARM will be one of the key enablers of its commercial vision moving forward. The project will contribute to modernizing the CBSA’s commercial business processes by streamlining and automating the many labour-intensive processes required to collect, assess, manage and report on revenues effectively.

The CARM project aims to modernize and streamline the process of importing commercial goods by

simplifying the overall importing process
providing a modern interface for importing into Canada
giving importers self-service access to their information
reducing the cost of importing into Canada
improving consistency of compliance with trade rules

The CARM project came under scrutiny during the March 18 meeting of the Standing Committee for Government Operations (OGGO) and in subsequent committee meetings including OGGO and at the Standing Committee on Public Accounts (PACP). The following motion directed at the CBSA was passed:

Pursuant to Standing Order 108(3)(c) the Committee orders that the Canada Border Services Agency (CBSA) should produce in both official languages unredacted copies of a) all signed contracts relating to the development and implementation of the CBSA Assessment and Revenue Management (CARM) project since the beginning of 2010, b) all CBSA communications relating to the 2018 Deloitte technical specifications, c) all CBSA communications relating to CARM release-to-testing since October 2023, provided that documents are submitted to the Committee Clerk no later than 15 days following the adoption of this motion, and once the documents have been received by the Committee, that it invites the President of the CBSA to testify at a 2-hour meeting to answer the Committee’s questions about the contracts for the development and implementation of CARM.

Cyber security overview

Issue

Explaining SSC’s role in addressing cyber security, as this is a shared responsibility with the Treasury Board of Canada Secretariat (TBS), the Office of the Chief Information Officer (TBS-OCIO), and the Canadian Centre for Cyber Security (CCCS), which is part of the Communications Security Establishment (CSE).

Key facts

SSC works diligently to keep networks safe, secure and accessible for Canadians by:
securing information technology (IT) infrastructure services
strengthening cyber and IT security operations, providing a classified IT infrastructure for the Government of Canada (GC)
improving the governance and management of the security related to IT infrastructure services
SSC is responsible for designing and maintaining the cyber and IT security of the GC for the partners and clients it supports. This includes designing and operating a secure IT infrastructure in alignment with TBS security policies and the zero trust framework. It also includes protecting networks, systems and data
SSC applies cyber security measures to prevent malicious actors from gaining access to GC networks by using firewalls, network scans, anti-virus, anti-malware, identification and authentication tools and services
Cyber security is a shared responsibility between SSC, CSE, TBS, as well as departments and agencies
When a cyber security incident occurs, SSC and its partners, like the CSE, coordinate to identify, contain, eradicate and recover from cyber threats

Key messages

While all departments and agencies have a responsibility to ensure cyber security within their organization, a number of departments and agencies hold key roles in cyber defence
TBS, SSC and CSE are the primary stakeholders in ensuring that the government’s cyber security posture is able to respond to evolving threats
TBS provides strategic oversight of government cyber security event management
SSC designs, implements, operates and maintains the IT security infrastructure
SSC also collaborates with CSE, TBS and relevant partner departments on cyber event response related to the infrastructure it manages. In conjunction with TBS and CSE, SSC also provides security and privacy by design as part of the establishment of new services
CSE, via the CCCS, monitors systems and networks for malicious activities and cyber attacks, and leads cyber event response
Public Safety Canada leads national cyber security policy and strategy
The Royal Canadian Mounted Police (RCMP) is the primary investigative department on all cybersecurity incidents dealing with actual or suspected cybercrime of non-state origin against GC infrastructure
The Canadian Security Intelligence Service (CSIS) collects information and intelligence on activities suspected of constituting threats to the security of Canada, and supports departments and agencies through security screening and foreign intelligence collection
National Defence conducts cyber security research and development

If pressed on

If pressed on SSC’s responsibility vs. That of CSE:

CSE monitors the GC perimeter for malicious activities and cyber attacks. CSE leads the GC’s operational response to cyber security events
SSC designs and operates most security systems that protect the government’s IT infrastructure. CSE uses complementary solutions to supplement SSC‑managed security systems
SSC ensures the GC is protected by state-of-the-art commercial solutions while CSE fills the gap between commercial solutions and the most sophisticated adversaries
SSC is also responsible for the maintenance of the infrastructure, including installing upgrades and patches when needed

If pressed on a particular cyber event:

SSC has people, technology and processes in place to safeguard systems, and works collaboratively with TBS, CSE, as well as departments and agencies to detect and respond to cyber threats
When a cyber security event occurs, SSC and other partners coordinate to identify, contain, eradicate and recover from cyber threats
The risk of cyber attacks is persistent and requires constant vigilance

If pressed on current and future cyber security investments:

The government is investing $515.8M over 6 years for SSC, CSE and TBS to address the rapidly evolving cyber threat landscape
The proposed funding will
strengthen the protection of the GC’s IT infrastructure against ever‑evolving cyber threats
enhance technological and human capacity
identify, assess and remediate vulnerabilities
deliver new enterprise capabilities that will enable organizations across the GC to continue delivering services to Canadians securely
support enterprise cloud cyber security services for the GC
expand cyber security protection for small departments and agencies
support SSC’s security information and event management system
modernize the government’s approach to cyber security
support TBS’s associated efforts to reinforce government cyber security

Background

Cyber security is a key dimension of the services provided by SSC which safeguard Canadians. Cyber security incidents, in addition to affecting the continuous delivery of quality services, have an impact on trust in institutions.

The GC works continuously to enhance cyber security in Canada by preventing attacks through robust security measures, identifying cyber threats and vulnerabilities, and by preparing for and responding to cyber incidents to better protect Canada and Canadians.

The GC has improved its enterprise capacity to detect, defend and respond to cyber threats; centralized Internet access points; launched an enterprise security architecture program; established the foundation of a Government Cyber Security Program and implemented a whole-of-government incident response plan.

Page details

Date modified:: 2024-10-08

Standing Committee on Government Operations and Estimates: May 29, 2024

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Public Services and Procurement Canada

Minister’s opening statement

Opening

Main Estimates

Priorities

Closing

2024 to 2025 Main Estimates overview

Government of Canada’s pay administration program

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Collective bargaining

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Laboratories Canada (Federal Science and Technology Infrastructure Initiative)

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Non-discretionary expenses associated with Crown-owned buildings and leased spaces

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Electronic procurement solution

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Long Term Vision and Plan

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Card acceptance and postage

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Refocusing Government Spending

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Employee Benefit Plan adjustment

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Long-term capital investment plan

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Other

Canada Post Corporation 2024 to 2025 Main Estimates Overview

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National Capital Commission 2024 to 2025 Main Estimates Overview

Budget 2024

Issue

Key facts

Key messages

Background

2024 to 2025 Departmental Plan

Issue

Key facts

Key messages

Background

Refocusing government spending

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Key messages

Background

Changes in Procurement services in response to the Procurement Ombud’s and Auditor General’s reports

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Key facts

Key messages

Background

Contracts awarded to McKinsey & Company

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Key facts

Key messages

Background

Office of the Procurement Ombud Report on McKinsey

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Key facts

Key messages

Background

Fraudulent billing

Issue

Key messages

Background

Office of Supplier Integrity and Compliance

Issue

Key facts

Key messages

Background

Daniel J. Macdonald building contract

Issue

Key facts

Key messages

Background

Public Service Health Care Plan

Issue

Key facts

Key messages

Canada Post Corporation
2024 to 2025 Main Estimates Overview

National Capital Commission
2024 to 2025 Main Estimates Overview