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Standing Committee on Government Operations and Estimates: March 12, 2026

2025 to 2026 Supplementary Estimates (C) for Public Services and Procurement Canada, the portfolio

Date: March 12, 2026, 11:00 to 1:00 p.m.
Location: In person
Present: Arianne Reza, Deputy Minister Public Services and Procurement Canada

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General items

1. Opening statement

Arianne Reza
Deputy Minister
Public Services and Procurement Canada
Standing Committee on Government Operations and Estimates (OGGO)
Supplementary Estimates (C)
March 12, 2026
Check against delivery
609 words

Thank you, Mr. Chair for welcoming us today.

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

With me today are:

We are pleased to appear before you today to answer your questions regarding the $43 million being sought through the Supplementary Estimates (C) for Public Services and Procurement Canada, commonly known as PSPC.

Mr. Chair, as the country is confronted with rapidly developing economic and security challenges, the federal government remains committed to investing in Canada alongside reducing expenditure on daily operations.

The wide scope of PSPC’s mandate allows the department to directly support many of the Government’s goals.

Mr. Chair, before taking your questions, I would like to provide details regarding PSPC’s role in specific Government priorities targeted within the Supplementary Estimates and also outline a number of funding requests directly applicable to PSPC.

In the face of continued economic and security uncertainties, the department is requesting 17 million dollars to support advertising across other government departments and agencies.

These funds are for campaigns which were unforeseen and cannot be supported by existing departmental or agency funds.

Mr. Chair, the Supplementary Estimates also contain a request for 13.5 million dollars for accommodation costs for employees who provide pension services relating to the Public Service Superannuation Act, Canadian Forces Superannuation Act, Royal Canadian Mounted Police Superannuation Act, Canadian Forces Pension Fund and Reserve Force Pension Fund.

This funding is a yearly administrative adjustment requested through Supplementary Estimates exercises.

Mr. Chair, among other requests, contained within these Supplementary Estimates is 2 million dollars of funding to establish a joint transition office to support defence procurement reforms.

The Joint Transition Office efforts are a continuation of the Defence Procurement Review initiative that was outlined in the Government of Canada’s defence policy, Our North, Strong and Free: A Renewed Vision for Canada’s Defence.

The money is to be used to support the Government’s work to streamline defence procurement and modernize Canada’s military capabilities as well as increase co-operation with allies.

Specifically, this funding will be used to review existing legislation, regulations, and policy frameworks and implement any necessary amendments to these with the goal of achieving the desired policy objectives as part of defence procurement reforms.

These Supplementary Estimates also contain a request for 6.2 million dollars of funding for the Public Lands for Homes Plan. The Government is working to use surplus, underused, and vacant public lands, such as empty office towers or low-rise buildings to build affordable homes.

This money would provide funding for the Canada Public Land Bank and support the Federal Lands Centre on Disposals to unlock federal public lands across the country for housing.

Mr. Chair, we have a number of net transfers between government departments in the supplementary estimates before you today.

These include transfer of unused funds from Global Affairs Canada to PSPC for costs incurred during the hosting of last year’s G7 Summit in Alberta. The transfer of funds from Global Affairs Canada as well as from Shared Services Canada will allow PSPC to avoid incurring a deficit in relation to the summit.

Finally, Mr. Chair, I will also highlight that, as a result of the Government’s work to transform its information technology infrastructure, data centres are being consolidated leading to power and space savings.

PSPC will transfer $900,000 to Shared Services Canada to compensate for power and space savings reductions, among other transfers within these estimates.

Mr. Chair, PSPC is committed to further cost efficiencies and savings as we work to support the Government’s policy agenda.

We are happy to take your questions.

Thank you.

2. Public Services and Procurement Canada and the portfolio’s 2025 to 2026 Supplementary Estimates (C) overview

Public Services and Procurement Canada (PSPC) is seeking a net increase of $43.0 million through Supplementary Estimates (C), increasing its available funding from $7,350.6 million to $7,393.6 million net of revenues.

Table 1: Items sought in 2025 to 2026 Supplementary Estimates (C)
Item Amount
(in millions)
Voted appropriations
Funding for government advertising programs (Budget 2025) (horizontal item) $17.0
Funding for accommodation costs related to pension administration $13.5
Funding for the Public Lands for Homes Plan (Budget 2024) $6.2
Funding to establish a Joint Transition Office to support defence procurement reforms (Budget 2025) $2.0
Funding for increases in non-discretionary expenses associated with Crown-owned buildings and leased space $0.9
Statutory appropriations
Contributions to employee benefit plans $1.5
Transfers
-From other organizations
From various organizations to the Department of Public Works and Government Services for the Presidency of the 2025 G7 Summit in Canada $5.5
-To Other Organizations
To the Department of Crown-Indigenous Relations and Northern Affairs for Canada’s Devolution obligations in Nunavut ($0.2)
To Shared Services Canada for reimbursement related to reduced accommodation requirements as a result of data centre consolidations ($0.9)
To the Treasury Board Secretariat to support the Digital Comptrollership Program ($2.5)
Total $43.0

Voted appropriations: $39.6 million increaseFootnote i

Funding for government advertising programs (Budget 2025) (horizontal item)

$17,000,000

Purpose of funding

Considering ongoing economic uncertainty, the Government of Canada anticipates a growing need for responsive advertising efforts. The Emerging Needs Fund allows PSPC to do advertising for priority, urgent and/or unforeseen files on behalf of and in collaboration with other Government of Canada departments.

Any project proposed for the Emerging Needs Fund will undergo the same review the Privy Council Office conducts on all advertising project proposals. In addition, verification will be done to confirm that the requesting department is unable to support the campaign with internal funds and that the campaign was not foreseen and therefore could not have been included in the department’s original advertising forecast. Any unused funds will be returned to the fiscal framework.

Funding for accommodation costs related to pension administration

$13,532,736

Purpose of funding

Funding for accommodation costs for employees who provide pension services relating to the Public Service Superannuation Act, Canadian Forces Superannuation Act, Royal Canadian Mounted Police Superannuation Act, Canadian Forces Pension Fund and Reserve Force Pension Fund. This funding is a yearly administrative adjustment requested through Supplementary Estimates exercises.

Funding of $13.5 million is broken down as follows:

Funding for the Public Lands for Homes Plan (Budget 2024)

$6,202,514

Purpose of funding

Currently, governments across Canada possess surplus, underused, and vacant public lands, such as empty office towers or low-rise buildings that could be used to build affordable homes for Canadians. Budget 2024 announced funding for the Canada Public Land Bank and to support the Federal Lands Centre on Disposals to unlock federal public lands across the country for housing.

Funding to establish a Joint Transition Office to support defence procurement reforms (Budget 2025)

$1,994,962

Purpose of funding

The Joint Transition Office efforts are a continuation of the Defence Procurement Review initiative that was outlined in the Government of Canada’s defence policy, Our North, Strong and Free: A Renewed Vision for Canada’s Defence.

Statutory appropriations: $1.5 million increase

Contributions to employee benefit plans

$1,532,931

Purpose of funding

The contributions to employee benefit plans include the employer’s matching contributions and payments to the Public Service Superannuation Plan, the Canada and Quebec Pension plans, death benefits, and the employment insurance accounts.

Net transfers between government departments: $1.9 million net increaseFootnote ii

From the Department of Foreign Affairs, Trade and Development and Shared Services Canada to the Department of Public Works and Government Services for the Presidency of the 2025 G7 Summit in Canada

Transfer of $5,450,842

Purpose of funding

In June 2025, Canada hosted the G7 Summit in the Bow Valley Region of Alberta. This event was the cornerstone of the G7 Presidency and the most important and high-profile event that took place in Canada in 2025. During this summit, a series of ministerial meetings was organized with world leaders in attendance. The summit was led by Global Affairs Canada (GAC) in collaboration with 12 departments and agencies. Since Canada hosts the presidency on a rotating basis every 7 years, GAC and its partners do not maintain a permanent team or ongoing operational resources for this work.

As the lead for this initiative, GAC is responsible for consolidating and reviewing the overall G7 budget and must, if necessary, reallocate any surpluses from partner departments or its own funds to other organizations involved in the G7 presidency with deficits following the delivery of the Summit.

PSPC has determined that it cannot manage its financial pressures for costs incurred for the G7 Summit with its current funding. Therefore, GAC and SSC are transferring their unused funds ($2,450,842 and $3,000,000, respectively) to PSPC so it can avoid incurring a deficit.

From the Department of Public Works and Government Services to the Department of Crown-Indigenous Relations and Northern Affairs for Canada’s Devolution obligations in Nunavut

Transfer of $173,000

Purpose of funding

On January 18, 2024, the Government of Nunavut (GN), Nunavut Tunngavik Incorporated, and the Government of Canada (GC) signed the Nunavut Lands and Resources Devolution Agreement. This agreement provides for the transfer of responsibilities related to Nunavut’s public lands, natural resources, and water rights from the GC to the GN. As part of this transfer, ownership of the Qimugjuk Building, located at 969 Federal Road in Iqaluit, Nunavut, will be officially transferred to the GN by the devolution date of April 1, 2027.

Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) and PSPC are collaborating to fulfill their respective obligations under the agreement, including those pertaining to the Qimugjuk Building.

A Building Condition Report was commissioned for the Qimugjuk Building, which identified a series of recommendations. Through CIRNAC, consultations were held with the GN to review these recommendations and confirm the obligations that must be addressed prior to the building being devolved.

Funding for increases in non-discretionary expenses associated with Crown-owned buildings and leased space, and Transfer from the Department of Public Works and Government Services to Shared Services Canada for reimbursement related to reduced accommodation requirements as a result of data centre consolidations

Funding of $904,487 and Transfer of $904,487

Purpose of funding

Shared Services Canada (SSC) was created in 2011 to transform how the Government manages its information technology infrastructure. In line with its mandate, one of SSC’s core objectives is to generate savings through IT consolidation. Through the data centre consolidation project, SSC will close and PSPC will decommission, if needed, legacy data centres and consolidate them.

The $0.9 million funding and transfer represents power and space savings in fiscal year 2024 to 2025 as a result of closing data centres. These savings are passed on to SSC. PSPC is the only department that can access the funding related to accommodation, and therefore, the only one able to compensate SSC for its power and space savings reduction.

From various organizations to the Treasury Board Secretariat to support the Digital Comptrollership Program

Transfer of $2,500,000

Purpose of funding

The Government of Canada (GC) operates multiple departmental financial managementsystems (DFMS) most of which are at, or coming to, end-of-life. Significant investment is required over the next 5 years to transition off these aging systems. DFMS consolidation can reduce the technical debt, mitigate impacts, while modernizing the GC’s financial management landscape.

The SAP financial management system currently in use in several departments and agencies is anticipated to reach the end of its extended SAP maintenance support on December 31, 2030. The Digital Comptrollership Program (DCP) is mandated to mitigate the risks of this critical transition towards a new financial system by developing a standard GC financial management solution, common financial management business processes and common data structures, which is to be delivered through a Digital Comptrollership Enterprise Service for adoption by departments and agencies. DCP will coordinate this GC-wide transition.

Canada Post and National Capital Commission 2025 to 2026 Supplementary Estimates (C) overview

Canada Post

Cash injection under section 31 of the Canada Post Corporation Act

Purpose of funding

The Government will provide Canada Post with $1.008 billion as an interim measure in order to continue operations and maintain financial solvency. This funding, which would be provided on an as-needed basis to cover non-discretionary obligations and fully repaid by Canada Post, serves as a short-term financial bridge to protect service continuity. This funding is in addition to the repayable funding of up to $1.034 billion announced in January 2025.

National Capital Commission

Funding to Protect Heritage Assets

Purpose of funding

Funding from the 2022 Fall Economic Statement (FES) and the 2023 FES, $332.6 million in additional appropriations, was earmarked for the National Capital Commission (NCC) to protect heritage assets, as well as address the deferred maintenance of NCC assets in the National Capital Region. The NCC developed at a multi-year rehabilitation plan (2023-2024 to 2032-2033) which identified this funding for the maintenance and upkeep of historical and culturally significant infrastructure, including assets within the official residences’ portfolio.

In January 2025, the Minister of Finance approved a request to reprofile $18.9 million from the 2022 FES from year 2023 to 2024 to year 2025 to 2026 to rehabilitate heritage assets.

Funding of $18.9 million is broken down as follows:

Key Issues

3. Procurement process for official language interpretation services and new request for standing offer

Issue

In 2025, in collaboration with the Procurement Branch, the Translation Bureau modified its procurement tool. The new standing offers came into effect in January 2026.

Key facts

Key messages

If pressed on reports from the Office of the Procurement Ombud:

If pressed on the impact of choosing the lowest bidder on the quality of interpretation:

If pressed on the impact of new standing offers on supplier health and safety:

Background

To replace contracts that expired on December 31, 2025, Public Services and Procurement Canada (PSPC) launched a request for information process at the end of June 2025, which closed on August 8, 2025. Nearly 50 suppliers submitted comments that were taken into account in the preparation of the new procurement tool: a request for standing offers.

The request for a standing offer was posted on October 24, 2025, with an initial closing date of November 24, 2025, for interpreters who already hold accreditation with the Translation Bureau. Thirty-four bidders were selected for a total of 36 available interpretation service resources. A second phase took place from December 24, 2025, to January 16, 2026, to allow candidates who had passed the last accreditation exam to submit their offers. Five new bidders were selected, bringing the total to 41 available interpretation service resources.

Between June and August 2025, the Office of the Procurement Ombud (OPO) received written complaints from 4 Canadian suppliers regarding the administration of their separate contracts awarded by PSPC for the “provision of parliamentary and conference interpretation services.” OPO addressed each complaint in a separate report. The 4 OPO reports focus primarily on the allocation of work, and one of them also addresses concerns related to travel time. Other issues were also raised, such as the use of the CanadaBuys (Ariba) platform and the department's integrity in administering the contract. Summaries of the 4 complaint review reports were published on the OPO website between January 12 and February 23, 2026. PSPC has committed to sharing the results of its review of the reports' findings with the OPO.

4. Old Age Security payment issues

Issue

Media is reporting on delays and errors in payments to seniors in the delivery of Canada’s Old Age Security pension benefits

Key facts

Key messages

If pressed on comparisons to SAAQclic:

Background

Benefits Delivery Modernization (BDM) is a long-term federal initiative to replace obsolescent systems used to deliver payments to Canadians for Old Age Security (OAS), Employment Insurance (EI) and the Canada Pension Plan (CPP). Public Services and Procurement Canada (PSPC) supports the program by conducting competitive procurements and managing contracts on behalf of Economic and Social Development Canada (ESDC). Individual benefits are onboarded in stages to manage risk and ensure service continuity. PSPC continues to work with ESDC to apply lessons learned as additional benefits are modernized.

Through a competitive procurement process, PSPC awarded 4 Master Systems Integrator Contracts (MSIC) to 4 qualified Systems Integrators in Spring 2021. OAS implementation work was competed between these suppliers.

In 2021, PSPC awarded a competitive contract to procure Curam software to IBM Canada, currently valued at $107 million, excluding taxes.

5. Annual Report on Government of Canada Advertising Activities

Issue

On January 30, 2026, Public Services and Procurement Canada released the annual report on Government of Canada advertising activities for fiscal year 2024 to 2025.

Key facts

Key messages

If pressed on advertising allocation in fiscal year 2024 to 2025:

If pressed on advertising allocation in fiscal year 2025 to 2026 and ongoing:

Background

Public Services and Procurement Canada’s (PSPC) common services role in government advertising is to contract advertising agencies, review creative materials and media plans for compliance with acts and policies, and manage the government's Agency of Record and the Emerging Needs Fund. The annual report has been published on the PSPC website each year since 2002 to 2003 and is not tabled in Parliament. In 2016, the Minister approved a fixed annual publishing date on the last business day of January. Since 2004, the annual limit of the Central Advertising Fund was set to $35 million.

The report includes information reported by government institutions and the government’s Agency of Record.

In fiscal year 2024 to 2025, PSPC, as a department, spent $210,925 on advertising. The top 3 advertising institutions were the following:

Stakeholder Roles in Advertising
Privy Council Office
Treasury Board of Canada Secretariat
Public Services and Procurement Canada
Institutions

Government Transformation

6. Red Tape Reduction Measures

Issue

In response to the red tape review process led by the President of the Treasury Board, Public Services and Procurement Canada and the National Capital Commission reviewed their regulations to reduce administrative burden, modernize processes and eliminate outdated regulations.

Key facts

Key messages

Background

On July 9, 2025, the President of the Treasury Board called on all Ministers with regulatory responsibilities to undertake a 60-day review of their regulatory portfolios to reduce red tape and support a stronger, more inclusive Canadian economy.

Ministers were asked to publish progress reports outlining immediate actions taken, as well as short, medium, and long-term plans to streamline regulations.

For Public Services and Procurement Canada, the list of actions outlined in the progress report include:

For the National Capital Commission, the list of actions outlined in the progress report include:

7. Canada Post Transformation

Issue

The Government has instructed Canada Post to take steps to transform its operations and work toward becoming financially self-sustaining.

Key facts

Key messages

If pressed on the updates to letter delivery standards:

If pressed on community mailbox conversion:

If pressed on ending the rural moratorium:

If pressed on the regulated stamp rate-setting process:

Background

In May 2025, William Kaplan was appointed to lead an Industrial Inquiry Commission (IIC) to examine Canada Post’s financial challenges in the context of the collective-bargaining dispute, with special attention to the underlying causes of the dispute.

The IIC’s report, submitted on May 15, 2025, outlined structural and financial challenges faced by Canada Post and made recommendations for both the Government and for collective bargaining, to return Canada Post to some degree of financial sustainability so it can continue, but in a manner that reflects 2025 realities.

On September 25, 2025, the Government announced it was accepting the recommendations of the IIC and instructed Canada Post to develop a comprehensive transformation plan, given that additional measures would be necessary to return the Corporation to financial solvency.

On November 7, 2025, Canada Post submitted its comprehensive transformation plan (‘The Next Mile’) to the Minister of Government Transformation, Public Works and Procurement and Québec Lieutenant. The plan lays out an implementation strategy for conversions to community mailboxes, modernizing its network of post offices (following the lifting of the rural moratorium, while ensuring the maintenance of service to rural, remote, and Indigenous communities), amending service standards for letter mail and reducing its management and overhead costs.

On January 28, 2026, Canada Post and the Canadian Union of Postal Workers, announced they had finalized tentative agreements covering both bargaining units, to be ratified by members by the end of May 2026. No strike or lockout actions will take place during this process. If agreements are ratified, this will put an end to a 2-year period of labour uncertainty that has deeply damaged Canada Post’s bottom-line, meaning Canadians should be able to look toward to an extended period of service reliability – until January 31, 2029 – that will enable Canada Post to begin its transformation.

8. Canada Post financial stability

Issue

Canada Post is facing existential financial challenges driven by lower revenues resulting from the decline in letter mail volumes and the increasingly competitive parcel market. To address these challenges, Canada Post has submitted its comprehensive transformation plan to return the corporation to financial self-sustainability to the Minister.

Key facts

Key messages

If pressed on the ability to repay the cash injections:

If pressed on the labour situation:

Background

Over the last 20 years, the amount of mail Canadians receive has declined by 70%, while the number of addresses has increased by more than 3 million. This has resulted in lower revenues and higher costs for Canada Post. Canada Post’s legislated mandate requires it to be financially self-sustaining but it has reported over $5.5 billion in operating losses since 2018, including more than $1 billion in the first 3 quarters of 2025 alone. These pressures have been compounded by the uncertainty caused by the 2-year long labour negotiations and various strike actions by the Canadian Union of Postal Workers in 2024 and 2025.

In December 2024, William Kaplan was appointed to lead an Industrial Inquiry Commission to examine Canada Post’s financial challenges in the context of the collective bargaining dispute. The Industrial Inquiry Commission report, submitted on May 15, 2025, outlined structural and financial challenges faced by Canada Post and made recommendations.

On September 25, 2025, the Government announced it was accepting the recommendations of the Industrial Inquiry Commission and instructed Canada Post to develop a comprehensive transformation plan, given that additional measures would be necessary to return the Corporation to financial solvency.

On November 7, 2025, Canada Post submitted its comprehensive transformation plan to the Minister of Government Transformation, Public Works and Procurement and Quebec Lieutenant. The plan lays out an implementation strategy for conversions to community mailboxes, modernizing its network of post offices (following the lifting of the rural moratorium, while ensuring the maintenance of service to rural, remote, and Indigenous communities), amending service standards for letter mail and reducing its management and overhead costs.

On January 28, 2026, after more than 2 years of negotiations, Canada Post and the Canadian Union of Postal workers announced they had finalized tentative agreements that would expire on January 31, 2029. Language is set to be finalized soon, and ratification is expected shortly thereafter. This will put an end to a 2-year period of labour uncertainty that has deeply damaged Canada Post’s bottom-line. While the agreements are subject to ratification by union membership, no strike or lockout actions will take place during this process, meaning Canadians can look toward to an extended period of labour peace - until January 31, 2029 - that will enable Canada Post to begin its transformation.

On February 5, 2026, the Government of Canada announced its intention to make up to $1.01 billion in repayable funding available to Canada Post in the 2025 to 26 fiscal year. This funding, which would be provided on an as-needed basis to cover non-discretionary obligations and fully repaid by Canada Post, serves as a short-term financial bridge to protect service continuity, while building on the repayable funding of up to $1.034 billion announced in January 2025. Questions about the ability to repay the cash injections have been raised by Opposition members of parliament at Committee and in the House.

As part of Budget 2025, the Government is also proposing amendments to the Canada Post Corporation Act to deregulate the stamp rate-setting process and enable Canada Post to set stamp rates, without the approval of the Governor in Council, in line with recommendation #7 of the Industrial Inquiry Commission.

9. Update on the move to Dayforce

Issue

Progress continues to be made on the transition from the Phoenix system to the Dayforce human resources and pay solution.

Notes:

Key facts

Key messages

If pressed on the effects of Workforce Adjustment and the backlog:

If pressed on the 10-year Phoenix report by the Professional Institute of the Public Service of Canada:

Background

In 2025 to 2026 and 2026 to 2027, Public Services and Procurement Canada (PSPC), in collaboration with its partners, will focus on finalizing the building and testing of the Dayforce solution. In parallel, essential change management activities will be undertaken to support departmental, operational, and enterprise readiness for a potential deployment.

On August 21, 2025, the acquisition of Dayforce by Thoma Bravo, a private equity firm specializing in software investments, based in the United States, was announced. The contract between the Government of Canada and Dayforce, which was amended on March 31, 2025, remains valid. The solution is hosted in Canada and all the resources who work on the contract directly require Canadian clearances or equivalent. The contract also requires that all data be stored in Canada. Dayforce reaffirmed its commitments to the Government of Canada and emphasized that the acquisition would not affect the existing partnership, service delivery, or contractual obligations.

Since the launch of Phoenix, PSPC has implemented a series of measures focused on stabilizing the administration of pay. We have also focused on other operational priorities in pay administration including parental leave, disability management, terminations, and overpayment recovery. We have improved service standard compliance while managing sustained increases of transactions submitted to the Pay Centre by departments and agencies. PSPC is looking at Artificial Intelligence (AI) to further automate case processing. AI will play a key role in managing transactions at the Pay Centre, and it will help to process transactions faster, with greater efficiency and accuracy. We are also taking a proactive approach to transparency by publicly sharing updates on our AI activities and achievements.

In addition, the Automated Benefit Enrollment initiative is a multi-phase project designed to streamline and automate benefits enrollment. By reducing manual processes, this initiative allows compensation advisors to focus on complex transactions across the Government of Canada.

Dayforce

Following extensive research, rigorous testing and a comprehensive feasibility assessment, the Government of Canada confirmed that Dayforce will replace Phoenix and more than 30 existing HR systems. This new approach is grounded in lessons learned, including strengthened governance, robust engagement with departments and bargaining agents, phased implementation, and full transparency.

As part of the change management approach, training will be a key factor for success and efforts to begin supporting organizations in their readiness to onboard have already begun. These efforts aim to ensure a smooth transition and reflect the government’s commitment to transparency, efficiency, and paying public servants on time and accurately.

Overpayments

Since October 2021, we have increased our efforts to seek repayment from employees and former employees who were overpaid. In the 2025 calendar year, pay accuracy now sits around 98.4%, and most remaining errors are caused by human resources (HR) actions that are delayed or entered incorrectly. The most common cause of an overpayment is a late entry or processing of a transaction that affects an employee's pay, which accounts for about 70% of all overpayments. Strong HR management and accountability are essential. Departments and managers must enter information on time and accurately. When they do not, it can lead to incorrect pay, including overpayments. The Pay Centre provides regular updates where the importance of timely and accurate data entry by HR within our client departments is reiterated.

Additionally, as part of the Unified Actions for Pay (UAP) initiative, Treasury Board of Canada Secretariat and PSPC introduced new measures to strengthen HR and pay practices and improve the reliability and consistency of HR data. These measures support better pay outcomes for employees, increase system automation and enhance data quality within existing procedures and standards.

Status of the backlog

As of January 28, 2026, the overall inventory of transactions waiting to be processed at the Pay Centre has decreased by 63% since the peak of January 2018, representing a reduction of 233,000 transactions. Additionally, there are 105,000 outstanding transactions over 1 year old, a decrease of 6,000 from the previous month.

Between April 2025 and June 2026, PSPC estimates that it will process a total of 122,500 backlog and priority cases as part of its commitment to the backlog and in preparation for the initial onboarding to Dayforce.

Procurement

10. Spending on professional and special services

Issue

Public Services and Procurement Canada is exploring ways to reduce its use of certain professional and special services.

Key facts

Key messages

Background

Parliamentary inquiries, audits of the Office of the Auditor General and reviews of the Office of the Procurement Ombud on federal government spending on professional services contracts have generated negative media attention and have raised concerns about taxpayer dollars that are spent on professional services.

In addition to the policy direction issued by the Treasury Board of Canada Secretariat in October 2023 in The Manager’s Guide: Key Considerations when Procuring Professional Services; Public Services and Procurement Canada has taken action to strengthen existing controls and has implemented measures to ensure proper oversight of public funds, clear accountability and documented decision-making.

Over the past decade, government expenditures on professional and special services have remained consistent relative to both total government expenditures and to the total payroll for public servants.

11. Continuous improvement of the procurement of professional services

Issue

When external resources are used by departments, Public Services and Procurement Canada works to ensure that contracts are structured consistently with value in mind.

Key facts

Key messages

Background

Parliamentary inquiries, audits of the Office of the Auditor General and reviews of the Office of the Procurement Ombud on federal government spending on professional services contracts have generated negative media attention and have raised concerns about taxpayer dollars that are spent on professional services.

The Treasury Board Directive on the Management of Procurement requires that business owners carefully consider and document alternative approaches before initiating a procurement for professional services. The Manager’s Guide: Key Considerations when Procuring Professional Services was published in October 2023 to support managers in fulfilling their responsibilities.

Public Services and Procurement Canada (PSPC) is currently developing a streamlined and simplified suite of mandatory methods of supply for the procurement of professional services. While work and consultations are underway, measures were introduced to strengthen contract management practices and ensure better value for money.

In July 2025, PSPC introduced strengthened measures to reinforce stewardship, accountability, and value for money in the procurement of professional services across the federal government. These measures respond directly to findings from parliamentary reviews, audits by the Office of the Auditor General, and reports from the Office of the Procurement Ombud.

Collectively, the measures are designed to ensure that professional services contracts are appropriately scoped, competitively awarded, and actively managed, with clearer expectations and stronger controls throughout the contract lifecycle. They limit the size, duration, and growth of task-based contracts; require greater scrutiny of pricing and amendments; strengthen invoice verification and performance oversight; and introduce additional senior-level approvals and reporting where risks are higher. At the same time, they support a gradual transition toward outcomes-based contracting.

These measures ensure that when external resources are used, decisions are well-documented, defensible, and demonstrably aligned with value for money.

In parallel, PSPC has undertaken extensive engagement with industry to inform the next phase of the transformation of professional services procurement. This has included a Request for Information and targeted one-on-one sessions with suppliers, the results of which will help shape future initiatives for fiscal year 2026 to 2027.

On September 2, 2025, PSPC implemented a new Vendor Performance Management framework to assess vendor performance and use past performance information in awarding contracts. This new framework complements the existing Vendor Performance and Corrective Measures policy that triggers suspension or other corrective measures when a contract is terminated for default. PSPC is currently working on implementing this framework for professional services supply arrangements.

12. Fraudulent billing

Issue

The Government of Canada continues to investigate and deter fraudulent billing by individuals working as sub-contractors on federal professional services contracts.

Key facts

Key messages

Background

Since March 2024, Public Services and Procurement Canada (PSPC) disclosed 9 cases of fraudulent billing by individuals working as professional services subcontractors who were employed by prime contractors that held multiple contracts with a number of federal departments and agencies:

Where appropriate, cases are referred to the RCMP for criminal investigation.

PSPC has a robust fraud risk management 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.

The focus of PSPC’s administrative investigations have been on the fraudulent billing practices of sub-contractors, not the prime contractors. That said, Canada has provisions in its contracts to recover the illegitimate payments and is working with the impacted prime contractors to recover these funds.

13. Office of Supplier Integrity and Compliance

Issue

The Office of Supplier Integrity and Compliance supports the Government’s ability to identify suppliers of concern and take appropriate action to mitigate the risk they pose.

Key facts

Key messages

Background

The Office of Supplier Integrity and Compliance (OSIC), launched on May 31, 2024, replaced the Government of Canada’s Integrity Regime that had been in place since 2015 as a government-wide, policy-based debarment system. It is designed to mitigate the risk of conducting business with suppliers of concern by excluding them from being awarded contracts, as opposed to being punitive which is the role of the criminal justice system.

OSIC plays a significant role in safeguarding the federal procurement and real property systems, which encompasses approximately $20 billion annually for contracts, real property agreements, the management of Crown-owned properties, and rental payments on lease contracts across Canada.

Under the updated Ineligibility and Suspension Policy (the Policy), changes have been introduced to enable OSIC to mitigate risks posed by suppliers of concern. Triggers for suspension or debarment have been expanded to include a wider range of procurement integrity-related issues such as:

The updated Policy accords flexibility for OSIC to determine appropriate periods of ineligibility, up to a maximum of 10 years, based on an assessment of aggravating and mitigating factors.

OSIC actively monitors current events for allegations of supplier misconduct through research, information sharing, and data analytics. OSIC exercises due diligence and procedural fairness when assessing suppliers, and apply administrative safeguards to allow for independent decision making while taking action when the Policy is triggered.

14. Buy Canadian

Issue

On December 16, 2025, the Government of Canada announced the coming into force of core elements of the Buy Canadian Policy to strengthen domestic industries and ensure federal procurement spending benefits Canadian businesses.

Key facts

Key messages

Background

On September 5, 2025, the Prime Minister announced an expanded Buy Canadian Policy that introduces a suite of new measures to prioritize Canadian suppliers, materials, and innovation across federal procurement and funding programs.

On November 4, 2025, the Prime Minister outlined nearly $186 million in new funding from Budget 2025 to fully implement the Buy Canadian Policy and ensure it delivers lasting results for Canadian businesses and workers.

On December 16, 2025, the Minister of Government Transformation, Public Works and Procurement and Quebec Lieutenant, announced the coming into force of core elements of the Buy Canadian Policy, which fundamentally changes how the federal government purchases goods and services.

Public Services and Procurement Canada developed the Buy Canadian Procurement Policy Framework that encompasses a number of new measures.

Policies under the framework that have come into force, effective December 16, 2025, include:

Measures that are expected by spring 2026 include:

15. Vendor Performance Management system

Issue

Vendor Performance Management is used within Public Services and Procurement Canada and its client departments to assess vendor performance and use past vendor performance information in awarding contracts.

Key facts

Key messages

Background

Public Services and Procurement Canada (PSPC) had already begun developing a Vendor Performance Management (VPM) system as part of its efforts to modernize federal procurement and strengthen the system's performance.

In its July 2025 report on knowledge development and sharing, the Office of the Procurement Ombud (OPO) proposes 5 key solutions to address persistent systemic issues in federal procurement. These include the implementation of a VPM system. The VPM initiative, which has been underway for a few years now, responds to recommendations made by the OPO.

The first phase of the VPM applies to PSPC goods and services contracts for PSPC valued at more than $100,000. Vendors will be evaluated on such things as how well the respect timelines, incidents of consultant turnover and invoicing accuracy. Scores are not yet used in vendor selection. The next few months will be used to test the system and gather feedback. Vendors will be given a 90 day notice before scores are considered.

Program development was supported by extensive consultations with other levels of government, sector and regional buyers, vendor associations and legal services. Should the decision be made to expand it to other departments, adjustments will have to be made to the e-procurement solution. PSPC is currently working to expand the program for all contracts over $100,000, including those managed for other departments as part of its common service provider role.

Defence

16. Defence Investment Agency

Issue

The Government of Canada has created a new Defence Investment Agency to modernize defence procurement.

Key facts

Key messages

If pressed on ties to economic impact:

If pressed on defence spending:

Background

Until now, defence procurement in Canada has been divided across multiple ministers and accountabilities, and layers of oversight from central agencies. To meet the Government’s commitment to accelerate spending on defence, reforms to defence procurement are needed. The Defence Investment Agency will centralize accountability, leverage expanded authorities and introduce flexibilities in the procurement process to deliver faster procurement outcomes. Defence procurement in Canada now better aligns with our allies, such as the United Kingdom, France, and most recently Australia, which have dedicated and independent defence procurement organizations.

Reforming defence procurement has been the subject of several reports and studies. In June 2024, the Standing Committee on National Defence tabled a wide-ranging report entitled, A Time for Change: Reforming Defence Procurement in Canada. Also, in June 2024, the Parliamentary Budget Officer tabled a report on the rising costs and extended delays associated with the development and acquisition of polar icebreakers. In December 2024, the Auditor General of Canada tabled a report on the application of Industrial and Technological Benefits (ITBs) to defence procurements, noting areas for administrative improvements, and tabled an additional report on Canada’s Future Fighter Jets in June 2025. Taken together, consecutive reports indicate that the procurement process and overly customized specifications have led to avoidable cost increases and significant delays.

17. Defence Industrial Strategy

Issue

The Defence Industrial Strategy’s objective is to provide technological and operational advantage to the Canadian Armed Forces and its security partners in their mission to defend Canada, while maximizing growth, job creation and economic benefits for all Canadians.

Key facts

Key messages

Background

On February 17, 2026, the Government of Canada launched a major shift in defence procurement and industrial policy. The Defence Industrial Strategy (DIS) lays out a generational effort to rebuild Canada’s defence industrial base, increase military readiness, and ensure Canada has the sovereign capability to equip its own forces.

It introduces the new Build–Partner–Buy framework, which prioritizes building equipment in Canada whenever possible, forming strategic partnerships with trusted allies where beneficial, and buying abroad only as a last resort. This policy direction reflects the government’s commitment to strengthen Canada’s defence autonomy, create domestic jobs, and ensure that defence spending delivers long-term economic and security benefits to Canadians.

At the centre of this new approach is the Defence Investment Agency (DIA), created to accelerate procurement, cut through administrative bottlenecks, and ensure that defence investments align with Canada’s industrial and technological strengths.

The DIA is responsible for operationalizing the Build–Partner–Buy framework and for implementing the government’s Buy Canadian direction, which is critical to the DIS’ objective of increasing the share of defence contracts awarded to Canadian firms to 70% within a decade.

By coordinating across departments and working directly with industry, the DIA provides clearer demand signals, secures domestic workshare, and strengthens supply chains for critical inputs such as ammunition, minerals, and advanced materials. This modernization is essential to ensuring that Canada can equip its military reliably, contribute effectively to allies, and maintain economic resilience in an increasingly contested global environment.

18. 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 shipbuilding sector, and generate economic benefits for Canadians.

Note: All questions related to budget, requirements, timelines, international comparisons, and project management should be directed to the Minister of National Defence.

Key facts

Key messages

If pressed on the River-class Destroyer Project:

If pressed on the Polar Icebreakers:

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. Canadian shipyards involved are Irving Shipbuilding Inc. in Nova Scotia, Seaspan’s Vancouver Shipyards in British Columbia and Chantier Davie Canada Inc. in Quebec.

The River-class Destroyer Project Implementation contract, with an initial value of $8 billion (including taxes) outlines the terms and conditions for the construction and acceptance of the first 3 ships.

Seaspan’s Vancouver Shipyards was awarded a $3.15-billion contract (excluding taxes) to build one polar icebreaker and Chantier Davie Canada Inc. was awarded a $3.25-billion contract (excluding taxes) to build the other polar icebreaker.

The Davie icebreaker will be built using a hybrid domestic-international build strategy, with work split between Davie’s facilities in Quebec and its Finnish shipyard, Davie North Yard Finland Oy. With the evolving global climate, it is essential more than ever that Canada delivers ships to the Canadian Coast Guard in a timely manner so they can continue to work to protect Canadian sovereignty and security.

The National Shipbuilding Strategy continues to evolve and is strengthened by the Icebreaker Collaboration Effort (ICE) Pact, a partnership between Canada, Finland, and the United States that was signed into effect in November 2024. This collaboration seeks to accelerate Arctic and polar icebreaker production, boost the marine industries of all 3 nations, and enhance technical cooperation and information sharing to meet global demand for icebreakers.

Real Property

19. Aligning the office portfolio with workplace presence requirements

Issue

The Government’s decision to increase onsite presence for executives and employees eligible for hybrid work represents a change in direction that affects the Office Portfolio Reduction Plan, which was announced as part of Budget 2024, with implications still under assessment.

Key facts

Key messages

If pressed on building condition:

If pressed on unassigned seating:

Background

Public Services and Procurement Canada is responsible for the management of general purpose office space, while departments and agencies remain responsible for specialized facilities such as laboratories and secure operational spaces, and Crown corporations manage their own real property portfolios. In recent years, workplace planning has been informed by a hybrid work model, with employees splitting their time between working remotely and in the office.

The initial Office Portfolio Reduction Plan used to develop the Budget 2024 proposal assumed an average of 2 to 3-day in office presence and unassigned seating by default.

On February 5, 2026, the Treasury Board of Canada Secretariat announced its intention to increase onsite presence for executives and employees eligible for hybrid work, with executives expected onsite 5 days per week by May 4, 2026, and other eligible employees 4 days per week as of July 6, 2026. Implementation discussions with bargaining agents will be led by the Treasury Board of Canada Secretariat.

The February 2026 announcement to further increase onsite presence is expected to place additional pressure on office space requirements and impact Public Services and Procurement Canada’s ability to achieve the savings committed in Budget 2024. Any adjustment to Budget 2024 targets is subject to funding authorities.

Public Services and Procurement Canada remains committed to exploring opportunities for controlling operational costs and will continue working with tenant departments and agencies to optimize the use of office space within the PSPC-administered office portfolio.

20. Build Canada Homes

Issue

Public Services and Procurement Canada is collaborating with Housing, Infrastructure and Communities Canada and the Canada Lands Company to develop a stable, predictable federal land pipeline for Build Canada Homes.

Key facts

Key messages

Background

Budget 2024 aimed to unlock 250,000 units by leveraging surplus and underutilized public lands across the country by 2031.

Public Services and Procurement Canada has facilitated the disposal of federal lands by launching the Canada Public Land Bank website, the Government of Canada's official online inventory of surplus and underutilized federal properties. There are currently 88 properties listed, representing the potential for approximately 42,500 housing units on a total of 463 hectares of land across Canada.

Other

21. Summary of Budget 2025 announcements specific to Public Services and Procurement Canada

In Budget 2025, the government unveiled over $141.4 billion in new spending (offset by $51.7 billion in projected savings) over the next 5 years with a focus on: building a stronger Canadian economy; shifting from reliance to resilience; empowering Canadians; protecting Canada’s sovereignty and security; and creating a more efficient and effective Government.

Funding, and other announcements, for Public Services and Procurement Canada (PSPC) include:

Becoming our own best customer

Rebuilding, rearming, and reinvesting in the Canadian Armed Forces

A new Defence Investment Agency

Comprehensive Expenditure Review (Public Services and Procurement Canada specific)

To meet up to 15% in savings targets over 3 years, PSPC will:

These measures to enhance efficiency will support PSPC’s delivery of the Buy Canadian Policy, as announced by the Prime Minister on September 5, 2025.

To support the increased workflow at the Government of Canada Pension Centre from administering this time-limited program:

Budget 2025 also included decisions that were provided to PSPC since the Fall Economic Statement:

Support for Cape Breton Operations in managing legacy liabilities

Price and volume protection for federal real property

Improving the Government’s Pay Administration

Additional funding decisions related to sunsetting programs are expected at a later date.

Other announcements of note for that will likely impact/implicate PSPC include:

Comprehensive Expenditure Review (other considerations)

Optimizing Productivity in Government

As emerging technologies like AI continue to advance, the government intends to be at the forefront in their adoption and build and rely on the skills we have in the public service. Budget 2025 announces that going forward, the government will:

Adopting Artificial Intelligence to enhance productivity and improve services

Becoming our own best customer

Amendments to the Canada Post Corporation Act

Modernising limits on borrowing and portfolio investments

Build Canada Homes

Enhancing access to funds deposited by cheque

Collective bargaining in good faith

Government efficiencies

Attracting private sector expertise to the public service

Establishing a Financial Crimes Agency

Critical Minerals Sovereign Fund

Legislative amendments to the Red Tape Reduction Act

Amendments to the Building Canada Act

Canada Infrastructure Bank

Building one Canadian economy

Adopting a capital budgeting framework

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2026-06-22