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Public Services and Procurement Canada
Quarterly Financial Report for the quarter ended December 31, 2022

Quarterly Financial Report for the quarter ended December 31, 2022 (PDF, 1.3MB)

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1. Introduction

This Quarterly Financial Report (QFR) should be read in conjunction with the Main Estimates. It has been prepared by management as required under section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Directive on Accounting Standards, GC 4400 Departmental Quarterly Financial Report. It has not been subject to an external audit or review.

1.1 Raison d'être

Public Works and Government Services Canada (PWGSC) was established effective June 20, 1996, under the department of Public Works and Government Services Act. As of November 4, 2015, PWGSC started operating as Public Services and Procurement Canada (PSPC). PSPC plays an important role in the daily operations of the Government of Canada. It supports federal departments and agencies in the achievement of their mandated objectives as their central purchasing agent, real property manager, linguistic authority, treasurer, accountant, pay and pension administrator, and common service provider. The department's vision is to excel in government operations. Its mission is to deliver high-quality, central programs and services that ensure sound stewardship on behalf of Canadians and meet the program needs of federal institutions.

Further details on the department’s authority, mandate and core responsibilities can be found in Part II of the Main Estimates and Departmental Plan for the fiscal year ending March 31, 2023.

1.2 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting and a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities. The accompanying Table 3: Statement of authorities (unaudited)—For the quarter ended December 31, 2022 (in thousands of dollars) includes the department's spending authorities granted by Parliament, and those used by the department are consistent with the Main Estimates for the current fiscal year.

The authority of Parliament is required before money can be spent by the government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

1.3 Public Services and Procurement Canada's financial structure

PSPC provides services to many government departments, agencies and Crown corporations through a variety of funding mechanisms. This includes budgetary authorities that are comprised of voted and statutory authorities, as well as non-budgetary authorities. The voted budgetary authorities include operating expenditures, vote-netted revenues and capital expenditures, while the statutory authorities are mainly composed of revolving funds, employee benefit plans and payments in lieu of taxes (PILT). The non-budgetary authorities consist primarily of the Seized Property Working Capital Account (the description can be found in paragraph 1.3.4).

PSPC's complex financial structure may result in significant fluctuations in authorities on a quarterly basis, which are due to timing differences that are resolved by year-end. These are summarized in the next 4 paragraphs:

1.3.1 Cost-recovery basis

For the most part, PSPC delivers its services on a cost-recovery basis, generating revenues via revolving fund (the Funds) organizations and programs within the operating vote. These organizations and programs are mainly designed to provide services to other government organizations and are expected to recover the cost of their operations through revenues. However, the costs incurred by the Funds are usually disbursed prior to invoicing the client, which generally occurs upon completion of a project or after services are rendered, and thus revenues may be collected in a subsequent quarter.

1.3.2 Project management

PSPC manages a variety of real property projects that progress through phases from planning to funding and from procurement to construction. Historical trends have shown that expenditures against these projects are not incurred evenly throughout the year; thus, quarter-to-quarter fluctuations are normal. Such projects include:

1.3.3 Payments in lieu of taxes

PILT issued by PSPC are funded through a statutory vote and paid on behalf of other participating federal departments. Payments are subsequently recovered from the participating departments and are recorded as statutory grants in the Public Accounts of Canada. Timing fluctuations can occur between the payments and the recoveries from the other departments.

1.3.4 Seized property account

PSPC also manages seized property for the Government of Canada pursuant to the Seized Property Management Act. The financial management of this activity is undertaken through the non-budgetary Seized Property Working Capital Account. Charged to this account are expenditures and advances made to maintain and manage any seized or restrained property. PSPC recovers its costs from this account once the property owner loses the right to the property and it is disposed of.

1.4 COVID-19 pandemic

The COVID-19 pandemic represents a serious global health threat that has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. Throughout the pandemic, PSPC has been actively engaged in supporting the Government of Canada's response, through procurements in response to an unprecedented and urgent demand for:

PSPC also received funding to operationalize the Essential Services Contingency Reserve to support the provision of PPE for essential services in Canada. After nearly 3 years into the COVID-19 pandemic, protecting the health and safety of Canadians remains a priority for the Government of Canada. As such, PSPC will continue to play a central role in response and post-pandemic recovery efforts.

2. Highlights of fiscal quarter and fiscal year-to-date results

2.1 Significant changes to authorities

When compared to the same quarter of the previous year, year-to-date PSPC authorities available for use decreased by $327.0 million ($4,904.2 million in the third quarter of the fiscal year ending March 31, 2023 compared to $5,231.2 million in the third quarter of the fiscal year ending March 31, 2022) as reflected in Table 3: Statement of authorities (unaudited)—For the quarter ended December 31, 2022 (in thousands of dollars). Major reasons for the decrease are outlined below:

Table 1: Year-over-year variances in authorities available for use (in millions of dollars)
Initiatives Operating Capital Budgetary statutory authorities Total variances
Price and volume protection 104.9 0 0 104.9
Government of Canada’s Pay System 36.2 0 4.9 41.1
Procurement initiatives 24.9 0 5.8 30.7
Planning and investment in PSPC's assets portfolio 31.5 (22.6) 1.0 9.9
Electronic Procurement Solution 14.7 0 (0.2) 14.5
Government translation and interpretation services 9.0 0 0 9.0
Cape Breton Operations (4.4) 0 (0.2) (4.6)
Supplies for the health System (COVID-19) (525.6) 0 0 (525.6)
Other (1.0) (0.1) (5.8) (6.9)
Cumulative variance in authorities available for use (309.8) (22.7) 5.5 (327.0)

Groupings can change between quarters due to materiality of initiatives.

Amounts may not balance with other public documents due to rounding.

The cumulative decrease of $327.0 million from the third quarter of the fiscal year ending March 31, 2022 can be explained by:

Price and volume protection—increase of $104.9 million
The increase is a result of funding received for protection from inflation and price variations relating to space requirements for real property elements over which PSPC has very little or no control such as rent, cost of utilities and accommodation costs.
Government of Canada’s Pay System—increase of $41.1 million
The increase mainly relates to timing of funding to support pay stabilization and maintain the established compensation workforce dedicated in reducing the backlog of pay transactions for the Government of Canada.
Procurement initiatives—increase of $30.7 million
As announced in Budget 2021, the funding will allow PSPC to continue to modernize federal procurement and create opportunities for specific communities by diversifying the federal supplier base. The funding will also ensure that PSPC is adequately prepared to support the Canadian Coast Guard and the Canadian Armed Forces as they both continue to deliver defence and marine procurement projects via Canada’s Defence Policy and the National Shipbuilding Strategy.
Planning and investment in PSPC's assets portfolio—increase of $9.9 million
The increase reflects the department’s current funding approval to plan and deliver on its capital plan. This funding will ensure that PSPC maintains the quality of its infrastructure for the benefit of all Canadians.
Electronic Procurement Solution—increase of $14.5 million
The increase is mainly due to the timing of receipt of funding for project expenditures. As announced in Budget 2018, the cloud-based Electronic Procurement Solution will modernize the government’s procurement function, making purchasing simpler and easier to access. The implementation phase within PSPC is expected to be completed during the first quarter of the fiscal year 2023 to 2024.
Government translation and interpretation services—increase of $9.0 million
The funding increase is in response to a higher volume of translation and interpretation requests, thereby ensuring that Parliamentarians and Canadians receive timely services in both official languages as well as in Indigenous and sign languages.
Cape Breton Operations—decrease of $4.6 million
The decrease is mainly due to a reduction in workers’ compensation costs related to former Cape Breton Development Corporation employees.
Supplies for the health system (COVID-19)—decrease of $525.6 million
The decrease is due to the reduction in funding to support the Government of Canada’s response to the COVID-19 pandemic when compared to the previous fiscal year.
Other—decrease of $6.9 million
The decrease is the result of funding variances in miscellaneous projects and activities, such as the transfer of resources to Shared Services Canada to support the enterprise service model for government information technology services.

2.2 Significant changes to year-to-date net expenditures

As presented in Table 4: Departmental budgetary expenditures by standard object (unaudited)—For the quarter ended December 31, 2022 (in thousands of dollars), year-to-date total net budgetary expenditures have increased by $346.8 million as compared to the same quarter of the previous year ($3,359.6 million in the current fiscal year compared to $3,012.8 million in the previous fiscal year).

Overall, total spending at the end of the third quarter represents 69% of annual planned expenditures for the current fiscal year compared to 58% for the third quarter of the previous year.

Table 2: Year-over-year variances in net budgetary expenditures (presented by standard object) (in millions of dollars)
Standard object December 31, 2022
Year to date used at quarter end		 December 31, 2021
Year to date used at quarter end		 Year-over-year variance
Personnel 1,322.2 1,306.6 15.6
Transportation and communications 49.3 44.8 4.5
Information 19.8 6.7 13.1
Professional and special services 1,328.4 1,332.4 (4.0)
Rentals 957.8 963.3 (5.5)
Repair and maintenance 1,071.6 680.4 391.2
Utilities, materials and supplies 252.3 249.8 2.5
Acquisition of land, buildings and works 431.0 445.1 (14.1)
Acquisition of machinery and equipment 50.1 47.9 2.2
Transfer payments 65.4 76.6 (11.2)
Public debt charges 83.1 85.0 (1.9)
Other subsidies and payments 265.5 254.5 11.0
Revenues netted against expenditures (2,536.9) (2,480.3) (56.6)
Total net budgetary expenditures 3,359.6 3,012.8 346.8

Comparative figures have been reclassified to conform to the current year's presentation.

Amounts may not balance with other public documents due to rounding.

The year-over-year net increase of $346.8 million is mainly attributable to:

3. Risks and uncertainties

PSPC integrates risk management principles into business planning, decision-making and organizational processes to minimize negative impacts and maximize opportunities across our diverse range of services and operations. Risk management at PSPC is carried out in accordance with the Treasury Board Secretariat's Framework for the Management of Risk, the Management Accountability Framework, and PSPC's Integrated Risk Management Framework.

The key risks identified as having a potential financial impact on PSPC's operations are:

3.1 Public Services and Procurement Canada's dependency on clients' expenditures

More than half of PSPC's financial and human resources are tied directly to cost-recovered services and activities. In a context of reduced expenditures on the part of client departments and agencies, there is a risk that PSPC could face unpredictable and reduced business volumes and associated reduced resources. In response to this risk, PSPC continually adjusts to fluctuations in operational demands while maintaining the quality of its services. This includes sustaining rigorous management of revenues, expenditures, forecasting and commitment monitoring, and working closely with other departments through the client service network to identify changing requirements and their impacts on the department as well as developing and implementing client onboarding strategies.

3.2 Public Services and Procurement Canada's ability to undertake and deliver complex, transformational and interdepartmental major projects and procurements

There is a risk that project complexities, supply delays and escalating costs of material will affect the effective and efficient delivery of major PSPC initiatives, including the rehabilitation of the parliamentary precinct and federal science facilities as well as procurement modernization initiatives. In response, PSPC is utilizing built-in risk management processes with a strong focus on schedules and budgets, designing contracts with built-in flexibility, establishing service agreements and service standards with clear identification of responsibilities, and working with industry partners and stakeholders.

3.3 Predictable capital funding

There is a risk that the implementation of PSPC’s predictable capital funding model will disrupt the delivery of the department’s infrastructure programs, and will impact the timely and strategic fund allocation needed to ensure a healthy asset portfolio. This capital funding model provides PSPC with secured funding over a 20-year period, to be used to acquire and maintain capital assets such as buildings, bridges and federal laboratories, and to further enhance long-term planning. This risk is influenced by factors such as limited experience with this new funding model, and a need for more closely aligned departmental resource planning processes. PSPC has established a dedicated project office to manage the transition to the new funding model and support the mitigation of its associated risks.

3.4 Pay transformation initiative

In 2016, the department implemented a new pay system as part of the Pay Transformation Initiative. The implementation was a major undertaking that experienced challenges. There is a risk that the ongoing stabilization of pay administration for the Government of Canada will be slowed down, impacting the timeliness and accuracy of employee pay, the transfer of accurate pay data to pension, and the ability for the department to continue resolving existing pay errors. To mitigate this risk, PSPC has already taken a number of concrete steps. PSPC is continuing to work with the Treasury Board of Canada Secretariat, departments and agencies to develop and implement new timeliness and accuracy standards for human resources transactions, and completed the government-wide roll-out of MyGCPay’s recently added functionality.

3.5 COVID-19 pandemic

The COVID-19 pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. As the central purchaser for the Government of Canada, there is a risk that PSPC would face challenges in continuing to procure critical goods and services needed to support the Government of Canada’s response to the COVID-19 pandemic and the recovery efforts toward a safe and open economy. To mitigate this risk, PSPC incorporated flexibility in contracts and procurement instruments so that supply could be ramped up and down as needed to respond to further waves in the COVID-19 pandemic.

4. Significant changes to operations, personnel and programs

There were no significant changes to operations, personnel and programs during the third quarter ended December 31, 2022.

Original approved and signed by:

Paul Thompson
Deputy Minister
Public Services and Procurement Canada
Gatineau, Canada
March 1, 2023

Wojo Zielonka
Assistant Deputy Minister and Chief Financial Officer
Public Services and Procurement Canada
Gatineau, Canada
March 1, 2023

Table 3: Statement of authorities (unaudited)—For the quarter ended December 31, 2022 (in thousands of dollars)
Fiscal year ending March 31, 2023 Fiscal year ending March 31, 2022
Total available for use for the year ending March 31, 2023table 3 note 1, table 3 note 2 Used during the quarter ended December 31, 2022 Year-to-date used at quarter end Total available for use for the year ending March 31, 2022table 3 note 1, table 3 note 2 Used during the quarter ended December 31, 2021 Year-to-date used at quarter end
Vote 1
Gross operating expenditures 4,467,767 1,023,233 2,993,922 4,758,954 1,009,667 3,007,085
Vote-netted revenues (1,338,862) (357,020) (998,456) (1,320,046) (382,396) (1,040,805)
Net operating expenditures 3,128,905 666,213 1,995,466 3,438,908 627,271 1,966,280
Vote 5—Capital expenditures 1,610,417 361,128 1,049,383 1,633,060 316,155 773,379
Real Property Services revolving fund
Gross expenditures 2,478,069 589,422 1,353,428 2,066,333 533,126 1,239,119
Revenues (2,479,911) (589,691) (1,227,319) (2,062,171) (541,238) (1,151,196)
Net expenditures (1,842) (269) 126,109 4,162 (8,112) 87,923
Translation Bureau revolving fund
Gross expenditures 177,701 43,653 117,610 159,497 44,331 125,658
Revenues (170,349) (46,328) (114,262) (156,129) (37,776) (107,142)
Net expenditures 7,352 (2,675) 3,348 3,368 6,555 18,516
Optional Services revolving fund
Gross expenditures 262,724 146,363 199,142 178,789 128,828 161,584
Revenues (262,401) (116,548) (196,879) (178,860) (130,144) (181,108)
Net expenditures 323 29,815 2,263 (71) (1,316) (19,524)
Total of all revolving funds
Gross expenditures 2,918,494 779,438 1,670,180 2,404,619 706,285 1,526,361
Revenues (2,912,661) (752,567) (1,538,460) (2,397,160) (709,158) (1,439,446)
Total revolving fund net expenditures 5,833 26,871 131,720 7,459 (2,873) 86,915
Other budgetary statutory authorities
Contributions to employee benefit plans 158,167 39,114 117,342 151,129 36,511 109,533
Minister of Public Services and Procurement (PSP) salary and motor car allowance 92 23 69 91 23 68
Refunds of amounts credited to revenues in previous years 0 0 0 0 0 0
Spending of proceeds from the disposal of surplus Crown assets 737 188 195 541 4 14
Collection agency fees 0 0 0 0 0 0
Payment in lieu of taxes to municipalities and other taxing authorities table 3 note 2 0 (22,578) 65,457 0 (11,883) 76,640
Total other budgetary statutory authorities 158,996 16,747 183,063 151,761 24,655 186,255
Total budgetary authorities 4,904,151 1,070,959 3,359,632 5,231,188 965,208 3,012,829
Non-budgetary authority
Seized Property Working Capital Account 0 0 0 0 0 0
Total authorities 4,904,151 table 3 note 3 1,070,959 3,359,632 5,231,188 table 3 note 3 965,208 3,012,829

Table 3 Notes

Table 3 Note 1

Includes only authorities available for use and approved by Parliament at quarter-end. Amounts may not balance with other public documents due to rounding.

Return to table 3 note 1 referrer

Table 3 Note 2

Consistent with the presentation in the Main Estimates, "Total available for use for the year", for both fiscal years ending March 31, 2023 and March 31, 2022, under “PILT”, is presented net of planned PILT made to municipalities and the equivalent planned recoveries from other government departments. A description of PILT is provided in section 1.3 Public Services and Procurement Canada's financial structure of this report.

Return to table 3 note 2 referrer

Table 3 Note 3

The total available for use for the year ended March 31, 2023 experienced a net decrease of $327.0 million as compared to the previous fiscal year.

Return to table 3 note 3 referrer
Table 4: Departmental budgetary expenditures by standard object (unaudited)—For the quarter ended December 31, 2022 (in thousands of dollars)
Fiscal year ending March 31, 2023 Fiscal year ending March 31, 2022
Planned expenditures for the year ending March 31, 2023table 4 note 1,table 4 note 2 Expended during the quarter ended December 31, 2022 Year-to-date used at quarter end Planned expenditures for the year ending March 31, 2022table 4 note 1,table 4 note 2 Expended during the quarter ended December 31, 2021 Year-to-date used at quarter end
Expenditures
Personnel 1,811,015 442,000 1,322,198 1,655,096 431,156 1,306,552
Transportation and communications 120,239 22,776 49,314 98,550 17,581 44,755
Information 18,506 13,654 19,781 20,706 3,244 6,740
Professional and special services 2,446,951 568,452 1,328,365 2,262,755 600,980 1,332,370
Rentals 1,326,390 319,367 957,790 1,292,256 351,715 963,304
Repair and maintenance 1,334,741 351,654 1,071,650 1,284,606 240,168 680,425
Utilities, materials and supplies 433,084 166,194 252,275 913,519 152,705 249,769
Acquisition of land, buildings and works 938,077 192,519 430,995 656,836 201,131 445,133
Acquisition of machinery and equipment 171,950 23,805 50,087 200,752 (12,400) 47,932
Transfer payments table 4 note 2 0 (22,578) 65,457 0 (11,883) 76,640
Public Debt charges 130,224 27,245 83,103 93,082 28,135 84,993
Other subsidies and payments 424,497 75,458 265,533 470,236 54,230 254,467
Total gross budgetary expenditures 9,155,674 2,180,546 5,896,548 8,948,394 2,056,762 5,493,080
Less revenues netted against expenditures
Revolving funds revenues (2,912,661) (752,567) (1,538,460) (2,397,160) (709,158) (1,439,446)
Vote-netted revenues (1,338,862) (357,020) (998,456) (1,320,046) (382,396) (1,040,805)
Total revenues netted against expenditures (4,251,523) (1,109,587) (2,536,916) (3,717,206) (1,091,554) (2,480,251)
Total net budgetary expenditures 4,904,151 1,070,959 3,359,632 table 4 note 3 5,231,188 965,208 3,012,829 table 4 note 3

Table 4 Notes

Table 4 Note 1

Includes only authorities available for use and approved by Parliament at quarter-end. Amounts may not balance with other public documents due to rounding.

Return to table 4 note 1 referrer

Table 4 Note 2

Consistent with the presentation in the Main Estimates, "Planned expenditures for the year" for both fiscal year ending March 31, 2023 and year ended March 31, 2022, under "Transfer payments", are presented net of planned PILT made to municipalities and the equivalent planned recoveries from other government departments. A description of PILT is provided in section 1.3 Public Services and Procurement Canada's financial structure of this report.

Return to table 4 note 2 referrer

Table 4 Note 3

The year-to-date used at quarter ended December 31, 2022 experienced a net increase of $346.8 million as compared to the same quarter of the previous fiscal year.

Return to table 4 note 3 referrer

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2024-07-09