While Canadian federal audits have attracted widespread national attention in recent years, provincial governments and agencies are not immune from adverse audit reports exposing their own problematic procurement practices.
For example, Ontario’s Auditor General released two reports in November 2022 that raised serious concerns over the contracting practices of two large revenue-raising provincial agencies. In the first report, the Auditor General found significant flaws in Liquor Control Board of Ontario IT procurement practices. In the second report, the Auditor General found that the Ontario Lottery and Gaming Corporation mismanaged the privatization of provincial casino operations by failing to enforce the terms of the originally tendered contracts. As these two audits illustrate, while these provincial liquor and gaming agencies contribute significant funds to provincial revenues, their tendering and contracting procedures remain a work-in-progress.
Further, in its December 2023 report entitled Driver Training and Examination, Ontario’s Auditor General found that the provincial government’s “oversight of the driver examination service provider was ineffective and inefficient in improving the quality of service it provided.” For example, the report found that the government made additional payments to the service provider for extended operating hours even though those requirements were already covered in the original contract. The report also found that the government extended that contract for an additional two-to-three-year term through a non-competitive process.
More recently, in its 2024 annual report, Ontario’s Auditor General found that the provincial government failed to follow its established procedures in a call for development (CFD) process for the redevelopment of Ontario Place, a project with an estimated total cost of $2.2 billion, including over $500 million in public funding. Citing many instances in which the process rules were not followed, the report concluded that the CFD decisions “were not fair, transparent or accountable to all participants.” The Auditor General recommended that future land development contract awards follow more clearly defined procurement procedures and best practices.
Turning to Atlantic Canada, recent public audits in Nova Scotia and New Brunswick also revealed widespread procurement irregularities in provincial agencies. In its January 2023 audit entitled Metropolitan Regional Housing Authority – Examination of Service Contract Awards, Nova Scotia’s Auditor General concluded that the housing agency (“Metro”) needed to improve its conflict screening practices after finding that Metro’s Director failed to properly disclose multiple conflicts in relation to the award of a new security services contract. The report also raised broader concerns about inadequate conflict screening practices across Nova Scotia’s public housing sector. In fact, in a random sampling of ten other tender calls issued by five of Nova Scotia’s regional housing authorities, the Auditor General found that “none of the ten included conflict-of-interest language or disclosure requirements.”
Further, in its February 2024 report entitled Value for Money: Development of Transitional Care Facilities, Nova Scotia’s Auditor General found a lack of due diligence in Nova Scotia healthcare facility procurements. The report raised concerns over value-for-money, delays and cost overruns, improper sole-sourcing, and inadequate conflict screening. While the audit recognized the “significant challenges and pressures that exist throughout the healthcare system,” the Auditor General concluded that public institutions “should not promote a culture where expediency takes precedence over appropriate due diligence and value for money.”
Finally, in its 2024 performance audit, New Brunswick’s Auditor General reviewed $173 million in travel nurse contracts. The report concluded that “a lack of clearly defined vendor selection processes, poor contract oversight and deficiencies in payment review processes resulted in undue risk to the province.” The Auditor General also determined that “the contracts with private nursing agencies were not reflective of best practices and did not demonstrate value for money.” In fact, the report found that multiple contracts that were signed using the contractor’s standard contracts were never legally reviewed by the province and “contained significant deviations” from the government’s standard terms.
Turning to Western Canada, in its June 2022 report entitled Alberta Infrastructure – Procurement Practices, Alberta’s Auditor General found multiple treaty infractions at the provincial infrastructure agency. The audit, which included a four-year sampling from $4.5 billion in construction projects for schools, hospitals, and other government facilities, found rushed bidding deadlines that breached treaty standards, as well as the failure to properly screen for conflicts of interest or secure confidential bidder information. The audit also found inconsistent bid evaluation practices and the failure to maintain proper evaluation records.
More recently, in its November 2024 report entitled Highway Maintenance Contracts – Transportation and Economic Corridors, Alberta’s Auditor General reviewed the Alberta government’s highway maintenance contracts. The report found that the government did not maintain proper records to demonstrate how contract requirements were met, did not always reduce payments when materials failed to meet specifications, gave extra work to contractors contrary to sole-sourcing policies, and lacked controls for approving extra work. The report also found that the government’s contract management manual for snow removal contracts had not been updated since 2010, even though the province implemented a new performance-based contracting structure in 2019. Further, the Auditor General found that nine out of 10 reviewed change orders exceeded $100,000 and should have been put to tender rather than being sole-sourced to the existing contractor. The report recommended better contract monitoring and better guidance to contract management staff.
Finally, Canada’s Auditor General reviewed the procurement practices of the Yukon government, a Canadian territory that operates under federal oversight. In its 2024 report entitled Procurement and Contracting – Government of Yukon, the Auditor General found that the government’s “procurement and contracting activities did not demonstrate value for money as they were not always documented or monitored for results.” In fact, the report found that in 51% of the contracts reviewed “a competitive environment was not created and value for money was not demonstrated.” Further, in eight percent of reviewed contracts, the report found that work was started before contracts were signed, including a $2 million contract that was not signed until almost a year after work commenced on the project. The Auditor General also found multiple instances where public bodies failed to comply with the advice given by the government’s central procurement agency, noting 110 instances out of 291 consultations where “the department’s advice was not followed.”
As these reports illustrate, procurement governance within provincial and territorial institutions remains a work-in-progress. Moving forward, these institutions need to redouble their efforts to implement proper procurement policies and practices to better protect the expenditure of public funds.
