Canada’s Auditor General released three high-profile audits in 2024 that exposed widespread irregularities in federal government spending.
The Auditor General’s February 2024 ArriveCAN report revealed problematic sole-sourcing practices on a major technology project. In fact, the report found a surprising lack of records documenting “how and why GC Strategies was awarded the initial ArriveCAN contract through a non-competitive process.” After the initial $2.35 million sole-source, the audit found that GC Strategies “was subsequently involved in the development of the requirements” included in the bid solicitation for further project work. The Auditor General concluded that the “requirements placed on bidders were restrictive and likely limited competition”. In fact, in its parallel January 2024 audit entitled Procurement Practice Review of ArriveCAN, Canada’s Procurement Ombud found that the bid solicitation included seven specific instances of overly restrictive requirements that favoured the incumbent. While 40 prequalified suppliers were invited to bid, no-one else did. GC Strategies was the only bidder and was awarded the new $25 million deal.
This was not the only recent federal audit that raised concerns over sole-sourcing and favouritism. In fact, in its 2024 report entitled Professional Services Contracts, Canada’s Auditor General made a series of findings in relation to 97 professional services contract worth a total of $200 million awarded between 2011 and 2023 by 10 federal departments and agencies, and 10 Crown corporations to McKinsey & Company. These findings raised a series of concerns in relation to federal contracting practices, including a lack of compliance with procurement policies, lack of evidence of value for money, lack of evaluation records, lack of sole-source justifications, questionable scope changes, repeated contract splitting, and weak conflict of interest screening practices. As an overall conclusion, the Auditor General found a “frequent disregard for procurement policies” and found that “contracting practices often did not demonstrate value for money.”
Finally, to round out the trilogy of troubling 2024 federal spending audits, in its report entitled Sustainable Development Technology Canada, Canada’s Auditor General found rampant and long-term conflicts of interest at a federally funded non-profit foundation. As the report detailed, Sustainable Development Technology Canada (SDTC) was established by the federal government in 2001 to fund Canadian environmental technology projects. Two decades later, the report found that the SDTC had failed to establish proper conflict screening procedures for those funding decisions. In fact, the report found 90 separate instances, involving $76 million in funding awards, where “the foundation’s conflict of interest policies were not followed.” The report made a series of recommendations to address these chronic conflict concerns, stating that SDTC “should implement an effective system to receive, manage, store, and report annually disclosures of conflicts of interest and put measures in place to ensure its conflict-of-interest policies are followed.”
As these recent public audits illustrate, federal sector entities continue to struggle in their efforts to implement proper spending oversight practices.
