While federal and provincial audits tend to attract widespread attention, recent municipal audits have exposed serious concerns over local procurement practices.
In its 2023 annual report, Montreal’s Inspector General found an increase in the number of complaints from bidders, suppliers and subcontractors. Those cases accounted for 42 percent of all complaints received that year by that oversight office.
The report identified biased specifications and anti-competitive bidding practices as two increasing risk areas in municipal procurement. For example, the report cited a snowblower procurement where the specifications were “so detailed as to suggest that a specific product was being targeted” and that the solicitation was “directed at a single company.” The Inspector General’s intervention ultimately led to the cancellation of the tender call so that specifications could be revised.
As the report noted, the snowblower complaint was reflective of a broader trend of suppliers pressuring municipal institutions to bias their specifications. As the Inspector General cautioned, “the tactics used by certain suppliers to promote their products clearly compromised a transparent, fair, neutral and impartial competitive bidding process” and resulted in significantly higher bids. In fact, the report documented a situation where a vendor attempted to position itself as a “sole supplier” by offering its competitors “substantial amounts to withdraw from a public call for tenders.” This scheme enabled inflated bids that greatly exceeded prevailing market costs. Citing potentially fraudulent and criminal conduct, the Inspector General transferred the case to the police for further investigation.
Similarly, in its February 2024 report entitled Auditor General’s 2023 Annual Report on the Fraud and Waste Hotline, Toronto’s Auditor General released the results of an internal investigation that was initially prompted by a complaint to the City’s fraud hotline. That investigation uncovered multiple conflicts of interest involving a now-former City employee. On four separate occasions, while still working for the City, the former employee performed work as a subcontractor under City-issued contracts. The employee failed to disclose or seek the City’s approval prior to any of those engagements. As the Auditor General noted, the investigation prompted the City to make “internal control improvements to avoid future conflict of interest situations, which include updating its fraud awareness training and reviewing the existing conflict of interest policies to ensure staff awareness.”
Finally, in December 2024 report entitled Audit of Software Acquisition and Licence Management, Toronto’s Auditor General found that the City of Toronto spent over $11 million for unused software licenses between 2020 and 2024. The Auditor General concluded that the City needed to improve its project planning “to ensure timely deployment of licences when making bulk purchases” in order to “avoid purchasing licences that are not ready to be deployed.” The report made ten specific recommendations to “maximize the value of the City’s investment in software and licences, and improve the City’s governance, management, and processes related to software acquisition.”
As these recent municipal audits reveal, municipal institutions should bolster their oversight practices to better ensure fair competition and value for money in their procurement operations.
