Cranes surround the Peace Tower on Parliament Hill, Friday, Jan.24, 2025.Adrian Wyld/The Canadian Press
Federal spending on outsourcing reached a record high of $17.8-billion last year, despite the Liberal government’s vow to cut back on the use of outside help.
It’s an increase of 13.5 per cent over the previous fiscal year. Spending in the broad category of professional and special services – which includes contracted work in categories such as lawyers, architects, training and maintenance, as well as various types of consultants – has more than doubled since the Liberals formed government in 2015.
The growth in outsourcing has been at the centre of political debate on Parliament Hill for the past several years. Conservative Leader Pierre Poilievre has repeatedly said he would cut spending in this area and Liberal ministers have also promised to cut back on outsourcing as part of an effort to meet overall fiscal targets.
The topic has been at the heart of months of committee hearings, inspired in part by concerns over the cost of the ArriveCan app for cross-border travellers, which grew from an initial $80,000 to more than $54-million because of extensive use of private contractors and subcontractors. Parliamentary committee investigations have expanded their reviews of ArriveCan spending to also scrutinize federal spending with multinational outsourcing companies.
The new figures are contained in the latest edition of the public accounts, which provide the official breakdown of what was spent during the 2023-24 fiscal year. The information was tabled in the House of Commons in December just hours before the holiday recess and was compiled and analyzed by The Globe and Mail.
University of Ottawa assistant law professor Matt Malone, who researches federal contracting and transparency policies, said the continuing upward trend is concerning because outside consultants are not held to the same accountability or transparency rules as public servants.
“It’s baffling that so little has been done to challenge and reverse this trend, even as we have known it is a problem for some time,” Mr. Malone said in an e-mail.
“All contracts, grants and funding agreements should be open by default, to use a phrase this government once used. It’s shameful and damaging to Canadian democracy that the federal government makes journalists and others pay for this information through access to information requests.”
In some cases, the public accounts only present the total amount spent on services in a way that combines both external and internal transactions. In other cases, the figures are reported separately. Internal expenditures involve transactions between different organizations within the government, such as legal services and information technology.
The total spending on professional and special services, including internal expenses, was $20.8-billion, of which 85 per cent was outsourced to external parties, totalling $17.8-billion.
While that category covers a broad range of government services, a lot of the political attention has focused on the area of management consulting services. That has also climbed in recent years, but is a smaller category of spending, accounting for $837.8-million last year, based on a combination of internal and external spending.
The public accounts do not break down external expenditures by type of work, making it difficult to determine exactly how much spending on management consulting services is outsourced to external parties.
On the whole, the government has curbed the growth in spending on management consultants, which was essentially unchanged from the previous year. There has been a significant drop in spending with U.S. consulting firm McKinsey and Company: It received just $1.4-million in the past fiscal year, down from $19.6-million the year before and $32.5-million in 2021-22.
The growth in spending with McKinsey under the Liberals drew opposition complaints because of the company’s ties to Dominic Barton, who headed the company until 2018 and also served as an economic adviser to the government. The Auditor-General reported last year that federal spending with McKinsey often did not demonstrate value for money.
Planned committee hearings into the public accounts have been delayed indefinitely because of Prime Minister Justin Trudeau’s decision to prorogue Parliament until March 24. The three main opposition parties have vowed to vote non-confidence in the government shortly after, which would trigger a federal election campaign.
Public service unions have been expressing concern for years about what they describe as the growing “corporate shadow public service,” as federal departments turn to large multinationals to provide advice or even deliver key government services.
The latest spending trends show one such multinational stands out for the amount of federal dollars flowing its way. In 2024, the federal government spent a total of $308-million on Deloitte for various services, including engineering, architectural, scientific research, informatics, business and management consulting.
In the past 10 years, spending on the company increased sharply, showing a steady rise from 2013-14 levels, when it received $14-million.
The $308-million for Deloitte placed it well ahead of the pack among consulting companies, followed by $190-million for IBM; $43-million for Accenture; $36-million for CGI; and $28-million for KPMG.
Of the money spent on Deloitte, $166-million went to management consulting services, making it the highest-paid contractor in this area. PricewaterhouseCoopers was second at $40-million, 76 per cent less than what Deloitte earned for the same type of work. They were followed by Colliers Project Leaders with $39-million, CGI with $18-million and IBM with $15-million.
Isabelle Arseneau, a spokesperson for Treasury Board president Ginette Petitpas Taylor, said in an e-mail that while outsourcing is necessary for large-scale projects, the government is strengthening its oversight of procurement.
“Our goal is to achieve savings without compromising services, ensuring that public funds are directed to the most pressing needs of Canadians,” she said.
Rola Salem, a spokesperson for the Treasury Board Secretariat, said in a statement to The Globe that contracted services have always been an important part of how the government delivers programs and services to Canadians.
“For example, professional services might be needed to acquire special expertise, to meet unexpected fluctuations in workload, or complement the work of the professional public service,” she said.
“Time-limited projects, shortages in certain employment groups and shortages in certain geographic locations may also require the use of professional services. Consultants can also provide independent verification of a decision, offer another viewpoint or establish a set of options for consideration.”
In an e-mailed statement, Deloitte Canada said it is the largest Canadian-owned and operated professional services firm in the country.
“In recent years, we have competed for and been selected to support complex federal government programs through fair, rigorous and transparent government procurement practices,” the company said.
“It’s through a combination of our size, recognized capability across many areas, our purpose and values, and an increased need for support that we are proud to work alongside the Public Service of Canada to make a positive impact on Canadians.”