WTF is right!

Former AG employees scored untendered contracts for auditing work

By Glen McGregor
Wednesday, May 27, 2015

Auditor General Michael Ferguson speaks at a news conference in Ottawa on Tuesday, April 28, 2015 following the tabling of his spring report to Parliament.

Auditor General Michael Ferguson’s office gave consulting contracts for auditing work to a small group of former employees, with contract values set just below the threshold requiring competitive tendering.

A review of the past three years of contracts shows several cases in which former Office of the Auditor General (OAG) employees were brought back to perform audits and paid just below the $25,000 limit on sole-sourced contracts. The value of some of the contracts were later increased, with two ending up above the threshold.

Former auditor general Sheila Fraser warned about similar contracting practices in the past. In an audit of Public Works and Government Services in 2008, she said that departments “must fully justify the decision to use an exception to competitive bidding” and also cautioned against amending contracts to significantly change the work being done.

The OAG says it followed all the applicable rules for contract tendering.

“Some of those people would be because they have expertise and experience in things we needed help with,” Ferguson told the Citizen. “We really do try to limit the number of contracts issued to former employees, but it does happen from time to time.”

Ferguson cited the audit of Senate expenses as an example where his office requires expertise in examining travel spending and so turns to former employees.

Among those receiving multiple contracts from the OAG was Kathryn Elliott, who had previously served under Fraser as principal of the human resources management audit team. Beginning in 2012, she was given contracts for “accounting and audit services” valued at $24,930, $22,599 and $24,999.38 — just 62 cents below the limit.

Other examples include:

* Aline Vienneau, who according to her Linkedin profile worked with the OAG until November 2014 , received a $23,400 contract from the office in September of that year. It was later amended and increased in value to $42,900.

* Louis Bisson, who is listed as a former OAG employee on his Facebook page, in June of 2014 received a $24,973 contract for four months work — just $27 shy of the tendering requirement. The value of the contract was later increased to $48,623.

* Thomas Wileman, listed as a principal with the OAG in minutes of a 2005 House of Commons finance committee, received a $24,000 contract in February 2014.

* Kevin Potter, once director of the audit operations branch, received a $15,862 contract in January 2014.

* Barry Elkin, once the principal in audit operations, received an OAG contract for $15,960 in April 2014.

In cases where the values of some of the contracts were increased over the tendering threshold due to “operational needs,” the OAG says it was in the public interest to amend the contracts.

“In deciding whether to amend the contracts, we considered the nature, complexity and sensitivity of the accounting and audit services work required,” said spokesperson Ghislain Desjardins in an email.

“Having considered those factors, we determined that it would not have been in the public interest, and it would not be a good use of public funds, to have another contractor replace those contractors or restart the accounting and audit services work.”

The notice of contracts published through the proactive disclosure system do not indicate the exact nature of work. But the data show contracts issued in 2014, when the auditor general was conducting the Senate expenses audit which required contracting outside help. The OAG said it won’t confirm which contracts were Senate-related until the audit becomes public, which is expected early next month.

It is not uncommon for government employees to become consultants after leaving or retiring, but the use of sole-source contracts pitched right below the limit suggests that the OAG was setting the terms of the deals to bypass the tendering process.

The OAG says it now indicates when contracts are issued to former public servants who are receiving a government pension and will review its proactive disclosure policies to see if it needs to make the same notations on older contracts.

A 2008 Citizen analysis of tendering data showed the gaming of tendering limit was prevalent in other government departments. At Treasury Board Secretariat, the Privy Council Office, Finance Canada and Public Works, a disproportionate share of the contracts issued fell in the $24,000 to $24,999 range.

The $25,000 limit on sole-sourced deals is set by Treasury Board to ensure suppliers get a fair shot at the most important work while allowing departments to move quickly on smaller contracts without having to go to tender.

With files from Jason Fekete, Ottawa Citizen