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Audit exposes $220-million in excess spending
Canadian Press
Posted on The Globe and Mail
POSTED AT 2:51 PM EDT Sunday, April 21
Halifax — The Defence Department wastes up to $220-million each year by trying to circumvent strict rules against hiring long-term employees, says a new audit.
Instead of adding staff to the payroll, the department pays so-called "professional help brokers" millions of dollars to supply long-term employees to areas where there are chronic staff shortages.
By using arm‘s-length professional contractors, officials can get around hiring restrictions that forbid temporary workers from staying on the job longer than 20 weeks.
But the scheme has a cost: the department pays a premium of as much as 50 per cent over the basic wages paid to employees supplied by the firms. Much of the excess amount becomes profit for the brokers.
"We question whether this technically-compliant practice is genuinely serving the public interest," says the November, 2001, audit, obtained under the Access to Information Act.
"These firms ... have become intermediaries in the process, adding cost but often little additional value."
An investigation determined that payments to the top 20 brokers cost the department at least $220-million in the fiscal year 1999-2000 — a five-fold increase in five years.
The dramatic increase in the use of "professional help brokers" coincides with the massive downsizing of the Canadian military in the 1990s, which removed many mid-career professionals from the ranks.
Since 1992, the Defence Department has shed about 43,000 soldiers and civilians. As a result, the department is expected to suffer from continuing staff shortages in many areas for the next decade.
Resorting to brokers to help fill job gaps often provides only an illusion of competitive bidding for professional services, the auditors found.
Typically, the department will ask for bids to provide longer-term professional help just as a temporary worker nears the end of the 20-week maximum period set by regulations.
Up to six separate companies then bid on the employment contract — all of them offering the services of the same temporary worker already on the Defence Department payroll.
In a sampling of 300 professional-service deals, the auditors found 117 that appeared — in effect — to be long-term hires. The employees, for example, all worked on site and were all paid by the day rather than by any completed task.
The investigation also found a host of other problems in the sample:
About $31 million of the deals violated specific Treasury Board contracting policies.
One manager, who was limited in authority to approving contracts worth up to $5,000, authorized a $300,000 contract.
Fourteen contracts were not put out to competitive bidding, as required.
There were six instances where professionals were hired without any contract being drawn up.
The Defence Department did not respond to requests for comments on the findings of the audit report. But in a written response to the auditors, officials said they would improve the monitoring of contracts and consider converting some contract work to full-time positions.
Canadian Press
Posted on The Globe and Mail
POSTED AT 2:51 PM EDT Sunday, April 21
Halifax — The Defence Department wastes up to $220-million each year by trying to circumvent strict rules against hiring long-term employees, says a new audit.
Instead of adding staff to the payroll, the department pays so-called "professional help brokers" millions of dollars to supply long-term employees to areas where there are chronic staff shortages.
By using arm‘s-length professional contractors, officials can get around hiring restrictions that forbid temporary workers from staying on the job longer than 20 weeks.
But the scheme has a cost: the department pays a premium of as much as 50 per cent over the basic wages paid to employees supplied by the firms. Much of the excess amount becomes profit for the brokers.
"We question whether this technically-compliant practice is genuinely serving the public interest," says the November, 2001, audit, obtained under the Access to Information Act.
"These firms ... have become intermediaries in the process, adding cost but often little additional value."
An investigation determined that payments to the top 20 brokers cost the department at least $220-million in the fiscal year 1999-2000 — a five-fold increase in five years.
The dramatic increase in the use of "professional help brokers" coincides with the massive downsizing of the Canadian military in the 1990s, which removed many mid-career professionals from the ranks.
Since 1992, the Defence Department has shed about 43,000 soldiers and civilians. As a result, the department is expected to suffer from continuing staff shortages in many areas for the next decade.
Resorting to brokers to help fill job gaps often provides only an illusion of competitive bidding for professional services, the auditors found.
Typically, the department will ask for bids to provide longer-term professional help just as a temporary worker nears the end of the 20-week maximum period set by regulations.
Up to six separate companies then bid on the employment contract — all of them offering the services of the same temporary worker already on the Defence Department payroll.
In a sampling of 300 professional-service deals, the auditors found 117 that appeared — in effect — to be long-term hires. The employees, for example, all worked on site and were all paid by the day rather than by any completed task.
The investigation also found a host of other problems in the sample:
About $31 million of the deals violated specific Treasury Board contracting policies.
One manager, who was limited in authority to approving contracts worth up to $5,000, authorized a $300,000 contract.
Fourteen contracts were not put out to competitive bidding, as required.
There were six instances where professionals were hired without any contract being drawn up.
The Defence Department did not respond to requests for comments on the findings of the audit report. But in a written response to the auditors, officials said they would improve the monitoring of contracts and consider converting some contract work to full-time positions.
