Feds gave too much control to Accenture in $313-million CEBA sole-source contracts, auditor finds
A federal Crown corporation gave international consulting firm Accenture Inc. too much control over the scope and value of a series of sole-source contracts worth $313-million to administer a COVID-19 emergency loan program, according to a new report from federal Auditor-General Karen Hogan.
In the early days of the pandemic, the federal government launched the Canada Emergency Business Account (CEBA) program, which provided loans of up to $60,000 to nearly 900,000 small businesses.
The government gave responsibility of the program to Export Development Canada (EDC), a Crown corporation, which subsequently outsourced most of the work to Accenture in a series of sole-source contracts.
Those agreements were not publicly disclosed at the time, and only became widely known after a series of stories in The Globe and Mail in 2023.
The Auditor-General released a report on the administration of CEBA on Monday, along with other reports that included one showing the government doesn’t know whether the billions of dollars it spends each year on seniors’ benefits is meeting their needs.
The report on Accenture said EDC felt it did not have the in-house capacity to run a major new loan program and immediately outsourced the work to Accenture, with which it had already had contracts for other services.
As the complexity of the endeavour grew, EDC turned again and again to Accenture, rather than open a competitive bidding process or seek out other vendors, according to the audit. As well, the Crown corporation did not do enough due diligence to ensure it was getting good value for money, the audit said.
EDC gave Accenture “too much control over key aspects of contracts, such as the scope of work and pricing, and failed to exercise basic controls in contract management, such as monitoring that amounts paid aligned with the work performed,” the report said.
Federal auditors studied Accenture invoices from April to November, 2023, and found EDC was paying an average of 14 hours a day to agents at a call centre, even though the centre was only open for nine hours a day. EDC did not notice this discrepancy at the time, the audit said, but later followed up with Accenture, which said the extra charges came from “other unreported call centre agents who were not answering calls but performing other program-related tasks.”
The audit said 92 per cent of CEBA-related contracts were sole-sourced to Accenture, worth a total of $313-million, with $29-million in other contracts split among 29 other contractors.
The audit also raised concerns about hourly rates charged by Accenture, saying that contracts reviewed by federal auditors charged hourly rates of anywhere from $60 a person per hour to $750 a person per hour, with EDC doing little to verify that the rates were justified.
EDC was aware that this degree of sole-sourcing could be a problem, according to the audit. In the spring of 2021, it began to tell the Department of Finance and Global Affairs Canada that EDC should open further loan collection contracts to other bidders. Those departments agreed, according to the audit, but were slow to give EDC direction. So, by the end of 2021, EDC decided to continue giving Accenture sole-source contracts.
The audit noted that, at one point, EDC decided to hold an informal competitive process to identify companies that could build a loan accounting system to track loans under default. EDC then asked Accenture to run the process, and the company selected one of its own subsidiaries.
As The Globe and Mail previously reported, Accenture outsourced the work to its subsidiary: One Financial in Brazil.
“Not managing that conflict of interest, in my mind, was unacceptable,” Ms. Hogan told MPs on the public accounts committee following the release of the report.
Accenture declined to comment.
EDC said it was proud of how CEBA helped thousands of small businesses and there was “no precedent or instruction manual to follow” in creating the program.
Todd Winterhalt, a senior vice-president at EDC, said the Crown corporation is updating its contracting policies in light of the audit and expects to be done by the end of the year.
The Auditor-General also said the Department of Finance should have exercised more oversight over the growing expenses of administering CEBA.
In a response included in the report, the department said it disagreed, and the EDC board of directors is the only group that should have provided oversight.
The federal government declined to address specific questions. In a joint statement, Finance Minister Chrystia Freeland and Small Business Minister Rechie Valdez said CEBA was a “historic” effort that saved thousands of small businesses and the Auditor-General did not “properly acknowledge” how difficult things were at the time.
In the report on seniors’ benefits, the Auditor-General said the federal government doesn’t know whether the billions of dollars it spends each year on the benefits is meeting their needs.
The report pointed out the annual cost of Old Age Security is on track to more than double over the next 20 years, to $181.2-billion in 2045, up from $88-billion in 2025.
OAS provides people aged 65 to 74 with up to $718 a month and those aged 75 and older with up to $790.
Ms. Hogan’s report said current OAS levels are essentially tied to the program’s founding in 1952, when the benefit began with $40 a month. The amount has increased over the years to grow in line with inflation. However, the report notes the Liberal government has long been debating – without resolution – whether it should adopt a better formula for tracking inflation that is specifically focused on seniors.
The report also looked at programs aimed at funding projects to help seniors. The government has backed 39,000 projects since 2004, worth a combined $850-million. However, the report found poor tracking of whether they delivered what was promised.
This article was first reported by The Globe and Mail
