Standing Committee on Government Operations and Estimates: May 5, 2026

2026 to 2027 Main Estimates for Public Services and Procurement Canada, Shared Services Canada and the portfolio

Date: May 5, 2026, 3:30 pm to 4:30 pm
Location: In person
Present: The Honourable Joël Lightbound, Minister of Government Transformation, Public Works and Procurement and Arianne Reza, Deputy Minister Public Services and Procurement Canada

General items

1. Opening statement

The Honourable Joël Lightbound, Minister of Government Transformation, Public Works and Procurement and Québec Lieutenant

Standing Committee on Government Operations and Estimates
2026 to 2027 Main Estimates

May 5, 2026
750 words

Opening

Good morning, Mr. Chair, thank you for inviting me to speak to the Main Estimates for Public Services and Procurement Canada and Shared Services Canada for the fiscal year 2026 to 2027.

Let me begin by acknowledging that we are gathered on the unceded territory of the Algonquin Anishinaabeg peoples.

Joining me today are:

Arianne Reza, Deputy Minister
Michael Hammond, Chief Financial Officer

From Shared Services Canada, we have:

Scott Jones, President
Scott Davis, Chief Financial Officer

Mr. Chair, Public Services and Procurement Canada – or PSPC for short – is tabling a total opening net budget of approximately $5.9 billion in the 2026 to 2027 Main Estimates, which represents a net decrease of $1.3 billion from the previous fiscal year.

Shared Services Canada – or SSC for short – is seeking a total of $2.36 billion in funding, representing a net decrease of $128.6 million year over year.

Funding requirements for both departments may be adjusted in year through Supplementary Estimates should approvals be granted.

Mr. Chair, during this time of a rapidly shifting global economic and security environment, the Government of Canada is committed to spending less so that Canadians can invest more in the people and businesses that will build the strongest economy in the G7.

The figures in front of you today demonstrate PSPC’s and SSC’s commitment to the responsible management of resources.

Both departments have made great strides in improving efficiencies and focusing on core priorities as part of the Government’s Comprehensive Expenditure Review.

Public Services and Procurement Canada year-over-year variances

Starting with PSPC, Mr. Chair, the department has reduced its overall request for funding in these Main Estimates, even as it continues work on a number of important projects.

These include standing up Canada’s new Defence Investment Agency all while continuing to provide central procurement, translation, real property management, and other common services to the Government of Canada.

Capital investment

In terms of year-over-year variances, the largest decrease in PSPC’s Main Estimates is for the long-term capital investment plan and pre-planning for capital, with a total decrease of $1.2 billion.

Mr. Chair, the Government has completed a number of significant capital investment projects. This decrease is largely due to the completion of important initiatives that are now in operation and providing benefits to Canadians, such as the Energy Services Modernization Project.

Comprehensive Expenditure Review

For the variance specifically in relation to the Government’s Comprehensive Expenditure Review, PSPC can attribute a decrease of $97.5 million in operating funding.

Important actions here include reducing the administrative burden for internal processes at the department, alongside right-sizing its workforce.

Pay and human resources

Mr. Chair, as the pay administrator for the Government of Canada, PSPC is responsible for delivering pay to over 430,000 current or former public servants from over 100 departments and agencies.

In these Estimates, we have a year-over-year decrease of $57.3 million related to the current pay administration program. At the same time, we are seeking an increase of $67.6 million to support continued rigorous testing and building of the next generation of our pay and HR system.

Additional Items

Additional variances in PSPC’s Main Estimates include, among others, a decrease of $24.8 million following the sunsetting of project funding for the now established cloud-based Electronic Procurement Solution.

This cloud-based platform is an important part of the department’s procurement modernization efforts, and it has improved the purchasing process for both government buyers and suppliers.

In addition, you may note an increase of $20.7 million funding for non-discretionary expenses associated with Crown-owned buildings and leased spaces.

This increase provides protection for accommodation costs beyond PSPC’s control, and any unspent funds at year-end are returned.

Shared Services Canada year-over-year variances

Mr. Chair, now turning to Shared Services Canada, the department remains committed to leveraging modern technology to improve service delivery to Canadians.

SSC is responsible for delivering the Government’s agenda for digital transformation, efficiency, and the deployment of AI and automation tools, including digitally sovereign solutions amidst increasing geopolitical uncertainty.

Mr. Chair, the department’s net decrease of $128.6 million year-over-year was achieved through the Comprehensive Expenditure Review and changes to the funding profiles of multi‑year initiatives.

SSC’s new funding requests include $63.9 million to support the continued delivery of core IT services across departments.

SSC is also seeking $37.5 million to support the procurement of the Security Information and Event Management solution, which will allow the department to better predict, detect and respond to cyber threats.

Closing

Mr. Chair, in an increasingly complex and fast‑changing environment, PSPC and SSC will continue to deliver on their mandates and support government operations while being responsible stewards of Canadian taxpayer dollars.

Thank you, and I am happy to take your questions.

2. Public Services and Procurement Canada and the portfolio’s 2026 to 2027 Main Estimates overview

The 2026 to 2027 Main Estimates were tabled in Parliament on February 26, 2026.

Public Services and Procurement Canada’s (PSPC) opening net budget is $5.929 billion. Compared to the 2025 to 2026 opening net budget of $7.263 billion, this is a net decrease of $1.334 billion, which is attributable mainly to the combination of items outlined below. When taking into account revenues of $4.369 billion, the Department’s gross budget will be $10.298 billion.

Table 1: Items contributing to the increase / (decrease) of 2026 to 2027 Main Estimates vs. 2025 to 2026 Main Estimates
Item	Variance (in millions)
Long-term capital investment plan and pre-planning for capital	($1,212.7)
Comprehensive Expenditure Review	($97.5)
Government of Canada’s pay administration program	($57.3)
Presidency of the 2025 G7 Summit in Canada	($27.7)
Electronic Procurement Solution	($24.8)
Non-discretionary expenses associated with Crown-owned buildings and leased spaces	$20.7
Next Generation Human Resources and Pay Strategy	$67.6
Other	($2.0)
Net decrease	($1,333.7)

The net decrease is mainly due to the following year-over-year variances

Long-term capital investment plan and pre-planning for capital

Decrease of $1.213 billion

Reason for the variance

The net decrease in capital vote 5 and pre-planning for capital reflects the department’s current funding approval to deliver on its long-term capital funding plan. The decrease primarily reflects the completion of contractual milestone payments related to significant investments in major infrastructure initiatives such as the Energy Service Modernization project. The department will seek updated approval as required in order to maintain the quality of its infrastructure for the benefit of all Canadians
Investments are made in two broad categories of assets:
- major projects and infrastructure investments: comprised of assets that enable the delivery of government programs and services administered by various client organizations and assets that are used by the general public. The four groups of assets are parliamentary, office, science and engineering assets (e.g., bridges, roads, docks)
- enabling services investments: comprised of assets that enable PSPC to deliver its programs and services and other government operations. The two groups of assets are digital assets (e.g., data modernization) and fleet assets (transition to zero emission vehicles)
These are some examples of current major capital projects:
- Centre Block Project, in support of Parliament in Ottawa
- Renewal of Place du Portage, Phase III, in Gatineau
- Block 2 Redevelopment Project, in support of Parliament in Ottawa

Comprehensive Expenditure Review

Decrease of $97.5 million

Reason for the variance

Budget 2025 announced the Comprehensive Expenditure Review (CER) aimed at reducing inefficiency and focusing on core priorities. The CER will return government spending to sustainable levels, thereby enabling direct federal spending to enhance productivity and towards capital formation. Savings will be achieved by restructuring operations and consolidating internal services and rightsizing programs to realize efficiencies. It will also involve workforce adjustments and attrition to return the size of the public service to a more sustainable level
To meet savings targets over 3 years, PSPC will undertake strategic realignments to reduce program operation costs and efficiently deliver services as a common service provider for the government. PSPC will reduce ongoing costs for its Real Property Revolving Fund, wind down activities of the Canada General Standards Board, review its internal processes to reduce administrative requirements, delayer management, and decrease spending on professional services and travel

Government of Canada’s pay administration program

Decrease of $57.3 million

Reason for the variance

Budget 2023 announced total funding of $1.038 billion (including accommodation and Shared Services Canada costs) to replace sunsetting funding to continue supporting pay administration operations and to decrease the outstanding pay transactions starting in fiscal year 2023 to 2024
Following the Budget 2023 announcement, PSPC sought further funding of $886.0 million (does not include accommodation and Shared Services Canada costs in order to align with PSPC authorities) over 2 years via an off-cycle request to continue supporting pay administration operations and to decrease the backlog of pay issues:
- $469.3 million for 2025 to 2026
- $416.7 million for 2026 to 2027

This $52.6 million year-over-year variance accounts for most of the $57.3 million decrease in this item. Funding will be adjusted, should future approvals be received.

Presidency of the 2025 G7 Summit in Canada

Decrease of $27.7 million

Reason for the variance

In 2025, Canada hosted the G7 Summit. This included welcoming world leaders to the Summit and organizing a series of ministerial meetings led by Global Affairs Canada in collaboration with 12 departments and agencies
Since Canada hosts the presidency on a rotating basis every 7 years, PSPC does not maintain a permanent team or ongoing operational resources for this work
PSPC received funding in 2025 to 2026 for G7 leases for offices, the Summit’s main and supporting venues as well as procurement services, interpretation services, event management services, and project management activities. Funding is no longer required in 2026 to 2027

Electronic Procurement Solution

Decrease of $24.8 million

Reason for the variance

The Electronic Procurement Solution (EPS), which was completed on June 30, 2023, established a cloud-based solution that provides Canada with a powerful, accessible and modern digital procurement platform. This cloud-based ecosystem provides key enabling technologies such as SAP Ariba & Fieldglass for core procurement functions, ServiceNow for help desk functionality, and the Canada Buys portal as a single window to the federal government and the broader public Canadian sector
Project funding for the EPS has sunset. Funding announced in Budget 2023, which included $24.8 million for 2025 to 2026, has also sunset and was for the steady-state operation of the EPS within PSPC
Funding will be adjusted should future approvals be received

Non-discretionary expenses associated with Crown-owned buildings and leased spaces

Increase of $20.7 million

Reason for the variance

This funding provides PSPC protection for accommodation costs, which are beyond the department’s control such as inflation (price) and fluctuations in the space required to accommodate public servants (volume) within Crown-owned buildings and leased spaces. The costs relate to building operation items such as rent, utilities, and payments in lieu of taxes
In return for this protection, unspent funds at year-end are returned to the fiscal framework

Next Generation Human Resources and Pay Strategy

Increase of $67.6 million

Reason for the variance

Budget 2024 announced $112.1 million (including accommodation and Shared Services Canada costs) for PSPC in 2024 to 2025, to support the Next Generation Human Resources (HR) and Pay Initiative and assess the feasibility of the Government of Canada’s transition to a Software-as-a-Service integrated HR and pay solution (Dayforce), measures to consolidate and improve human resources and pay for the public service, and support sound data management practices for HR and pay
In 2025, PSPC sought further funding of $547.9 million (does not include accommodation and Shared Services Canada costs in order to align with PSPC authorities) over 2 years via an off-cycle request:
- $233.4 million for 2025 to 2026 was to finalize building and testing the solution and begin carrying out change management activities with departments and agencies
- $314.5 million for 2026 to 2027 is to finalize building and testing the new integrated HR and pay solution and for PSPC to undertake partial definition and execution activities

This $81.1 million year-over-year variance accounts for most of the $67.6 million increase in this item.

Other

The net remaining decrease of $2.0 million is negligible and the result of funding variances in miscellaneous projects and activities.

Crown Corporation 2026 to 2027 Main Estimates overview

Public Services and Procurement Canada’s (PSPC) portfolio crown corporations will be receiving a total of $182.2 million in appropriations via the 2026 to 2027 Main Estimates – of which $22.2 million is for Canada Post, and $162.0 million for the National Capital Commission – representing a combined net decrease of $1.052 billion compared to the 2025 to 2026 Main Estimates.

Table 2: Items contributing to the increase and (decrease) of 2026 to 2027 Main Estimates vs. 2025 to 2026 Main Estimates
Item	Variance (in millions)
Canada Post
Cash injections under section 31 of the Canada Post Corporation Act	($1,034)
National Capital Commission
Upkeep of heritage and capital assets	$1.2
Operating expenditures	($4.3)
Gatineau-Ottawa tram project	$2.7
Phase IV of the Federal Contaminated Sites Action Plan	($10.1)
Economic increase for employees	$0.1
2 Billion Trees program	$0.6
Refocusing government spending	($0.8)
Comprehensive Expenditure Review	($7.2)
Net decrease for Canada Post and the National Capital Commission	($1,051.80)

The net decrease is mainly due to the following year-over-year variances:

Cash injections under section 31 of the Canada Post Corporation Act

Decrease of $1.034 billion

Reason for the variance

As announced in January 2025, the Government provided Canada Post with a repayable cash injection of up to $1.034 billion in the 2025 to 2026 Main Estimates to ensure that the corporation could maintain its solvency and continue to serve Canadians while working with the Government on the changes required to ensure the long-term viability of the postal system. Canada Post is expected to require additional cash injections in 2026 to 2027; however, no such funds are included in the 2026 to 2027 Main Estimates. This is largely due to timing. Additional amounts should be expected to be included in the 2026 to 2027 Supplementary Estimates
Canada Post continues to receive an annual appropriation of $22.21 million for 2026 to 2027, an amount that has remained unchanged since 2000. The appropriation offsets the cost of delivering parliamentary mail and materials for the use of blind persons, which are sent free of postage as per the Canada Post Corporation Act

National Capital Commission

Decrease of $17.8 million

The decrease reflects lower capital expenditures for Phase V of the Federal Contaminated Sites Action Plan as well as operating reductions stemming from the refocusing government spending exercise, the CER, and other operating adjustments
The funding will be used to advance work supporting the upkeep of heritage and capital assets (2022 Fall Economic Statement), studies for the Gatineau-Ottawa tram project (2024 Fall Economic Statement), environmental initiatives (Phase V of the Federal Contaminated Sites Action Plan), and employee economic increases

3. Public Services and Procurement Canada’s 2026 to 2027 Departmental Plan

Issue

On March 13, 2026, the 2026 to 2027 Departmental Plan for Public Services and Procurement Canada was tabled in the House of Commons by the President of the Treasury Board.

Key facts

The planned spending for the department totals $5.9292 billion for fiscal year 2026 to 2027; $4,646.1 million for fiscal year 2027 to 2028; and $4.5209 billion in 2028 to 2029
As part of the Comprehensive Expenditure Review, Public Services and Procurement Canada plans the following spending reductions:
- 2026 to 2027: $108.9 million
- 2027 to 2028: $147 million
- 2028 to 2029: $190.8 million
- 2029 to 2030: $196 million
- 2031 and ongoing: $190 million annually
It is anticipated that these spending reductions will result in a decrease of approximately 1,793 full-time equivalents by 2028 to 2029

Key messages

In 2026 to 2027, Public Services and Procurement Canada will continue to implement ambitious programs to modernize its services, strengthen the Canadian economy, and support nation-wide defence and security priorities
In doing so, Public Services and Procurement Canada will leverage Artificial Intelligence and digital tools to make government services faster, more efficient, and easier to use
The department will also support Canada’s economic growth through the new Buy Canadian Procurement Policy Framework and related programs, which require that Canadian suppliers, materials and content be prioritized in federal procurement

Background

The Departmental Plan outlines the 2026 to 2027 planned resources and activities that Public Services and Procurement Canada (PSPC) will undertake on behalf of Canadians and other federal organizations. The Departmental Plan is a mechanism of ministerial accountability, communicating departmental expenditure plans for the next three years, as well as the organization’s priorities and expected results of the next fiscal year. The Plan is tabled annually in Parliament and made available to all Canadians.

The forecasted spending reductions of the Comprehensive Expenditure Review are in response to the government’s commitment to restrain the growth of day-to-day operational spending to make investments that will grow the economy and benefit Canadians.

Canadian General Standards Board

As announced in Budget 2025, the Canadian General Standards Board ceased operations on April 1, 2026. As some residual resources associated with this Program will remain in place during the 2026 to 2027 fiscal year, the Program has been retained in PSPC’s Program Inventory for this year to ensure appropriate financial follow-up as operations are wound down.

4. Shared Services Canada 2026 to 2027 Main Estimates overview

Shared Services Canada (SSC) is seeking a total of $2.36 billion through the 2026 to 2027 Main Estimates to support its role as the information technology (IT) service provider for the Government of Canada (GC). This amount represents a net decrease of $128.6 million, compared to the 2025 to 2026 Main Estimates of $2.49 billion. The available funding for 2026 to 2027 is net of $1.063 million in revenue.

The net decrease in SSC’s reference levels includes:

$101.4 million in new funding for IT services and initiatives
($0.9 million) in transfers between departments
($240.0 million) in other adjustments related to the Comprehensive Expenditure Review as announced in Budget 2025 and adjustments for changes in funding profiles for multi‑year initiatives and projects, offset by an increase for compensation adjustments
$10.9 million for Employee Benefit Plan (EBP) adjustments

The main contributors to the overall decrease are the budget reductions from Budget 2025’s Comprehensive Expenditure Review, offset by new funding for IT services and for the Security Information and Event Management (SIEM) solution.

Table 3: Items sought in 2026 to 2027 Main Estimates (Amounts in millions)
NEW FUNDING	$101.4
Funding for core IT services	$63.9
Funding for Security Information and Event Management solution	$37.5
TRANSFERS	($0.9)
From other departments
From Public Services and Procurement Canada (PSPC) for the CanAI Garage initiative	$6.4
From various organizations for the Microsoft 365 E5 license requirements	$3.1
From PSPC for reimbursement related to reduced accommodation requirements as a result of data centre consolidations	$0.9
To other departments
To Treasury Board Secretariat (TBS) for contributions to the Communications Community Office	($0.05)
To the Royal Canadian Mounted Police (RCMP) for law enforcement record checks	($0.1)
To various organizations for the management of forensic software licenses	($1.0)
To various departments related to the Government IT Operations (Enterprise Service Model) for revenue in lieu of appropriation	($10.1)
OTHER ADJUSTMENTS	($240.0)
Budget 2025: Comprehensive Expenditure Review	($156.4)
Adjustments in funding related to multi-year initiatives and projects where funding profiles changed	($85.8)
Funding for compensation adjustments	$2.2
Statutory Appropriations	$10.9
Employee Benefit Plan (EBP)	$10.9
Total	($128.6)

Table 4: Vote-Netted Revenue
Vote-Netted Revenue (VNR)	NIL
An increase of $100.0 million due to rising service volumes driven by activities to support the Department of National Defence's (DND) operational and modernization priorities	$100.0 ($100.0)
An increase of $110.0 million to support the management of software and services agreements on behalf of the GC	$110.0 ($110.0)
Extension of the existing $60.0 million capital VNR authority that allows SSC to treat capital recoveries as respendable revenue from April 1, 2026 to March 31, 2029	$60.0 ($60.0)

New funding: $101.4 million increase

(A) Funding for core Information Technology services

$63,908,569

Purpose

The funding of $63.9 million is to support the onboarding of new full-time equivalents (FTE) with core IT services, such as uniform network services, software and hardware for workplace technology devices, and technology-related services.

(B) Funding for security information and event management solution

$37,512,449

Purpose

The funding of $37.5 million will support the procurement of a new enterprise Security Information and Event Management solution, which will automate cyber threat detection and response across GC networks.

Transfers: ($0.9 million) decrease

(C) Transfers between Shared Services Canada and other organizations

Transfer of ($883,097)

Purpose

Transfers between SSC and other organizations for various initiatives totalling a decrease of ($0.9 million) for 2026 to 2027:

Transfer from PSPC of $6.4 million for the CanAI Garage initiative
Transfer from various organizations of $3.1 million for Microsoft 365 E5 license requirements
Transfer from PSPC of $0.9 million for reimbursement related to reduced accommodation requirements as a result of data centre consolidations
Transfer to TBS of ($0.05 million) for contributions to the Communications Community Office
Transfer to the RCMP of ($0.1 million) for law enforcement record checks required by SSC’s security screening program
Transfer to various organizations of ($1.0 million) for the management of forensic software licenses
Transfer to various departments ($10.1 million) related to the Government IT Operations (Enterprise Service Model) for revenue in lieu of appropriation

Other Adjustments: ($240.0 million) decrease

(D) Reductions to implement the Comprehensive Expenditure Review

($156,364,940)

Purpose

A total decrease of ($156.4 million) due to the reductions to implement the Comprehensive Expenditure Review as announced in Budget 2025. SSC has committed to achieve savings by:

Driving efficient enterprise solutions and controlling consumption
Reducing reliance on legacy systems
Artificial intelligence, automation and modernizing business processes
Reducing dependence on professional services

(E) Adjustments in funding related to multi-year initiatives and projects

($85,779,637)

Purpose

A net decrease of ($85.8 million) due to changes to funding profiles for multi-year initiatives and projects.

The changes are a result of time-limited funding or variations in funding from year-to-year. These adjustments are due to:

an increase of $26.7 million for Safeguarding Access to High Performance Computing equipment for Canada’s Hydrometeorological Services due to changes in the funding profile
a decrease of ($31.3 million) for Secure Cloud Enablement and Defence Evolution and Departmental Connectivity and Monitoring initiative due to changes in funding profile
a net decrease of ($18.0 million) related to the Refocusing GC Spending (Budget 2023 Reductions) representing additional reductions from 2024-2025 for operating efficiencies and non-standard legacy services
a decrease of ($16.3 million) for Canada's 2025 G7 Presidency due to time-limited funding
a decrease of ($6.6 million) for Cyber and Information Technology Security Projects due to changes in funding profile
a decrease of ($0.6 million) for the Standardization of Mandatory Network, Security and Digital Services for Small Departments and Agencies due to changes in funding profile
a net decrease of ($39.7 million) for various projects and initiatives such as time-limited funding for core IT services, compensation adjustments, and transfers with other departments

(F) Compensation adjustments

$2,162,203

Purpose

An increase of $2.2 million for compensation adjustments resulting from recently concluded collective agreements and updated terms and conditions of employment.

Statutory appropriations: $10.9 million increase

(G) Employee Benefit Plan

$10,835,272

Purpose

The increase to SSC’s statutory appropriations of $10.9 million is related to EBP contributions resulting from adjustments for the following:

A total of $11.4 million (Statutory) related to new items:
- An increase of $11.3 million (Statutory) related to a comprehensive adjustment to the EBP rate from 15.3% to 16.4%
- An increase of $1.6 million related to transfers with other departments
- An increase of $1.0 million (Statutory) for EBP related to the Security Information and Event Management Solution as announced in the Fall Economic Statement 2022
- An increase of $0.4 million (Statutory) for EBP related to appropriations for compensation adjustments for newly signed collective agreements; offset by
- A decrease of ($2.9 million) (Statutory) for the cost of EBP related to the Comprehensive Expenditure Review
A net decrease of ($0.5 million) (Statutory) in EBP related to multi-year initiatives and projects where salary funding profiles changed

Net nil effect

(H) Vote netted revenue

$270,000,000

Purpose

An increase of $210.0 million in operating VNR Authority:
- An increase of $100.0 million due to rising service volumes driven by activities to support the DND’s operational and modernization priorities
- An increase of $110.0 million to support the management of the software and services agreement on behalf of the GC
Extension of the existing $60.0 million capital VNR authority that allows SSC to treat capital recoveries as respendable revenue from April 1, 2026 to March 31, 2029
- Respendable revenues are a type of revenue that, once received, increases departmental spending authority

5. Shared Services Canada’s 2026 to 2027 Departmental Plan

Issue

Shared Services Canada’s 2026 to 2027 Departmental Plan outlines the department’s mandate and details its commitments, priorities and expected results for the coming fiscal year.

Key facts

Table 5: Shared Services Canada’s spending and employees by fiscal year
Category	2023 to 2024 (Actual)	2024 to 2025 (Actual)	2025 to 2026 (Forecast)	2026 to 2027 (Planned)	2027 to 2028 (Planned)	2028 to 2029 (Planned)
Spending (millions)	$2,791	$2,617	$2,699	$2,362	$2,266	$2,101
Employees (full-time equivalents)	9,276	9,346	8,928	8,796	8,656	8,344

Key messages

Shared Services Canada is driving digital enterprise solutions that will transform how government works—improving the speed, reliability and cost effectiveness of enterprise services
Shared Services Canada is modernizing enterprise application integration and common digital platforms to reduce duplication, retire legacy systems and enable departments to deliver services more efficiently and cost effectively
Shared Services Canada is advancing artificial intelligence by building infrastructure, piloting automation use cases, developing Canadian-centric artificial intelligence tools, and establishing governance frameworks to ensure privacy, security and innovation
Shared Services Canada is equipping public servants with modern, standardized digital tools that improve how they work and enhance service delivery to Canadians

If pressed on specific initiatives for 2026 to 2027:

Digital services

Shared Services Canada will support digital transformation across the Government of Canada by:
- advancing the Enterprise Desktop Solution (EDS) proof-of-concept with up to 10 departments, which will replace the separate management of desktops by each department with modern, unified desktop management across the Government of Canada. This will reduce duplication, lower costs and enhance security
- rolling out softphones (Internet-based phones) to all departments, which will reduce telephony costs; eliminating an additional 100,000 traditional fixed telephone lines; and targeting a 50% reduction in the number of mobile devices across the Government of Canada
- expanding the Protected B secure messaging solution to approximately 50,000 government-issued devices, strengthening digital sovereignty, enhancing security and reducing reliance on foreign-hosted cloud services
- centrally procuring and testing off-the-shelf generative artificial intelligence productivity tools for use across government to help automate and streamline common tasks
- transitioning the Government of Canada’s in-house generative artificial intelligence chatbot, CANChat, into an enterprise service and increasing its security level to Protected B, providing enhanced artificial intelligence-driven capabilities to employees
- advancing an enterprise-wide approach to financial management through a common digital solution instead of many different solutions

Hosting

Shared Services Canada will strengthen digital sovereignty and improve efficiency by:
- developing a backup capability—enabling data recovery in the event of failure or loss—that meets data residency and sovereignty requirements to keep data secure and under Canadian control
- creating a sovereign private cloud environment, starting with core capabilities like compute, storage and networking, and scaling to add additional services over time
- developing 3 to 5 new standardized enterprise applications, reducing duplication and maintenance costs
- continuing to work with Environment and Climate Change Canada on its weather supercomputer, a powerful system that supports accurate weather forecasting, air quality alerts and climate modelling
- continuing and accelerating the migration of legacy applications and data from 150 legacy facilities, building on the closure of more than 500 aging data centres
- migrating applications from 105 departmental cloud environments into a standardized, secure, Protected B Government of Canada platform

Connectivity and cyber security

Shared Services Canada will continue to expand and modernize Government of Canada network infrastructure by:
- implementing tools to intelligently route network traffic, improving speed and service quality
Shared Services Canada will also continue to strengthen cyber security across government by:
- creating a secure classified cloud environment and launching an enterprise platform for secure voice, video and messaging communications
- advancing its zero trust framework, which means no user or device is trusted automatically, even within the network
- using the Endpoint Visibility, Awareness and Security initiative to automatically identify network-connected endpoints—such as desktops and servers—and verify they meet security requirements. Endpoint Visibility, Awareness and Security will also provide continuous monitoring and automated response to cyber events
- deploying a Security Information and Event Management solution to automate and accelerate large parts of the security monitoring process, which will help Shared Services Canada better predict, detect and respond to cyber threats

Service delivery

Shared Services Canada will support science by:
- integrating artificial intelligence and adding other enhancements to the Federal Science DataHub to improve analysis and collaboration
- implementing artificial intelligence-powered search into the Federal Open Science Repository of Canada to improve user experience and the visibility of Canadian science
Shared Services Canada will also support partners by:
- modernizing the Department of National Defence information technology infrastructure to enhance security, resilience and performance, including in remote locations
- supporting the integration of Canadian Coast Guard information technology systems with Department of National Defence to strengthen security and interoperability
- leading the development of a new central financial management platform to replace 42 separate aging systems supported by 5 different commercial suppliers, reducing administrative burdens, eliminating duplication and reducing costs

If pressed on declining spending:

Shared Services Canada’s planned budget decreases from 2026 to 2027 and 2028 to 2029 are mainly due to the Comprehensive Expenditure Review announced in Budget 2025, as well as decreases to funding for network, security and digital services standardization for small departments and agencies and for high-performance weather computing
Shared Services Canada has also reduced spending on professional and special services by $81 million, from $477 million in 2022 to 2023 to $396 million in 2024 to 2025

Background

Departmental plans provide parliamentarians and Canadians with an understanding of the results the government aims to achieve over the next three years with the resources provided in the Main Estimates. These plans outline each department’s overall program structure, planned financial investments and the human resources allocated to each program and subprogram.

Key issues

6. Comprehensive Expenditure Review

Issue

Budget 2025 announced the Comprehensive Expenditure Review aimed at reducing inefficiency and focusing on core priorities.

Key facts

To meet up to 15% of savings targets over 3 years, Public Services and Procurement Canada will undertake strategic realignments to reduce program operation costs and efficiently deliver services as a common service provider for the government
Public Services and Procurement Canada plans the following spending reductions:
- 2026 to 2027: $108.9 million
- 2027 to 2028: $147 million
- 2028 to 2029: $190.8 million
- 2029 to 2030: $196 million
- 2031 and ongoing: $190 million annually
It is anticipated that these spending reductions will result in a decrease of approximately 1,793 full-time equivalents by 2028 to 2029

Key messages

Public Services and Procurement Canada is committed to responsible stewardship of public funds by reducing operational inefficiencies and focusing on core mandates, while continuing to deliver reliable services for Canadians
Public Services and Procurement Canada is undertaking strategic realignments to reduce program operating costs, modernize internal processes, reduce spending on professional services and travel, and enhance service delivery through digital and artificial intelligence enabled tools
These changes will be implemented gradually through attrition and organizational adjustments, while continuing to support government priorities and effective delivery as a common service provider

Background

Per Budget 2025, Public Services and Procurement Canada (PSPC) will achieve the reductions previously stated by doing the following:

undertake strategic realignments to reduce ongoing costs to operate programs and efficiently deliver services as a common service provider for the government
reduce ongoing costs for its Real Property Revolving Fund by focusing on core mandates, modernizing operations, and reducing duplicative functions
wind down activities of the Canada General Standards Board, as this optional service will be better served via alternative organizations given that there are 15 other accredited Standards Development Organizations operating in Canada
reduce funding to pilot and innovation projects for Laboratories Canada
review its internal processes to reduce administrative requirements and delayer management;
advance digital delivery of procurement-related documents and better manage project delivery, and reduce spending on professional services and travel
implement the use of artificial intelligence chat bots and self-service tools to improve service delivery

7. Buy Canadian

Issue

On December 16, 2025, the Government of Canada announced the coming into force of core elements of the Buy Canadian Policy to strengthen domestic industries and ensure federal procurement spending benefits Canadian businesses.

Key facts

In fiscal year 2024 to 2025, Public Services and Procurement Canada, as Canada’s central purchasing agent, awarded $55.6 billion in contracts for goods, services and construction. Of this, approximately $50.9 billion (91%) was awarded to suppliers operating in Canada
Between April 2025 and February 2026, Public Services and Procurement Canada, as a common service provider, awarded 1,637 contracts and amendments for approximately $9.3 billion to suppliers located outside of Canada. Of this amount, 768 contracts and amendments were awarded for defence purposes representing 96% ($8.9 billion) of the total value

Key messages

Effective December 16, 2025, the government rolled out the core elements of Buy Canadian and new procurement rules that apply across all federal institutions
The new policies help create strong Canadian supply chains by prioritizing Canadian suppliers and Canadian-made goods and services whenever possible in major federal acquisitions
These measures support key Canadian sectors, including steel, aluminum and wood products, and help Canadian industries become more self-sufficient and resilient to changes in the global economy

Background

On September 5, 2025, the Prime Minister announced an expanded Buy Canadian Policy that introduces a suite of new measures to prioritize Canadian suppliers, materials, and innovation across federal procurement and funding programs.

On November 4, 2025, the Prime Minister outlined nearly $186 million in new funding from Budget 2025 to fully implement the Buy Canadian Policy and ensure it delivers lasting results for Canadian businesses and workers.

On December 16, 2025, the Minister of Government Transformation, Public Works and Procurement and Quebec Lieutenant announced the coming into force of core elements of the Buy Canadian Policy, which fundamentally changes how the federal government purchases goods and services.

The Buy Canadian Policy applies to all federal departments and agencies, Crown corporations, as well as across federal grants and contributions programs.

Public Services and Procurement Canada developed the Buy Canadian Procurement Policy Framework that encompasses a number of new measures.

Policies under the framework that have come into force, effective December 16, 2025, include:

the Policy on Prioritizing Canadian Suppliers and Canadian Content in Strategic Federal Procurements that gives priority to Canadian businesses and Canadian content for major federal procurements. This applies immediately to large, strategic procurements valued at $25 million and over, and will expand to procurements valued at $5 million and above by June 2026
the Policy on Prioritizing Canadian Materials in Federal Procurements that requires suppliers working on defence and construction contracts valued at $25 million and over to use Canadian steel, wood products and aluminum where these inputs are necessary. This Policy will have the required flexibility to introduce additional materials as required
those active files span a wide range of federal priorities, including facility management at CFB Saint-Jean (DND); medical transportation claims processing (ISC); psychological suitability screening (RCMP); breathing apparatus maintenance (DND); Small and Mini Uncrewed Ground Vehicle Systems (DND); and line of communication bridge systems (DND)

Measures that are expected by Spring 2026 include:

the launch of a Small Business Procurement Program that will create specific streams of procurement for small and medium businesses, and will also help them navigate the federal procurement system more easily

As noted in the September 5 announcement on the Buy Canadian Policy, Public Services and Procurement Canada is also developing a roadmap to support provinces, territories and municipalities in applying similar standards to their own procurement.

8. Old Age Security payment issues

Issue

Media is reporting on delays and errors in payments to seniors in the delivery of Canada’s Old Age Security pension benefits.

Key facts

In 2021, Public Services and Procurement Canada awarded a competitive contract to IBM for Cúram software, currently valued at $135.6 million, excluding taxes
Implementation of Old Age Security on Cúram was contracted to Deloitte Inc. in April 2022 following a competitive procurement process. The current value of that contract is $315 million, excluding taxes
Old Age Security was the first benefit delivered on the new Cúram-based Benefits Delivery Modernization platform, with 7.4 million seniors receiving benefits since April 2025

Key messages

Public Services and Procurement Canada remains committed to achieving value for money under the broader Benefits Delivery Modernization program through active contract management, including rigorous cost control and oversight mechanisms
Public Services and Procurement Canada’s role is limited to procurement and contract management. System operation and benefit payments are the responsibility of Employment and Social Development Canada

If pressed on comparisons to SAAQclic:

initial cost estimates for complex information technology programs are based on preliminary and an often incomplete view of the work needed to deliver solutions that operate correctly and fully protect Canadians’ personal information
Benefits Delivery Modernization work is being procured in phases to reduce risk and regularly test the market for best value as requirements are increasingly better defined
work to implement the Old Age Security system was competitively procured in accordance with Canada’s contract cost principles

Background

Benefits Delivery Modernization (BDM) is a long-term federal initiative to replace obsolescent systems used to deliver payments to Canadians for Old Age Security (OAS), Employment Insurance and the Canada Pension Plan. Public Services and Procurement Canada (PSPC) supports the program by conducting competitive procurements and managing contracts on behalf of Employment and Social Development Canada (ESDC). Individual benefits are onboarded in stages to manage risk and ensure service continuity. PSPC continues to work with ESDC to apply lessons learned as additional benefits are modernized.

Through a competitive procurement process, PSPC awarded four Master Systems Integrator Contracts to four qualified Systems Integrators in Spring 2021. OAS implementation work was competed between these suppliers.

PSPC managed BDM contracts include the travel provisions to reimburse the cost of authorized travel and living expenses. All payments are subject to government audit.

9. Update on the move to Dayforce

Issue

Progress continues to be made on the transition from the Phoenix system to the Dayforce human resources and pay solution.

Notes

All questions related to the mental health of public servants, collective agreements, overpayment write-offs due to the six-year statutory restriction and compensation for Phoenix damages should be directed to the President of the Treasury Board
Issues related to income tax are under the purview of the Minister of Finance and National Revenue

Key facts

As of March 25, 2026, the overall inventory of transactions waiting to be processed at the Pay Centre has decreased by 65% since the peak of January 2018, representing a reduction of 412,000 transactions

Key messages

The Government of Canada remains committed to supporting employees and continues to take action and implement measures on all fronts to resolve public service pay issues
In July 2025, the Government of Canada shifted its focus to finalizing the design and build of the Dayforce solution, which reinforces its commitment to digital transformation focused on transparency, efficiency, and paying employees accurately and on time
The Dayforce solution is progressing well, with pre-implementation activities underway, including design and build
Enterprise testing is set to begin in summer 2026. The Canadian Nuclear Safety Commission will deploy first, followed by Public Services and Procurement Canada and Shared Services Canada, with all three having a planned go-live date in 2027 to 2028

If pressed on the effects of Workforce Adjustment and the backlog:

as part of workforce adjustment, affected employee accounts will be resolved, including any backlog cases
collaboration with client departments, ongoing monitoring of intake patterns, and capacity allocation according to case complexity are critical to mitigating risk. Adjustments to prioritization strategies will be required to protect service standards and maintain overall backlog stabilization

If pressed on the 10-year Phoenix report by the Professional Institute of the Public Service of Canada:

while meaningful progress has been achieved, Public Services and Procurement Canada acknowledges that some employees continue to experience pay issues
the department continues to invest in the stabilization of the current system while providing targeted, compassionate support to affected employees
this includes:
- the increased use of technological tools now makes it possible to process a large volume of compensation cases, speeding up the resolution of complex transactions and significantly reducing processing times
- continued modernization of human resources and pay management processes, and standardization of pay processes across departments

Background

In 2025 to 2026 and 2026 to 2027, Public Services and Procurement Canada (PSPC), in collaboration with its partners, will focus on finalizing the building and testing of the Dayforce solution. In parallel, essential change management activities will be undertaken to support departmental, operational, and enterprise readiness for a potential deployment.

On August 21, 2025, the acquisition of Dayforce by Thoma Bravo, a private equity firm specializing in software investments, based in the United States, was announced. The contract between the Government of Canada and Dayforce, which was amended on March 31, 2025, remains valid. The solution is hosted in Canada and all the resources who work on the contract directly require Canadian clearances or equivalent. The contract also requires that all data be stored in Canada. Dayforce reaffirmed its commitments to the Government of Canada and emphasized that the acquisition would not affect the existing partnership, service delivery, or contractual obligations.

Since the launch of Phoenix, PSPC has implemented a series of measures focused on stabilizing the administration of pay. We have also focused on other operational priorities in pay administration including parental leave, disability management, terminations, and overpayment recovery. We have improved service standard compliance while managing sustained increases of transactions submitted to the Pay Centre by departments and agencies. PSPC is looking at Artificial Intelligence (AI) to further automate case processing. AI will play a key role in managing transactions at the Pay Centre, and it will help to process transactions faster, with greater efficiency and accuracy. We are also taking a proactive approach to transparency by publicly sharing updates on our AI activities and achievements.

In addition, the Automated Benefit Enrollment initiative is a multi-phase project designed to streamline and automate benefits enrollment. By reducing manual processes, this initiative allows compensation advisors to focus on complex transactions across the Government of Canada.

Dayforce

Following extensive research, rigorous testing and a comprehensive feasibility assessment, the Government of Canada confirmed that Dayforce will replace Phoenix and more than 30 existing HR systems. This new approach is grounded in lessons learned, including strengthened governance, robust engagement with departments and bargaining agents, phased implementation, and full transparency.

As part of the change management approach, training will be a key factor for success and efforts to begin supporting organizations in their readiness to onboard have already begun. These efforts aim to ensure a smooth transition and reflect the government’s commitment to transparency, efficiency, and paying public servants on time and accurately.

Overpayments

Since October 2021, we have increased our efforts to seek repayment from employees and former employees who were overpaid. In the 2025 calendar year, pay accuracy now sits around 98.4%, and most remaining errors are caused by human resources (HR) actions that are delayed or entered incorrectly. The most common cause of an overpayment is a late entry or processing of a transaction that affects an employee's pay, which accounts for about 70% of all overpayments. Strong HR management and accountability are essential. Departments and managers must enter information on time and accurately. When they do not, it can lead to incorrect pay, including overpayments. The Pay Centre provides regular updates where the importance of timely and accurate data entry by HR within our client departments is reiterated.

Additionally, as part of the Unified Actions for Pay (UAP) initiative, Treasury Board of Canada Secretariat and PSPC introduced new measures to strengthen HR and pay practices and improve the reliability and consistency of HR data. These measures support better pay outcomes for employees, increase system automation and enhance data quality within existing procedures and standards.

Status of the backlog

As of March 25, 2026, the overall inventory of transactions waiting to be processed at the Pay Centre has decreased by 65% since the peak of January 2018, representing a reduction of 412,000 transactions. Additionally, there are 92,000 outstanding transactions over one year old, a decrease of 6,000 from the previous month.

Between April 2025 and June 2026, PSPC estimates that it will process a total of 122,500 backlog and priority cases as part of its commitment to the backlog and in preparation for the initial onboarding to Dayforce.

10. Office of the Auditor General’s report on Modernizing the Pay System

Issue

The objective of the Office of the Auditor General’s audit was to examine if the Treasury Board of Canada Secretariat and Public Services and Procurement Canada were managing the Human Resources and Pay Transformation Project so that they could ensure that federal public servant's pay transactions would be accurate and on time, and the project would provide value for money, once implemented. There were 3 recommendations implicating Public Services and Procurement Canada.

Key facts

As of March 25, 2026, the overall inventory of transactions waiting to be processed at the Pay Centre has decreased by 65% since the peak of January 2018, representing a reduction of 412,000 transactions

Key messages

The Auditor General found that we are managing the project to transform the pay system so that public servants will be paid accurately and on time and that the project will provide value for money once implemented
Public Services and Procurement Canada accepts the Auditor General’s recommendations and will continue to implement them
Public Services and Procurement Canada is working with the Treasury Board of Canada Secretariat to review existing service standards and government-wide reporting mechanisms to ensure they remain relevant in today’s environment and support timely and accurate pay
Also, Public Services and Procurement Canada will include costs to transition departments and agencies to the new system in its cost estimates, and will demonstrate good value for money by measuring whether costs to process pay transactions in Dayforce will decrease compared to the current state

If pressed on the Phoenix replacement costs ($4.2 billion) outlined in the Auditor General's report:

the high-level estimates that referenced the $4.2 billion figure were based on the preliminary analysis of project costs
deploying a modern human resources and pay solution for the federal public service is being informed by a carefully planned phased approach to implementing the transformation and costs to onboard to the new system will be developed in due course

If pressed on additional costs for cloud extensions:

foundational work has been undertaken to standardize and simplify business processes in preparation for Dayforce. Approximately 200 human resource processes have been standardized. However, there are some unique Government of Canada requirements that will not change. Examples include acting and retroactive payment rules
to meet these unique needs, Dayforce is building cloud extensions. They are part of the vendor’s standard cloud service, designed to work with the core system without creating a separate, customized version that the government would need to maintain
there are currently 9 cloud extensions planned for Dayforce to meet enterprise Government of Canada human resources and pay requirements. As a comparison, Phoenix has hundreds of customizations

Background

The Office of the Auditor General of Canada has tabled a report examining the government’s efforts to modernize the federal pay system following the challenges associated with the Phoenix pay system.

The Auditor General found that progress was slow regarding the simplification of pay rules, that Public Services and Procurement Canada (PSPC) made limited progress in eliminating the backlog of pay transactions, and that PSPC had gaps in its preliminary cost estimates. The Auditor General concluded that the Treasury Board Secretariat (TBS) and PSPC are managing the HR-to-Pay Transformation in a way that ensures the future system will deliver accurate pay on time and demonstrate value for money.

The Auditor General recommends that TBS and PSPC fix gaps in service standards, and that PSPC assess and mitigate any adverse effects of its backlog reduction approach, especially for departments that will onboard Dayforce later in the project, while considering factors that could increase pay transactions, such as workforce reductions. The Auditor General further recommends that PSPC’s cost estimates include costs to transition departments and agencies to the new system, and that PSPC determine if costs to process pay transactions will decrease with Dayforce, compared to the current state.

Lessons learned from previous pay initiatives

We are taking a cautious and deliberate approach to reduce operational risks, avoid mistakes of the past, and apply lessons from Goss Gilroy’s 2018 independent review, such as:

a single project sponsor and broad, inclusive governance supported by an effective challenge function and 3rd party oversight
proactive and open communication of relevant details, project documentation, and decisions through the Transparency by Design initiative
engaging and involving public servants and bargaining agents through sessions to build awareness, validate requirements, and comprehensively test the new system
Public Services and Procurement Canada will deploy Dayforce across the Government of Canada in a structured, phased approach to reduce risk, manage complexity, incorporate lessons learned and verify readiness across departments. Each phase is interdependent and includes detailed deliverables, timelines, and governance checkpoints

Government transformation

11. Red Tape Reduction measures

Issue

In response to the red tape review process led by the President of the Treasury Board, Public Services and Procurement Canada and the National Capital Commission reviewed their regulations to reduce administrative burden, modernize processes and eliminate outdated regulations.

Key facts

Public Services and Procurement Canada operates under 20 acts and 27 regulations
In total, through consolidation, comprehensive reviews, and targeted amendments, the department is reducing red tape related to 14 of its regulations

Key messages

To enhance agility, improve clarity, and reflect evolving technologies and practices, Public Services and Procurement Canada is consolidating and revising its regulatory framework by developing new Harmonized Procurement Regulations and updating other operational regulations, such as the Translation Bureau and Controlled Goods Regulations
Moving forward, all the organizations in the portfolio will continue to seek ways to eliminate red tape in their programs, policies, processes and service delivery

Background

On July 9, 2025, the President of the Treasury Board called on all ministers with regulatory responsibilities to undertake a 60-day review of their regulatory portfolios to reduce red tape and support a stronger, more inclusive Canadian economy.

Ministers were asked to publish progress reports outlining immediate actions taken, as well as short, medium, and long-term plans to streamline regulations.

For Public Services and Procurement Canada, the list of actions outlined in the progress report includes:

Develop Harmonized Procurement Regulations
Update of the Controlled Goods Regulations
Review of Translation Bureau Regulations
Amend the Government Property Traffic Regulations
Amend the Public Works Nuisances Regulations
Amend the Seized Property Disposition Regulations
Amend the Canada Gazette Publication Order, 2014
Repeal the Selkirk Marine Railway Dry Dock and the Canadian Vickers Dry Dock Regulations and explore alternatives to other regulations that govern the operations of similar assets

For the National Capital Commission, the list of actions outlined in the progress report includes:

Develop leaner processes for the Federal Land Use, Design and Transaction Approval and Environmental Impact Assessment
Modernizing the National Capital Act

12. Canada Post transformation

Issue

The Government has instructed Canada Post to take steps to transform its operations and work toward becoming financially self-sustaining.

Key facts

Canada Post’s legislated mandate requires it to be financially self-sustaining but it has reported over $6.1 billion in operating losses since 2018
In 2025 alone, Canada Post reported a $1.57 billion loss before tax, marking its largest loss in history
On April 16, 2026, Canada Post issued a news release stating that it was initiating discussions with 13 communities as it prepares to convert addresses to community mailboxes

Key messages

Canadians deserve serious action to begin transforming Canada Post in response to the scale and urgency of its financial challenges. Inaction is not an option
As such, I have instructed Canada Post to operationalize changes to letter delivery standards, proceed with community mailbox conversions, and to right‑size and transform the retail post office network, while protecting access in rural, remote and underserved areas
This marks the first step in a multi-year transformation that will set Canada Post on a better and more sustainable financial path
In November 2025, Canada Post submitted its transformation plan to me, and I am carefully reviewing the Plan

If pressed on the updates to letter delivery standards:

to reflect worldwide decline in mail volumes and improve efficiency, Canada Post will update letter mail delivery standards and transition toward a more flexible, volume-based delivery approach

If pressed on community mailbox conversion:

increasing centralized delivery, which already serves 72% of Canadians, will save over $350 million annually, once fully implemented
Canada Post will consult with affected communities and enhance its delivery accommodation program, which includes door-to-door delivery for Canadians with accessibility challenges
as a start, Canada Post has initiated discussions with 13 communities as it prepares for conversion in late 2026 and early 2027

If pressed on ending the rural moratorium:

the Government knows that the post office is often a lifeline for rural and remote communities, but it is time to modernize the 1994 moratorium
I instructed Canada Post to return to me with a plan that will protect access in rural and remote communities and underserved areas before any post office closure occurs

If pressed on the regulated stamp rate-setting process:

as part of Budget 2025, the Government has amended the Canada Post Corporation Act to modernize and streamline the regulated stamp rate-setting process by enabling Canada Post to adjust postage without Governor in Council approval

Background

In May 2025, an Industrial Inquiry Commission (IIC) was set up to examine Canada Post’s financial challenges in the context of the collective-bargaining dispute, with special attention to the underlying causes of the dispute.

The IIC’s report, submitted on May 15, 2025, outlined structural and financial challenges faced by Canada Post and made recommendations for both the Government and for collective bargaining, to return Canada Post to some degree of financial sustainability so it can continue, but in a manner that reflects 2025 realities.

On September 25, 2025, the Government announced it was accepting the recommendations of the IIC and instructed Canada Post to develop a comprehensive transformation plan, given that additional measures would be necessary to return the Corporation to financial solvency.

On November 7, 2025, Canada Post submitted its comprehensive transformation plan (‘The Next Mile’) to the Minister of Government Transformation, Public Works and Procurement and Québec Lieutenant. The plan lays out an implementation strategy for conversions to community mailboxes, modernizing its network of post offices (following the lifting of the rural moratorium, while ensuring the maintenance of service to rural, remote, and Indigenous communities), amending service standards for letter mail and reducing its management and overhead costs.

On January 28, 2026, Canada Post and the Canadian Union of Postal Workers announced they had finalized tentative agreements covering both bargaining units, which will be voted on by union members from April 20 to May 30, 2026. If ratified by members, this will put an end to a two-year period of labour uncertainty that has deeply damaged Canada Post’s bottom line. While the agreements are subject to ratification by union membership, no strike or lockout actions will take place during this process, meaning Canadians can look toward to an extended period of service reliability – until January 31, 2029 – that will enable Canada Post to begin its transformation.

On April 16, 2026, Canada Post issued a news release stating that it was initiating discussions with 13 communities as it prepares to convert approximately 136,000 addresses from door-to-door delivery to community mailboxes in late 2026 and early 2027. These communities include Moncton and Riverview (New Brunswick), Sept-Îles (Quebec), La Prairie and Candiac (Quebec), Ottawa (Ontario), Etobicoke (Ontario), Winnipeg (Manitoba), Abbotsford (British Columbia), Mission (British Columbia), and Vancouver (British Columbia). Canada Post plans to convert 4 million addresses that still receive door-to-door delivery to community mailboxes within the next five years.

13. Canada Post financial stability

Issue

Canada Post is facing existential financial challenges driven by lower revenues resulting from the decline in letter mail volumes and the increasingly competitive parcel market. To address these challenges, Canada Post has submitted its comprehensive transformation plan to return the corporation to financial self-sustainability to the Minister.

Key facts

On September 25, 2025, the Minister of Government Transformation, Public Works and Procurement and Québec Lieutenant instructed Canada Post to provide a comprehensive transformation plan to not only implement the recommendations of the Industrial Inquiry Commission but also to propose additional measures to restore the corporation to financial solvency, including reducing its management overhead costs
On January 28, 2026, Canada Post and the Canadian Union of Postal Workers announced they had finalized tentative collective agreements. Voting will take place from April 20 to May 30, 2026
On April 20, 2026, Canda Post reported a $1.57 billion loss before tax for 2025
In February 2026 the Government announced it would be providing an additional up to $1.01 billion in repayable funding for Canada Post to ensure the continuity of postal services. Canada Post did not ultimately require the full amount of funds, and as a result, an Order in Council, on the recommendation of the Minister of Finance, was published on May 5, 2026, stating that funding of up to $673 million will be made available to Canada Post in 2026 to 2027

Key messages

I received Canada Post’s comprehensive transformation plan in November 2025, and I am reviewing it carefully. We are actively working on balancing urgent measures to restore Canada Post's financial viability with taking the time to ensure that appropriate guardrails are embedded in the transformation plan, and, in particular, ensuring that services in rural, remote and Indigenous communities are protected
The Government of Canada has removed long-standing barriers to postal reform, and now Canada Post must take decisive action to deliver the services Canadians need in a way that is financially sustainable
The Government of Canada is taking concrete action to ensure postal services continue without disruption and has made up to $2.042 billion in additional repayable funding available to Canada Post in 2025 to 2026 and 2026 to 2027
This temporary support ensures Canadians continue to receive reliable postal services today, while the necessary reforms to secure Canada Post’s long-term viability begin

If pressed on the Order in Council for a cash injection of $673 million in 2026 to 2027:

the $673 million is not additional funding, rather it is unused funds from the $1.01 billion announced in February 2026. Given the labour uncertainty facing Canada Post at the time, a contingency was included in the event that labour action continued to impact the corporation
the $673 million will be included in the 2026 to 2027 supplementary estimates which will be voted on by Parliament before funds are provided to Canada Post

If pressed on the labour situation:

the Government is pleased that a tentative agreement has been reached between Canada Post and the Canadian Union of Postal Workers and looks forward to its ratification by postal workers

If pressed on the ability to repay cash injections:

the Government of Canada expects Canada Post to fully repay the loans, as required by the Canada Post Corporation Act
the memorandum of understanding between the Department of Finance, Public Services and Procurement Canada and Canada Post outlining the terms of the cash injections has been shared with the standing Committee on Government Operations and Estimates

Background

Over the last 20 years, the amount of mail Canadians receive has declined by 70%, while the number of addresses has increased by more than three million. This has resulted in lower revenues and higher costs for Canada Post. Canada Post’s legislated mandate requires it to be financially self-sustaining but it has reported over $6.1 billion in operating losses since 2018. These pressures have been compounded by the uncertainty caused by the 2-year-long labour negotiations and various strike actions by the Canadian Union of Postal Workers in 2024 and 2025.

In December 2024, William Kaplan was appointed to lead an Industrial Inquiry Commission to examine Canada Post’s financial challenges in the context of the collective bargaining dispute. The Industrial Inquiry Commission report, submitted on May 15, 2025, outlined structural and financial challenges faced by Canada Post and made recommendations.

On January 24, 2025, the Government of Canada announced its intention to make up to $1.034 billion in repayable funding available to Canada Post through the 2025 to 2026 fiscal year to maintain solvency and ensure continuity of operations.

On September 25, 2025, the Government announced it was accepting the recommendations of the Industrial Inquiry Commission and instructed Canada Post to develop a comprehensive transformation plan, given that additional measures would be necessary to return the Corporation to financial solvency.

On November 7, 2025, Canada Post submitted its comprehensive transformation plan to the Minister of Government Transformation, Public Works and Procurement and Quebec Lieutenant. The plan lays out an implementation strategy for conversions to community mailboxes, modernizing its network of post offices (following the lifting of the rural moratorium, while maintaining service to rural, remote, and Indigenous communities), amending service standards for letter mail and reducing its management and overhead costs.

On January 28, 2026, after more than two years of negotiations, Canada Post and the Canadian Union of Postal workers (CUPW) announced they had finalized tentative agreements that would expire on January 31, 2029 which will be voted on by CUPW members from April 20 to May 30, 2026. If ratified by members, this will put an end to a two-year period of labour uncertainty that has deeply damaged Canada Post’s bottom line. While the agreements are subject to ratification by union membership, no strike or lockout actions will take place during this process, meaning Canadians can look toward to an extended period of labour peace – until January 31, 2029 – that will enable Canada Post to begin its transformation.

On February 5, 2026, the Government of Canada announced its intention to make up to $1.01 billion in repayable funding available to Canada Post in the 2025 to 2026 fiscal year, which brought the total repayable funding announced in 2025 to 2026 up to $2.042 billion. This funding, which was provided on an as-needed basis to cover non-discretionary obligations and must be repaid by Canada Post, serves as a short-term financial bridge to protect service continuity. Questions about Canada Post’s ability to repay the cash injections have been raised by Opposition members of parliament.

As part of Budget 2025, the Government made amendments to the Canada Post Corporation Act to deregulate the stamp rate-setting process and enable Canada Post to set stamp rates, without the approval of the Governor in Council, in line with recommendation #7 of the Industrial Inquiry Commission.

14. Government transformation through deployment of artificial intelligence

Issue

The Government is leveraging artificial intelligence at scale to improve productivity, streamline operations, and deliver faster, more efficient services to Canadians.

Key facts

As a common service provider, Public Services and Procurement Canada delivers core back-office services that support government operations and service delivery

Key messages

The government is embarking on an ambitious whole-of-government transformation to build a more agile and productive public service, by modernizing business processes and technology
The government is using artificial intelligence in a safe and responsible manner to improve productivity, streamline operations, and deliver better services to Canadians
Back office services are well suited for government-wide transformation, enabling consistent and scalable solutions across departments
For example, Public Services and Procurement Canada is advancing GCTranslate, an enterprise-grade, AI-powered language self-service tool designed to improve translation efficiency while safeguarding Canada’s linguistic identity

Background

Public Services and Procurement Canada (PSPC) delivers enterprise services that support government operations and modernization, including the responsible use of artificial intelligence. This supports the Government’s mandate commitment to spending less on government operations so that Canadians can invest more in the people and businesses that will build the strongest economy in the G7.

Procurement

15. Spending on professional and special services and travel

Issue

Public Services and Procurement Canada is exploring ways to reduce its use of certain professional and special services and travel.

Key facts

In Budget 2025, the Government of Canada committed to reducing spending on certain professional and special services and travel, as part of its objective to meet up to 15% in operating savings over 3 years. These reductions will be implemented progressively between fiscal years 2026 to 2027 and 2028 to 2029 as part of the Comprehensive Expenditure Review
In fiscal year 2024 to 2025, Public Services and Procurement Canada spent $3.04 billion on professional and special services (primarily on construction, engineering and architectural, in addition to management consulting and other services)
The fiscal year 2026 to 2027 Main Estimates project Public Services and Procurement Canada spending of $3.1 billion on professional services, representing a planned increase of 1.5% compared to actual expenditures from 2024 to 2025, but a 15% decrease from 2025 to 2026 Main Estimates. The planned $3.1 billion amount reflects the anticipated spending levels based on historical trends and adjusted to align with the overall funding outlined in the Main Estimates. It may differ from actual expenditures, which are only available at the time the Public Accounts are prepared
Some examples of large multi-year projects expected to incur professional services expenditures in 2026 to 2027 are the Centre Block major rehabilitation, Place du Portage III renewal, and Block 2 redevelopment projects. The annual expenditures fluctuate in accordance with project schedules

Key messages

The government of Canada is committed to spending less on certain professional services. Public Services and Procurement Canada is monitoring its professional and special services spending and is looking to reduce spending in management consulting services. It expects to report decreases in this area for fiscal year 2025 to 2026
As the department moves into groundbreaking on major infrastructure projects, the use of specialized resources (i.e., construction, engineering and architectural services) can be expected to rise, reflecting the Government of Canada’s limited internal capacity in these areas
We continue to take proactive measures to reduce expenditures in certain categories of professional services, such as management consulting and similar professional consultants

If pressed on travel:

consultants’ travel expenses can be included in the overall contract cost or outlined and billed separately. Travel claims submitted for reimbursement are reviewed to ensure compliance with Government of Canada directives
travel costs for non-public servants are monitored and ceilings are established as the Government of Canada is committed to spending less on these types of expenses

Background

Parliamentary inquiries, audits of the Office of the Auditor General and reviews of the Office of the Procurement Ombud on federal government spending on professional services contracts have generated negative media attention and have raised concerns about taxpayer dollars that are spent on professional services.

In addition to the policy direction issued by the Treasury Board of Canada Secretariat in October 2023 in The Manager’s Guide: Key Considerations when Procuring Professional Services; Public Services and Procurement Canada (PSPC) has taken action to strengthen existing controls and has implemented measures to ensure proper oversight of public funds, clear accountability and documented decision-making.

Historically, PSPC’s professional services expenditures have been concentrated in construction services, other services (primarily for remediation of contaminated sites), engineering and architectural services, business services (primarily for real estate services), and informatics services (primarily in support of the pay system). This spending pattern reflects areas where internal capacity is limited and external specialized expertise is required to support mandate delivery.

Some travel expenses related to consultants may be included within the overall professional and special services expenditures; however, the available financial data do not allow quantification of these amounts.

Total travel expenditures for the department in 2024 to 2025 amounted to $16.4 million, including $10.5 million for travel by public servants and $5.9 million for travel by non-public servants. Travel by non-public servants may include consultants, but also covers other categories, including ministers and their exempt staff.

16. Continuous improvement of the procurement of professional services

Issue

When external resources are used by departments, Public Services and Procurement Canada works to ensure that contracts are structured consistently with value in mind.

Key facts

Over the last three fiscal years (2023 to 2024 to 2025 to 2026), Public Services and Procurement Canada, as a common service provider, has awarded an average of 2,978 contracts and amendments annually for Professional Services, with a total value of approximately $2.2 billion dollars
In 2025 to 2026, Public Services and Procurement Canada, as a common service provider, awarded 2,507 contracts and amendments for professional services, with a total value of approximately $2.1 billion

Key messages

Public Services and Procurement Canada is continuously improving and modernizing its procurement practices and instruments for professional services
The decision to hire public servants or to pursue professional services contracts is made by departments and agencies based on factors such as the availability of specialized expertise in-house, unexpected fluctuations in workload, time-limited projects, and shortages in certain employment groups
In July 2025, Public Services and Procurement Canada implemented measures to shift professional services procurement toward outcome-based contracting, to limit the value and duration of time-based professional services contracts, and to introduce a new Vendor Performance Management program

Background

The Treasury Board Directive on the Management of Procurement requires that business owners carefully consider and document alternative approaches before initiating a procurement for professional services. The Manager’s Guide: Key Considerations when Procuring Professional Services was published in October 2023 to support managers in fulfilling their responsibilities.

Public Services and Procurement Canada (PSPC) is currently developing a streamlined and simplified suite of mandatory methods of supply for the procurement of professional services. While work and consultations are underway, measures were introduced to strengthen contract management practices and ensure better value for money.

In July 2025, PSPC introduced strengthened measures to reinforce stewardship, accountability, and value for money in the procurement of professional services across the federal government. These measures respond directly to findings from parliamentary reviews, audits by the Office of the Auditor General, and reports from the Office of the Procurement Ombud.

Collectively, the measures are designed to ensure that professional services contracts are appropriately scoped, competitively awarded, and actively managed, with clearer expectations and stronger controls throughout the contract lifecycle. They limit the size, duration, and growth of task-based contracts; require greater scrutiny of pricing and amendments; strengthen invoice verification and performance oversight; and introduce additional senior-level approvals and reporting where risks are higher. At the same time, they support a gradual transition toward outcome-based contracting.

These measures ensure that when external resources are used, decisions are well documented, defensible, and demonstrably aligned with value for money.

In parallel, PSPC has undertaken extensive engagement with industry to inform the next phase of the transformation of professional services procurement. This has included a Request for Information and targeted one-on-one sessions with suppliers, the results of which will help shape future initiatives for fiscal year 2026 to 2027.

On September 2, 2025, PSPC implemented a new Vendor Performance Management framework to assess vendor performance and use past performance information in awarding contracts. This new framework complements the existing Vendor Performance and Corrective Measures policy that triggers suspension or other corrective measures when a contract is terminated for default. PSPC is currently working on implementing this framework for professional services supply arrangements.

17. Fraudulent billing

Issue

The Government of Canada continues to investigate and deter fraudulent billing by individuals working as subcontractors on federal professional services contracts.

Key facts

As of April 2026, Public Services and Procurement Canada has reached agreements with the firms impacted by the fraudulent billing cases to repay approximately $4.8 million of the $5.5 million deemed to have been fraudulently billed
The Department of Justice continues efforts regarding a Statement of Claim filed in the Ontario Superior Court of Justice seeking approximately $198,000 from a prime contractor who refuses to repay the Government of Canada, this includes the subcontractor they had engaged
On April 23, 2026, the Royal Canadian Mounted Police announced it has laid charges against one of the 3 overbilling cases referred by Public Services and Procurement Canada. A consultant and his company, AM Government Consulting Inc., face two counts of fraud over $5,000 contrary to Section 380(1) of the Criminal Code of Canada

Key messages

Public Services and Procurement Canada has detected several instances of fraudulent billing undertaken by individuals who worked as subcontractors on federal professional services contracts
This has been the result of Public Services and Procurement Canada’s efforts over the last five years to strengthen its approach to detecting fraudulent activity and other types of wrongdoing
Public Services and Procurement Canada is actively pursuing the recovery of illegitimate amounts billed to the Government of Canada and referring cases to the Royal Canadian Mounted Police for criminal investigation

If asked further about incorrect billing:

Public Services and Procurement Canada investigators are working with prime contractors to determine the extent of overbilling by individual subcontractors. Under the terms of those contracts, they are responsible for the actions of their subcontractors
subcontractors found to have overbilled the Government of Canada have been referred to the Royal Canadian Mounted Police for criminal investigation. Any time overbilling is identified, Public Services and Procurement Canada is prepared to actively pursue the recovery of amounts inappropriately billed to the Government of Canada

Background

Since March 2024, Public Services and Procurement Canada (PSPC) disclosed ten cases of fraudulent billing by individuals working as professional services subcontractors who were employed by prime contractors that held multiple contracts with a number of federal departments and agencies:

one older case that was referred to the Royal Canadian Mounted Police (RCMP) by PSPC prior to March 20, 2024 (this case was publicly disclosed when the RCMP laid charges on July 9, 2024)
three cases that were publicly disclosed by PSPC on March 20, 2024
three cases that were publicly disclosed by PSPC on November 6, 2024
two cases that were publicly disclosed by PSPC in Spring 2025, and
one case that was publicly disclosed by PSPC in Spring 2026

Where appropriate, cases are referred to the RCMP for criminal investigation.

PSPC has a robust fraud risk management framework in place to prevent, detect and respond to wrongdoing in order to safeguard the integrity of the federal procurement system. This approach includes the use of a variety of tools to actively detect fraudulent activity and respond to alleged misconduct that the Government of Canada is being defrauded in either a specific contract or on a broader scale.

PSPC employs active measures to raise awareness among procurement officers on how to identify potential instances as well as the use of data analytics and tips from the public to identify potential instances of fraud and wrongdoing.

The focus of PSPC’s administrative investigations has been on the fraudulent billing practices of subcontractors, not prime contractors. That said, Canada has provisions in its contracts to recover the illegitimate payments and is working with the impacted prime contractors to recover these funds.

18. Office of Supplier Integrity and Compliance

Issue

The Office of Supplier Integrity and Compliance supports the Government’s ability to identify suppliers of concern and take appropriate action to mitigate the risk they pose.

Key facts

Since launching on May 31, 2024, and as of March 26, 2026, the Office of Supplier Integrity and Compliance has provisionally suspended six suppliers, suspended four suppliers, and declared 13 suppliers to be ineligible

Key messages

The Office of Supplier Integrity and Compliance is part of a broader framework of tools that improve the Government’s ability to respond to emerging risks and protect the integrity of federal procurement and real property systems
It administers the Government of Canada’s suspension and debarment program for procurement and real property transactions
Since its launch, the Office has taken action against various bad actors and continues to step up efforts to identify and respond to suppliers of concern

Background

The Office of Supplier Integrity and Compliance (OSIC), launched in May 2024, replaced the Government of Canada’s Integrity Regime that had been in place since 2015 as a government-wide debarment system. It is designed to mitigate the risk of conducting business with suppliers of concern by excluding them from being awarded contracts, as opposed to being punitive, which is the role of the criminal justice system.

OSIC plays a significant role in safeguarding federal procurement and real property systems, which encompass approximately $20 billion annually for contracts, real property agreements, the management of Crown-owned properties, and rental payments on lease contracts across Canada.

Under the updated Ineligibility and Suspension Policy (the Policy), changes have been introduced to enable OSIC to mitigate risks posed by suppliers of concern. Triggers for suspension or debarment have been expanded to include a wider range of procurement integrity-related issues, such as:

offences under the Criminal Code, the Financial Administration Act and the Corruption of Foreign Public Officials Act, the Canada Elections Act
civil judgments and similar offences that occur in other jurisdictions
misconduct related to human trafficking, forced labour, environmental violations, and labour code
wrongdoing in the absence of charges or convictions, including in cases where a supplier has been debarred by another jurisdiction or an international organization and/or cases involving a founded breach of the Code of Conduct for Procurement

The updated Policy accords flexibility for OSIC to determine appropriate periods of ineligibility, up to a maximum of 10 years, based on an assessment of aggravating and mitigating factors.

OSIC actively monitors current events for allegations of supplier misconduct through research, information sharing, and data analytics. OSIC exercises due diligence and procedural fairness when assessing suppliers, and applies administrative safeguards to allow for independent decision making while taking action when the Policy is triggered.

19. Increasing Indigenous involvement in procurement

Issue

Public Services and Procurement Canada, in partnership with Indigenous Services Canada and the Treasury Board of Canada Secretariat, is actively working to increase the participation of Indigenous businesses in federal procurement.

Note

All questions regarding the Indigenous Business Directory, verification of Indigeneity and alleged cases of Indigenous misrepresentation should be directed to Indigenous Services Canada.

Key facts

As of January 30, 2026, there are approximately 2,800 businesses on the Indigenous Business Directory, led by Indigenous Services Canada
All departments have a minimum target to award 5% of the total value of procurements to Indigenous businesses
In 2023 to 2024, Public Services and Procurement Canada awarded 3.4% ($143 million) of the total value of its procurements to Indigenous businesses

Key messages

Public Services and Procurement Canada is committed to economic reconciliation with Indigenous Peoples, and is working with Indigenous Services Canada and the Treasury Board of Canada Secretariat to increase Indigenous participation in federal procurement to meet the minimum target of 5% government-wide
we are taking concrete action to increase Indigenous participation in procurement, including:
- applying approaches to ensure Indigenous participation is considered in the development of procurement processes, including Indigenous Participation Plans in contracts to provide subcontracting opportunities and other economic benefits; and
- providing dedicated procurement opportunities to Indigenous businesses whenever possible

If pressed on contracts awarded to suppliers removed from the Indigenous Business Directory:

Indigenous Services Canada is responsible for the verification of a business’s ability to meet the eligibility requirements to be listed on the Indigenous Business Directory
it also confirms a business’s compliance with the Indigenous content requirements for the purpose of Procurement Strategy for Indigenous Business
when supplier misconduct or wrongdoing is detected and referred to my department, my officials have various tools at their disposal and are ready to take the required action to protect the integrity of the federal procurement system
together with Indigenous leaders and Indigenous Services Canada, Public Services and Procurement Canada is determining a path forward to transfer the administration of the business lists to Indigenous partners

If asked about contracts below $250,000 being reserved for Indigenous businesses:

in April 2022, Public Services and Procurement Canada implemented its Indigenous First strategy to consider procurement with Indigenous businesses for all internal opportunities in support of the department
in November 2025, an internal communication reinforcing the importance of respecting this strategy was issued. Employees were advised that contracts under $250,000 would be the primary focus of enhanced measures to ensure the approach is being consistently applied
in March 2026, Public Services and Procurement Canada issued a clarification to the November 2025 communication. To help advance the 5% Indigenous procurement objective, teams are asked to prioritize and actively consider Indigenous businesses for procurement activities, particularly for contracts valued at $250,000 or less. This does not, however, change the existing strategy for increasing procurement with Indigenous businesses, which was implemented in April 2022

If pressed on the Office of the Procurement Ombud Procurement Practice Review of Contracts Awarded to Indigenous Businesses:

we take the Procurement Ombud’s findings seriously and continue to work closely with Indigenous Services Canada to strengthen guidance, oversight, and consistency supporting the implementation of the Procurement Strategy for Indigenous Business set‑asides
Public Services and Procurement Canada agrees that clearer, unified guidance is essential to better support the federal procurement community and ensure that Procurement Strategy for Indigenous Business requirements are applied accurately and consistently across government
the department is actively collaborating with Indigenous Services Canada to review and enhance procurement operational guidance, and will ensure that updates to Public Services and Procurement Canada tools are accurate, timely, and aligned with Indigenous Services Canada’s policy direction

Background

On August 6, 2021, the Government of Canada announced a mandatory requirement for federal departments and agencies to ensure that a minimum of 5% of the total value of contracts is held by Indigenous businesses by 2024 to 2025. The announcement included Canada’s commitment to continue meaningful engagement to co-develop a longer-term transformative approach to Indigenous procurement and to increase the capacity of Indigenous-owned businesses to compete and receive more federal procurement contracts.

The procedures for reporting on contracts awarded to Indigenous businesses are set out in Appendix E: Mandatory Procedures for Contracts Awarded to Indigenous Businesses, of the Treasury Board Directive on the Management of Procurement. The Directive ensures that procurement of goods, services and construction obtains the necessary assets and services that support the delivery of programs and services to Canadians, while ensuring best value to the Crown.

On April 1, 2022, Public Services and Procurement Canada (PSPC) implemented a strategy requiring all internal Low Dollar Value procurements (under $3.75 million) to first be considered for competition and award to Indigenous businesses. Where procurements could not, or would not, be considered for Indigenous businesses first, departmental policy required that the rationale be documented in the procurement file.

In 2023 to 2024, PSPC awarded 3.4% ($143 million) of the total value of its procurements to Indigenous businesses. As PSPC did not achieve its 5% target commitment in the 2023 to 2024 fiscal year, concrete actions are being taken to help increase Indigenous business participation in federal procurement, including developing Indigenous Participation Plans to boost subcontracting with Indigenous businesses and provide employment and training opportunities for Indigenous Peoples; using limited bidding among prequalified Indigenous offerors; updating supply methods to include Indigenous businesses; structuring and unbundling projects to enable competitive Indigenous bids; and incorporating weighted Indigenous criteria in bid evaluations. PSPC also continued to increase awareness of federal procurement opportunities through its outreach and engagement activities.

As part of these efforts, starting in 2024 to 2025, PSPC’s methodology to calculate the 5% target will include the value of subcontracts awarded to Indigenous companies by non-Indigenous suppliers. In 2024 to 2025, PSPC awarded 3.16% of the total value of all its contracts to Indigenous businesses for the fiscal year ($234 million). PSPC’s overall procurement budget increased by more than $1.5 billion (27%), to a total of $7.4 billion, due to 3 large contract amendments in 2024 to 2025. None of these long-term contracts were originally with Indigenous businesses and, therefore, there was a significant impact on achieving the 5% target.

PSPC has no role in determining which suppliers are on the Indigenous Business Directory. However, when an authority such as Indigenous Services Canada determines there has been misrepresentation by a supplier or false claims have been made, the case can be referred to PSPC for action. Responses may include:

contractual remedies in instances where PSPC is the contracting authority
referrals to law enforcement for possible criminal investigation
referrals to PSPC’s Office of Supplier Integrity and Compliance for assessment against the Ineligibility and Suspension Policy

In February 2026, PSPC introduced a new Liquidated Damages clause for set-aside programs to deter and address impropriety. The clause provides a clear, enforceable remedy that enables Canada to recover predetermined damages if a contractor fails to comply with set-aside requirements, including cases such as misrepresentation.

The Office of the Procurement Ombud conducted a Procurement Practice Review of Contracts Awarded to Indigenous Businesses for the period of April 1, 2023 to March 31, 2025, to assess whether procurement practices aligned with applicable legislation, regulation, policies, and guidance. The Ombud’s report highlights significant gaps in clarity, guidance, and oversight across government that limit the effective and consistent implementation of the Procurement Strategy for Indigenous Business (PSIB). Overall, the findings point to inconsistent application, limited oversight, and varying departmental interpretations of PSIB requirements, underscoring the need for clearer government-wide direction and more coherent oversight to strengthen Indigenous procurement outcomes.

The report points out that bidders on contracts that are set-aside for Indigenous businesses have no access to the Canadian International Trade Tribunal or a similar recourse mechanism, and proposes that the Procurement Ombud could fill this role while a more permanent solution is found.

20. Vendor Performance Management system

Issue

Vendor Performance Management is used within Public Services and Procurement Canada and its client departments to assess vendor performance and use past vendor performance information in awarding contracts.

Key facts

Vendor Performance Management became mandatory in some internal Public Services and Procurement Canada procurements on September 2, 2025. Vendor Performance Management data is monitored monthly, and over time, will provide insight on performance results. The department already administers the Vendor Performance Corrective Measure policy, which triggers a corrective measure assessment when a contract is terminated for default or conditionally amended. The assessment may lead to ineligibility or conditions on future procurements
Vendor Performance Management complements this policy by recording the performance against contractual obligations in terms of cost, quality, schedule and administration. A vendor objection process is established, including dispute resolution, to ensure transparency and integrity
Vendor Performance Management, by itself, will not lead to contract termination or vendor ineligibility

Key messages

Vendor Performance Management is a practical risk‑management tool that captures objective evidence of how vendors actually perform on cost, schedule, quality, and administration, and ensures that information is available for future procurements. This closes a known accountability gap and incentivizes better supplier behaviour
A supplier that did not meet timelines, demonstrated poor management or supplied an inferior product would be disadvantaged in future procurements
Vendor Performance Management improves procurement outcomes by requiring communication on performance throughout the course of the contract and by using past performance in selection of suppliers

Background

Public Services and Procurement Canada (PSPC) had already begun developing a Vendor Performance Management (VPM) system as part of its efforts to modernize federal procurement and strengthen the system's performance.

In its July 2025 report on knowledge development and sharing, the Office of the Procurement Ombud (OPO) proposes five key solutions to address persistent systemic issues in federal procurement. These include the implementation of a VPM system. The VPM initiative, which has been underway for a few years now, responds to recommendations made by the OPO.

The first phase of the VPM applies to PSPC goods and services contracts for PSPC valued at more than $100,000. Vendors will be evaluated on such things as how well the respect timelines, incidents of consultant turnover and invoicing accuracy. Scores are not yet used in vendor selection. The next few months will be used to test the system and gather feedback. Vendors will be given a 90-day notice before scores are considered.

21. Electronic Procurement Solution

Issue

In the context of the publication of recent reports, audits, and committee appearances on the procurement process, Public Services and Procurement Canada is leveraging the Electronic Procurement Solution to modernize procurement processes.

Key facts

More than 88,000 supplier accounts have been registered in the Electronic Procurement Solution, supporting broad and competitive participation in federal procurement.
19,207 contracts awarded have been awarded in the Electronic Procurement Solution for a total of $53.9 billion, and 99.7% of all core Public Services and Procurement Canada procurement activities are now conducted in the Electronic Procurement Solution
The provinces, territories, municipalities, academia, schools, hospitals and Crown Corporations have a window into CanadaBuys and have posted 144,000+ notices on the web portal

Key messages

The Electronic Procurement Solution is a modern, cloud‑based digital platform that centralizes federal procurement, improving efficiency while strengthening visibility and oversight of government contracts
It now supports virtually all Public Services and Procurement Canada procurement, with over 19,000 contracts awarded through the system, valued at $53.9 billion and representing 99.7% of core procurement activities
The Electronic Procurement Solution has achieved broad supplier uptake, with more than 88,000 supplier accounts now registered, supporting open, competitive, and accessible procurement across Canada
Enhancements to the Electronic Procurement System support the Buy Canadian initiative by improving visibility and access for Canadian suppliers

Background

Under the Department of Public Works and Government Services Act, Public Services and Procurement Canada (PSPC) has the legislated mandate to provide acquisition services for federal departments and agencies.

PSPC launched the Electronic Procurement Solution (EPS) project in 2018 to move to a cloud-based e-procurement platform. This project was completed in June 2023 and is a key component of the digital transformation in support of the Minister's mandate to modernize procurement. Following the Budget 2018 announcement, on July 4, 2018, through a competitive process, PSPC awarded a five-year contract to Infosys Public Services who proposed a SAP-based solution.

The CanadaBuys portal is the public facing component of the e-procurement platform that, since September 2022, provides suppliers with a free and accessible single window to view procurement opportunities across federal, provincial, territorial, and municipal jurisdictions.

Prior to the implementation of EPS, PSPC was heavily reliant on an array of obsolescent systems and manual processes to conduct procurement activities and safeguard key information related to procurement activities (emails, CD, fax, e-post, hard copies, etc.). EPS centralizes tendering, award and contract management functions at PSPC and provides enhanced and automated information management and auditing functions.

The EPS contract sourcing and management functionalities are only accessible to PSPC procurement officers. Bid evaluations and other procurement activities conducted by other government departments under their own authorities are currently conducted outside the EPS SAP environment.

EPS has exhausted its project funding. Budget 2023, which included $24.8 million for 2025 to 2026 for the steady-state operation of the system within PSPC has also sunset. This is reflected as a decrease in the 2026 to 2027 Main Estimates.

The next steps planned by PSPC regarding EPS include the following:

evolve the use of the platform and further modernize procurement practices
continue to modernize PSPC Supply Arrangement and Standing Offer instruments and enhance the management of professional service contracts (e.g., timesheets) at PSPC with a view to support more efficient detection of fraudulent practices
promote social procurement and supplier diversity with better data collection

Defence

22. Defence Investment Agency

Issue

The Government of Canada has created the Defence Investment Agency to modernize defence procurement.

Key facts

On March 26, 2026, the Prime Minister announced that Canada had met NATO’s 2% defence spending commitment and reaffirmed that Canada would meet NATO’s Defence Industrial Pledge, which will see investments of 5% of annual GDP by 2035 in individual and collective security
On October 2, 2025, the Prime Minister announced the creation of the new Defence Investment Agency, which will overhaul and streamline Canada’s defence procurement so the Canadian Armed Forces have the world-class equipment they need
Doug Guzman started as its Chief Executive Officer in November 2025
The Defence Investment Agency is a new Special Operating Agency within Public Services and Procurement Canada. This transitional structure allows for the organization to be stood up quickly, bringing together the full complement of personnel and capabilities from Public Services and Procurement Canada, National Defence, the Canadian Armed Forces, the Canadian Coast Guard, and Innovation, Science and Economic Development Canada to modernize defence procurement
Legislation to make the Defence Investment Agency a stand alone entity is expected in Spring 2026, as identified in the Defence Industrial Strategy

Key messages

We created the new Defence Investment Agency to protect Canadian sovereignty by quickly equipping the Canadian Armed Forces and Coast Guard with the world-class tools they need, while also bolstering our industrial capacity
The agency will consolidate procurement processes, remove duplicative approvals and red tape, and provide industry with greater clarity and certainty
The Defence Investment Agency will promote and focus investments leveraging the Canadian defence industrial base, where appropriate, creating new careers, growing our economy, and supercharging innovation in aerospace, shipbuilding, and advanced manufacturing

If pressed on ties to economic impact:

we intend to better leverage opportunities to invest in Canadian workers, companies, and technologies through the Defence Investment Agency
the Agency will help Canadian firms scale up, develop cutting-edge capabilities, and compete globally

Background

Until now, defence procurement in Canada has been divided across multiple ministers and accountabilities, and layers of oversight from central agencies. To meet the Government’s commitment to accelerate spending on defence, reforms to defence procurement are needed. The Defence Investment Agency will centralize accountability, leverage expanded authorities and introduce flexibilities in the procurement process to deliver faster procurement outcomes. Defence procurement in Canada now better aligns with our allies, such as the United Kingdom, France, and most recently Australia, which have dedicated and independent defence procurement organizations.

Reforming defence procurement has been the subject of several reports and studies. In June 2024, the Standing Committee on National Defence tabled a wide-ranging report entitled, A Time for Change: Reforming Defence Procurement in Canada. Also, in June 2024, the Parliamentary Budget Officer tabled a report on the rising costs and extended delays associated with the development and acquisition of polar icebreakers. In December 2024, the Auditor General of Canada tabled a report on the application of Industrial and Technological Benefits to defence procurements, noting areas for administrative improvements, and tabled an additional report on Canada’s Future Fighter Jets in June 2025. Taken together, consecutive reports indicate that the procurement process and overly customized specifications have led to avoidable cost increases and significant delays.

23. Defence Industrial Strategy

Issue

The Defence Industrial Strategy’s objective is to provide technological and operational advantage to the Canadian Armed Forces and its security partners in their mission to defend Canada, while maximizing growth, job creation and economic benefits for all Canadians.

Key facts

The new Build-Partner-Buy framework emphasizes that the government will first seek to build capabilities domestically, through 10 designated sovereign capability areas and through its Buy Canadian Policy

Key messages

The Defence Industrial Strategy applies a Build–Partner–Buy framework, which ensures Canada makes the right procurement choice every time: build here when we can, partner with trusted allies when beneficial, and buy abroad only when necessary
The Defence Investment Agency is central to implementing the framework. It accelerates procurement, improves decision‑making, and ensures industrial benefits flow back to Canada
This approach strengthens Canadian sovereignty by reducing our over‑reliance on foreign suppliers, particularly in areas critical to national security
The Defence Industrial Strategy aligns defence spending with Canadian jobs, innovation, and long‑term resilience

If pressed on the announcement of the Drone Innovation Hub:

the $500 million Drone Innovation Hub is an important step in advancing Canada’s capabilities in an area that has demonstrated itself to be critical to modern warfare. This initiative, led by the National Research Council, will leverage Canadian innovation and will help Canada to keep pace with our peers in areas of advanced capability
initiatives like this are essential to strengthening Canada’s defence innovation ecosystem and ensuring that new technologies can move more quickly from development to operational capability for the Canadian Armed Forces

Background

On February 17, 2026, the Government of Canada launched a major shift in defence procurement and industrial policy. The Defence Industrial Strategy (DIS) lays out a generational effort to rebuild Canada’s defence industrial base, increase military readiness, and ensure Canada has the sovereign capability to equip its own forces.

It introduces the new Build–Partner–Buy framework, which prioritizes building equipment in Canada whenever possible, forming strategic partnerships with trusted allies where beneficial, and buying abroad only as a last resort. This policy direction reflects the government’s commitment to strengthen Canada’s defence autonomy, create domestic jobs, and ensure that defence spending delivers long-term economic and security benefits to Canadians.

At the centre of this new approach is the Defence Investment Agency (DIA), created to accelerate procurement, cut through administrative bottlenecks, and ensure that defence investments align with Canada’s industrial and technological strengths.

The DIA is responsible for operationalizing the Build–Partner–Buy framework and for implementing the government’s Buy Canadian direction, which is critical to the DIS’ objective of increasing the share of defence contracts awarded to Canadian firms to 70 percent within a decade.

By coordinating across departments and working directly with industry, the DIA provides clearer demand signals, secures domestic workshare, and strengthens supply chains for critical inputs such as ammunition, minerals, and advanced materials. This modernization is essential to ensuring that Canada can equip its military reliably, contribute effectively to allies, and maintain economic resilience in an increasingly contested global environment.

24. National Shipbuilding Strategy

Issue

The National Shipbuilding Strategy is a long-term commitment to renew the vessel fleets of the Royal Canadian Navy and Canadian Coast Guard, create a sustainable shipbuilding sector, and generate economic benefits for Canadians.

Note

All questions related to budget, requirements, timelines, international comparisons, and project management should be directed to the Minister of National Defence.

Key facts

As of March 2026, the Government of Canada has awarded more than $53 billion in contracts under the National Shipbuilding Strategy to businesses across the country and, of these, more than $1 billion went to small and medium businesses with fewer than 250 employees
Since 2012, more than $13.6 billion in development opportunities has been provided to Canadian suppliers, including more than $3 billion to small and medium-sized enterprises
National Shipbuilding Strategy contracts awarded between 2012 and 2025 are estimated to contribute more than $49.8 billion ($3.3 billion annually) to Canada’s gross domestic product and create or maintain more than 25,000 jobs annually

Key messages

The National Shipbuilding Strategy is about Canadians and Canadian businesses working together to strengthen and renew our Naval and Coast Guard fleets
So far, 10 large vessels and numerous small ships have been delivered, and many more are under construction across Canada
We will continue working closely with industry to manage costs and schedules, and ensure the best value is provided to Canadians throughout the duration of these projects

If pressed on the River-class Destroyer Project:

on March 3, 2025, the Government of Canada awarded the Implementation contract for the River-class Destroyer Project to Irving Shipbuilding Inc., to build the first batch of 3 ships
the River-class Destroyer Project is expected to create or maintain over 5,000 jobs over the next 15 years, many of which will be in Halifax, Nova Scotia
full-rate production on the first ship, His Majesty’s Canadian Ship Fraser, began April 25, 2025

If pressed on the Polar Icebreakers:

the Canadian Coast Guard is acquiring two polar icebreakers, which will strengthen its icebreaking fleet
they will also support critical scientific research and environmental protection efforts, and ensure national security in the Arctic
this investment enhances Canada’s maritime infrastructure and safeguards our sovereignty in the Arctic
construction of both polar icebreakers is underway. Full-rate production of the future Canadian Coast Guard Ship (CCGS) Imnaryuaq started in July 2025 at Seaspan’s Vancouver Shipyards, while steel cutting for the future CCGS Arpatuuq took place in August 2025 at Davie North Yard Finland Oy, owned by Chantier Davie Canada Inc., marking the start of its construction phase

Background

The National Shipbuilding Strategy is a long-term plan to renew the Royal Canadian Navy and Canadian Coast Guard fleets. It aims to eliminate the boom and bust cycles of vessel procurement that have slowed Canadian shipbuilding in the past. Canadian shipyards involved are Irving Shipbuilding Inc. in Nova Scotia, Seaspan’s Vancouver Shipyards in British Columbia and Chantier Davie Canada Inc. in Quebec.

The River-class Destroyer Project Implementation contract, with an initial value of $8 billion (including taxes) outlines the terms and conditions for the construction and acceptance of the first 3 ships.

Seaspan’s Vancouver Shipyards was awarded a $3.15 billion contract (excluding taxes) to build one polar icebreaker and Chantier Davie Canada Inc. was awarded a $3.25 billion contract (excluding taxes) to build the other polar icebreaker.

The Davie icebreaker will be built using a hybrid domestic-international build strategy, with work split between Davie’s facilities in Quebec and its Finnish shipyard, Davie North Yard Finland Oy. With the evolving global climate, it is essential more than ever that Canada delivers ships to the Canadian Coast Guard in a timely manner so they can continue to work to protect Canadian sovereignty and security.

The National Shipbuilding Strategy continues to evolve and is strengthened by the Icebreaker Collaboration Effort (ICE) Pact, a partnership between Canada, Finland, and the United States that was signed into effect in November 2024. This collaboration seeks to accelerate Arctic and polar icebreaker production, boost the marine industries of all 3 nations, and enhance technical cooperation and information sharing to meet global demand for icebreakers.

25. Procurement of Canadian F-35 jets

Issue

In December 2017, the Government of Canada launched an open and transparent competition to permanently replace the fighter fleet with 88 advanced jets - the Future Fighter Capability Project.

Note

All questions related to capability, technical issues, deliveries and requirements, in-service support costs, including the complete life-cycle costs, Auditor General Report on the F-35 entry into service, and current review of the F-35 acquisition should be answered by the Minister of National Defence
All questions related to the Industrial and Technological Benefits Policy should be answered by the Minister of Industry and Minister responsible for Canada Economic Development for Quebec Regions
All questions related to trade issues should be answered by the Minister of Foreign Affairs or Ministers responsible for Canada-US Trade

Key facts

The project is estimated to be $27.7 billion, which includes associated equipment, initial weapons and ammunition, sustainment set-up and services, as well as the construction of Fighter Squadron Facilities in Cold Lake, Alberta and Bagotville, Quebec

Key messages

The Government is committed to ensuring that members of the Canadian Armed Forces have the equipment they need to do their jobs and protect Canadians, while also ensuring the best value for Canadians
The Government is currently reviewing the purchase of the F-35s to ensure that they represent the best fighter capability for our country with an optimal solution in terms of capability, price and economic benefits for Canadians
During the F-35 review, Canada continues to make payments in accordance with the F-35 agreement schedules
The Canadian industry is expected to have significant opportunities to contribute to the sustainment of fighters in areas such as air vehicle and propulsion depots, training, maintenance of components, and supply chain management over the life of the fleet

Background

As part of its defence policy, Our North Strong and Free: A Renewed Vision for Canada’s Defence, the Government of Canada has renewed its commitment to procure 88 advanced fighter jets for the Royal Canadian Air Force.

An independent fairness monitor oversaw the entire competitive process to ensure a level playing field for all bidders. An independent third-party reviewer was also engaged to assess the quality and effectiveness of the procurement approach.

On January 9, 2023, the Government of Canada announced that following an open, fair and transparent competition, Canada had finalized an agreement with the United States government and Lockheed Martin with Pratt & Whitney for the acquisition of F-35 fighter jets for the Royal Canadian Air Force.

On November 25, 2024, the Government of Canada announced that Canada has identified L3Harris MAS from Mirabel, Quebec as a strategic partner. The company will collaborate with the Canadian government, the F-35 Joint Program Office and Lockheed Martin to explore the requirement for an air vehicle depot.

On March 14, 2025, the Prime Minister asked the Minister of National Defence to review the planned acquisition of the F-35 aircraft; the review is led by the Department of National Defence with input from key project stakeholders. The Independent Review Panel for Defence Acquisition will also provide separate advice to the Minister.

The Office of the Auditor General of Canada has completed its Performance Audit of Canada’s Future Fighter Capability Project and tabled the report in Parliament on June 10, 2025. There were no recommendations for PSPC. Key findings include: significant cost increases, infrastructure delays, Royal Canadian Air Force pilot shortages and project management gaps.

26. Canada achieves the 2% of Gross Domestic Product defence spending benchmark

Issue

After a number of years of failing to meet targets, on March 26, 2026, Canada achieved the North Atlantic Treaty Organization’s (NATO) target of 2% of gross domestic product (GDP) on defence spending.

Key facts

The Government of Canada has achieved NATO’s 2% of GDP on defence spending target in the 2025 to 2026 fiscal year, marking a significant milestone in Canada’s approach to national defence and collective security
Canada is investing more than $63 billion in defence across the Department of National Defence, the Canadian Armed Forces, and other government partners. This represents a significant increase in defence spending over the past year, driven by targeted investments in military personnel, readiness, equipment, and infrastructure, as well as in the defence industrial base and in eligible defence expenditures across government, consistent with NATO reporting practices
In 2025 to 2026, approximately $18.3 billion in defence-related spending—focused on infrastructure, major capital acquisitions, and investments under Canada’s Defence Industrial Strategy—has been modelled to generate an estimated 65,000 jobs and $7.7 billion to Canada’s GDP. These impacts reflect industrial activity associated with defence projects, as well as broader economic effects through supply chains and consumer spending
Canada is now on a clear path toward meeting NATO’s Defence Investment Pledge of 5% of GDP by 2035, strengthening its ability to defend Canadians, support allies, and contribute to global security

Key messages

The establishment of the Defence Investment Agency is a cornerstone of Canada’s plan to increase defence spending to 2% of gross domestic product in 2025 to 2026 and to 5% by 2035
This effort supports high quality domestic economic growth while better protecting Canadian sovereignty and strengthens our ability to work with Allies
Investing in defence reinforces defence supply chains and industrial capacity among Allied nations, thus reaffirming Canada’s commitment to global security

Background

Canada has met NATO’s defence spending target of 2% of GDP for the first time since the late 1980s, marking a significant milestone given the benchmark’s growing importance within the alliance.

The milestone was reached following a substantial $9.3 billion increase to the Department of National Defence budget in June, bringing total defence spending to just over $61 billion.

NATO estimates indicate Canada reached the 2% target only marginally, suggesting the achievement is sensitive to economic fluctuations and may be difficult to sustain without continued investment.

Despite meeting the headline target, Canada still ranks in the bottom third of NATO allies in defence spending, alongside countries such as Belgium, Spain, Albania, and Portugal, underscoring ongoing questions about burden-sharing and relative effort.

Real Property

27. Aligning the office portfolio with workplace presence requirements

Issue

The Government’s decision to increase onsite presence for executives and employees eligible for hybrid work represents a change in direction that affects the Office Portfolio Reduction Plan, which was announced as part of Budget 2024, with implications still under assessment.

Key facts

Public Services and Procurement Canada administers 5.8 million square metres of office facilities, reflecting reductions already implemented, and representing over 25.5% of the total floor area occupied by the Government of Canada
On February 5, 2026, the Government announced its intention to increase the on-site presence of executives and employees who are eligible for hybrid work. As of May 4, 2026, executives will be required to work onsite 5 days per week, and the intention is to have all employees work onsite 4 days a week as of July 6, 2026

Key messages

Workplace presence parameters are established by the Government and led by the Treasury Board of Canada Secretariat, including engagement with bargaining agents
Public Services and Procurement Canada is committed to providing sufficient and functional office space that supports government priorities while ensuring responsible use of public funds
Budget 2024 committed Public Services and Procurement Canada to reducing its office portfolio by 50% over the next 10 years. In light of increased onsite presence requirements, this reduction target will be adjusted accordingly, and planning to that effect is currently underway
While capacity is sufficient in many locations, localized pressures are being observed as on-site presence increases. These are being validated with departments and will be addressed over time through targeted solutions
Public Services and Procurement Canada is working with tenant departments and agencies to rapidly deliver efficient solutions by optimizing underutilized space, renewing existing leases where required, when requirements cannot be met within the existing portfolio

If pressed on building condition:

the health and safety of occupants is a priority, and Public Services and Procurement Canada will not accommodate employees in office space that does not adhere to Treasury Board policies or meet applicable health and safety code requirements
buildings are continuously monitored and assessed to ensure conditions remain safe, functional, and compliant with legislative and regulatory requirements
where condition issues are identified, mitigation measures are put in place, including repairs or relocation if required within the portfolio
space planning decisions consider building condition alongside operational needs

If pressed on unassigned seating:

the Treasury Board of Canada Secretariat engaged with bargaining agents to seek their input on implementation elements, including the potential for assigned seating and occupational health and safety
public Services and Procurement Canada continues to work with departments and agencies to address increased in-office presence requirements and will adjust accommodation solutions as government decisions are confirmed
as part of the efforts to accommodate increased presence requirements, unassigned seating may be used in some cases to support short-term capacity needs, and may remain in place, longer term where appropriate, based on operational requirements

If pressed on GCcoworking spaces:

given the current context of increased in-office presence, Public Services and Procurement Canada has extended GCcoworking operations on a temporary basis, while maintaining current service levels and informing users of any site-specific changes
as government direction on onsite presence evolves, the department is assessing how all available space, including GCcoworking sites, can best support operational requirements
options under consideration include adapting these spaces to support broader accommodation needs
Public Services and Procurement Canada will continue to ensure that space is used efficiently and that investments support safe, functional and cost-effective workplaces aligned with government priorities

Background

Public Services and Procurement Canada is responsible for the management of general purpose office space, while departments and agencies remain responsible for specialized facilities such as laboratories and secure operational spaces, and Crown corporations manage their own real property portfolios. In recent years, workplace planning has been informed by a hybrid work model, with employees splitting their time between working remotely and in the office.

The initial Office Portfolio Reduction Plan used to develop the Budget 2024 proposal assumed an average of two to three-day in office presence and unassigned seating by default.

On February 5, 2026, the Treasury Board of Canada Secretariat announced its intention to increase onsite presence for executives and employees eligible for hybrid work, with executives expected onsite five days per week by May 4, 2026, and other eligible employees four days per week as of July 6, 2026. Implementation discussions with bargaining agents will be led by the Treasury Board of Canada Secretariat.

The February 2026 announcement to further increase onsite presence is expected to place additional pressure on office space requirements and impact Public Services and Procurement Canada’s ability to achieve the savings committed in Budget 2024. Any adjustment to Budget 2024 targets is subject to funding authorities.

Public Services and Procurement Canada remains committed to exploring opportunities for controlling operational costs and will continue working with tenant departments and agencies to optimize the use of office space within the PSPC-administered office portfolio.

28. Rehabilitation of official residences

Issue

Issues have recently been raised on the status official residences and the deferred maintenance deficit, which have impacted the overall condition of the official residences’ portfolio’, including 24 Sussex Drive.

Key facts

Since 2015, the Prime Minister and his family have resided at Rideau Cottage
The 2021 Asset Portfolio Condition Report found that the overall condition of the portfolio of official residences, comprised of six official residences and 49 secondary buildings, continues to deteriorate with only 24% of the assets considered to be in “good” condition, down from 34% in 2018
The 2022 Fall Economic Statement earmarked $332.6 million plus $28.4 million of ongoing funding to the National Capital Commission for protecting heritage assets, excluding 24 Sussex Drive

Key messages

The Government of Canada recognizes the importance of the official residences and their heritage and cultural value
The National Capital Commission is responsible for year-round maintenance and operations for the six official residences and reports annually on capital expenditures incurred at the official residences

If pressed on 24 Sussex:

24 Sussex Drive is in critical condition and has been closed to protect the health and safety of residence staff, and to ensure the integrity of this heritage asset
we continue to work closely with the National Capital Commission to explore potential options regarding the future of the Prime Minister’s official residence, including 24 Sussex Drive and Rideau Cottage

Background

The official residence of the Prime Minister (PM) is located at 24 Sussex Drive. The Official Residences Act identifies the Minister of Government Transformation, Public Works and Procurement as responsible for maintenance and care of Canada’s official residences. The Act also identifies the National Capital Commission (NCC) as the custodian of the six official residences.

Since 2015, 24 Sussex Drive has been vacant due to health and safety concerns given the property had not undergone rehabilitation, nor had it received significant upgrades, prior to 2015. Since 2015, PMs and their families have resided at Rideau Cottage. In fall 2022, the NCC began the process of closing 24 Sussex Drive for health and safety reasons.

In 2017, NCC commissioned an in-depth report on building conditions for the largest and most complex buildings in the official residences’ portfolio. This report found that 58% of the assets in the portfolio were considered to be in ‘poor’ to ‘critical’ condition and funding is needed to restore and maintain he heritage buildings in this asset portfolio.

Since the 2018 report, the NCC has invested approximately $26 million in capital funding on rehabilitation work for the entire portfolio, excluding 24 Sussex Drive. Despite these efforts, in June 2021, the NCC published the Official Residences of Canada: Asset Portfolio Condition Report, which re-iterated that investments were urgently needed to rehabilitate these culturally and historically significant properties. The report showed that, to properly and effectively manage, maintain and preserve all the official residences, the NCC needed $175 million over 10 years to restore all six properties to “good” condition and $26.1 million annually for ongoing maintenance, repairs and renovation projects. The 2022 Fall Economic Statement earmarked funding to the National Capital Commission for protecting heritage assets, excluding 24 Sussex Drive.

29. Build Canada Homes

Issue

Public Services and Procurement Canada is collaborating with Housing, Infrastructure and Communities Canada and the Canada Lands Company to develop a stable, predictable federal land pipeline for Build Canada Homes.

Key facts

In September 2025, the Government launched Build Canada Homes, a new federal agency that will build affordable housing at scale
In August 2024, Public Services and Procurement Canada launched the Canada Public Land Bank which currently lists 88 properties available for housing development
These properties have the potential for approximately 42,500 housing units on a total of 463 hectares of land across Canada

Key messages

Budget 2025 reorients how the Government delivers infrastructure funding to support needs across the country by shifting toward a long‑term, investment‑driven approach that integrates housing and infrastructure planning
By leveraging public lands, deploying flexible financial tools, and acting as a catalyst for modern methods of construction, Build Canada Homes is driving a more productive and innovative homebuilding sector
As one of the largest federal custodians of real property, Public Services and Procurement Canada is leveraging its surplus and underutilized public lands to support government priorities, such as affordable housing
Public Services and Procurement Canada is taking action to accelerate federal property disposal to enable the creation of new homes where Canadians need them most

Background

Budget 2024 aimed to unlock 250,000 units by leveraging surplus and underutilized public lands across the country by 2031.

Public Services and Procurement Canada has facilitated the disposal of federal lands by launching the Canada Public Land Bank website, the Government of Canada's official online inventory of surplus and underutilized federal properties. There are currently 88 properties listed, representing the potential for approximately 42,500 housing units on a total of 463 hectares of land across Canada.

Shared Services Canada

30. Artificial intelligence

Issue

Artificial intelligence is considered a foundational technology, which stands to propel significant social and economic change. Shared Services Canada is exploring how to use new technologies like artificial intelligence to support government work.

Key facts

Key messages

By adopting artificial intelligence, the Government of Canada will transform government operations and support a more efficient and effective public service
Shared Services Canada is playing a leading role in digital transformation across the Government of Canada, facilitating the adoption and scaling of artificial intelligence across the public service. Shared Services Canada is:
- developing a sovereign made-in-Canada artificial intelligence platform that can be deployed across the government in partnership with leading Canadian artificial intelligence companies, the Department of National Defence and the Communications Security Establishment
- leading a competitive procurement process for generative artificial intelligence productivity tools for government employees, which includes five Canadian pre-qualified vendors
- enabling access to sovereign artificial intelligence compute capacity for public and private research, in collaboration with the National Research Council Canada
- applying artificial intelligence and automation across internal operations to automate common information technology support requests, reducing call volumes and costs while improving the user experience

If pressed on Shared Services Canada’s artificial intelligence initiatives:

Shared Services Canada is building foundational tools using in-house artificial intelligence experts, reducing dependency on contractors, lowering costs and keeping knowledge within government
Shared Services Canada has fine-tuned large language models on Canadian content to ensure that artificial intelligence tools reflect Canadian context, values and priorities
Shared Services Canada is scaling CANChat, a generative artificial intelligence tool it developed in-house. This is a safe and secure artificial intelligence platform for public servants, ensuring that Government of Canada data remains in Canada, is hosted on government-accredited infrastructure, and is not accessible by foreign service providers. The department is working to begin deployment across the Government of Canada this spring
Shared Services Canada is leading a competitive procurement process for generative artificial intelligence productivity tools for government employees, which includes five Canadian pre-qualified vendors
- Shared Services Canada has finalized a government-wide procurement of generative artificial intelligence tools that integrate with the Microsoft 365 office productivity suite. Shared Services Canada has established five framework agreements to date, all of which are with Canadian vendors
Shared Services Canada is expanding the infrastructure, skills and expertise to support artificial intelligence adoption, including making commercial artificial intelligence tools available, creating an artificial intelligence marketplace for sharing resources and helping to establish a secure and sovereign supercomputing facility for advancing artificial intelligence research
Shared Services Canada operates the artificial intelligence Centre of Excellence, which supports departments and agencies in applying artificial intelligence, shares best practices, contributes to policy development and fosters collaboration through peer reviews and working groups
the Government of Canada is committed to ensuring the responsible use of artificial intelligence and ensuring it is governed by clear values, ethics and rules

If pressed on jobs:

artificial intelligence is meant to support the work of public servants, not replace them. It can assist with routine and repetitive tasks so employees can focus on work that needs creativity, problem-solving and human judgment. This can increase agility, efficiency and retention by automating routine and time-consuming tasks

If pressed on memoranda of understanding for artificial intelligence:

the Government of Canada recently signed a memorandum of understanding with Cohere Inc. to explore opportunities for deploying artificial intelligence in internal government operations and to strengthen digital sovereignty through a made-in-Canada digital and artificial intelligence ecosystem. Shared Services Canada’s efforts to define requirements for sovereign cloud hosting services furthers this work

Background

To guide the responsible use of artificial intelligence, the Treasury Board of Canada Secretariat released key resources, including the Directive on Automated Decision-Making, the Guide on the use of generative artificial intelligence and the Algorithmic Impact Assessment tool.

31. Digital sovereignty

Issue

Digital sovereignty refers to the Government of Canada’s ability to exercise autonomy over its digital assets and services, ensuring it can manage and protect its digital systems, data and information regardless of where technologies are developed, hosted, or supported. This protects national security, supports economic competitiveness and enables the Government of Canada to operate independently while reducing the risks of foreign interference in the digital age.

It includes:

data sovereignty: Ensuring data complies with national laws and remains under the jurisdiction and control of the country
operational sovereignty: Retaining control over how digital services are deployed and preventing reliance on, or interference from, foreign entities
technological sovereignty: Maintaining the ability to make independent decisions about technology without being overly dependent on monopolistic or foreign‑controlled vendors

Key facts

Under the Directive on Service and Digital, departments and agencies are expected to prioritize computing facilities in Canada—or on Government of Canada premises abroad—for storing or handling sensitive electronic information, such as Protected B, C or classified data. This helps keep important data secure and under Canadian control
Under the Policy on Privacy Protection, departments and agencies must protect personal information properly, reduce privacy risks and remain open and accountable, even when it is processed or stored by third-party companies
The TBS paper Digital Sovereignty: A Framework to improve digital readiness of the Government of Canada examines the challenges related to jurisdictional complexity, reliance on global suppliers, evolving cyber security risks, and internal capacity. It underscores the need for interoperability across the Government of Canada and with trusted international partners. The framework discusses legal issues, supply chain, and technical controls that reinforce Canada’s authority over government systems
Shared Services Canada applies the Buy Canadian Policy in procurements to strengthen Canada’s economic resilience and industrial capacity. The policy supports domestic businesses and workers by prioritizing Canadian suppliers, materials and content wherever feasible
Data protection obligations are embedded in contracts with service providers through standardized security clauses, access restrictions and incident reporting requirements

Key messages

Digital sovereignty is a critical priority for the Government of Canada to protect essential data, reduce risks of foreign interference and strengthen domestic information technology capabilities and Shared Services Canada has been actively working to strengthen information technology diversification by reducing vendor concentration and influence in strategic areas, while promoting Canadian-made solutions
Shared Services Canada will also develop a sovereign made-in-Canada artificial intelligence platform that can be deployed across the government, in partnership with leading Canadian artificial intelligence companies, and enable greater access to sovereign artificial intelligence compute
Shared Services Canada is investing in Canadian technology capabilities and strengthening policies to protect critical infrastructure
Shared Services Canada has launched a procurement process to establish Sovereign Canadian Cloud capabilities for the Government of Canada through a process that prioritizes Canadian-owned and controlled cloud service providers. These efforts will secure Canadian capacity as part of the Government of Canada cloud ecosystem

If pressed on protections:

the Government of Canada applies a range of technical safeguards to protect data, maintain service reliability and ensure continued operation of its systems. These include secure system design; encryption to protect information in storage and in transit; access and identity management; and continuous monitoring to detect and respond to incidents

If pressed on how Shared Services Canada strengthens digital sovereignty:

Shared Services Canada works with Canadian telecommunications companies to provide the Government of Canada with a fast, reliable network that operates on Canadian-owned assets and routes traffic within Canada. This helps keep sensitive government data secure and under Canadian control
Shared Services Canada uses state-of-the-art enterprise infrastructure and multiple layers of defence, including cutting-edge sensors designed to identify and eradicate cyber threats.
Shared Services Canada delivers hybrid hosting models to meet the Government of Canada’s needs for security, scalability and sovereignty. Hosting models range from fully Government of Canada-owned data centres (maximum sovereignty) to public cloud services (lower control, higher scalability)
Shared Services Canada’s enterprise data centres are located within Canada and operate on Canadian-owned assets. This helps keep important data secure and under Canadian control

Background

Due to the global dominance of U.S.-based technology vendors and the comparatively small size of Canada’s information technology (IT) sector, targeted interventions are essential to scale Canadian capabilities. Cloud computing, in particular, is dominated by Amazon Web Services, Google Cloud and Microsoft Azure, posing challenges to operational and technological sovereignty.

Advanced cyber threat actors are increasingly using supply chains to bypass traditional security defences by introducing vulnerabilities. Since 2012, Shared Services Canada has mitigated this risk through Supply Chain Integrity (SCI) procurement reviews for equipment, software and services. These assessments help departments and agencies to identify and potentially mitigate security vulnerabilities before they impact operations.

The Government of Canada has made strategic investments in Canadian IT firms, including a March 2025 announcement by Innovation, Science and Economic Development Canada (ISED) of up to $240 million in funding for Toronto-based Cohere Inc. This investment marks Cohere as the first recipient of the AI Compute Challenge, part of the $2 billion Canadian Sovereign AI Compute Strategy.

In August 2025, the Government of Canada signed a memorandum of understanding with Cohere to explore opportunities for deploying AI technologies across the Government of Canada to enhance operations within the public service and to build out Canada’s commercial capabilities in using and exporting AI.

32. Government transformation

Issue

As the Government of Canada’s common information technology services provider, Shared Services Canada plays a central role in driving government transformation and creating government-wide efficiencies—in close collaboration with the Treasury Board of Canada Secretariat’s Office of the Chief Information Officer and Public Services and Procurement Canada.

Key facts

Key messages

The Government of Canada is committed to transformation and increasing government productivity while reducing the cost of operations. A more effective and efficient government will result in improved program and service delivery to Canadians and businesses
Shared Services Canada is playing a key role in digital transformation across the Government of Canada, by facilitating the adoption and scaling of artificial intelligence across the public service. Shared Services Canada will also achieve $318.5 million in ongoing savings through efficiencies in its internal operations
Aligned to the Government’s priority to modernize the way government procures goods and services, Shared Services Canada is reviewing all aspects of its information technology procurement by undertaking benchmarking, prioritizing Canadian vendors and sovereign infrastructure and services, and ensuring best value for Canada
Shared Services Canada is enabling artificial intelligence across government by:
- developing a sovereign made-in-Canada artificial intelligence platform that can be deployed across the government in partnership with leading Canadian artificial intelligence companies, the Communications Security Establishment and the Department of National Defence
- leading a competitive procurement process for generative artificial intelligence productivity tools for government employees, which includes 3 Canadian pre-qualified vendors
- enabling access to sovereign artificial intelligence compute capacity for public and private research, in collaboration with the National Research Council Canada
- applying artificial intelligence and automation across internal operations to automate common information technology support requests and reduce call volumes and costs, while improving the user experience
Shared Services Canada is transforming the government’s hosting infrastructure from a sprawling landscape of siloed and outdated systems to modern hosting solutions. This new model combines cloud services and traditional on-premise data centres to optimize performance, reduce costs and provide flexibility
Shared Services Canada will advance a common government-wide desktop solution to transition departments to a standardized, cloud-managed desktop service. This will reduce complexity, standardize information technology security, increase portability and result in significant cost savings for Canadians
Shared Services Canada also supports the government’s broader digital transformation agenda through partner-led projects and initiatives, including enabling access to sovereign artificial intelligence compute capacity in collaboration with National Research Council Canada; ongoing work to improve human resources and pay for federal public servants; and enabling the Department of National Defence to modernize their systems to support the Canadian Armed Forces at home and abroad

If pressed on cost savings:

Under the Comprehensive Expenditure Review, Shared Services Canada will meet up to 15% in savings targets over 3 years, achieving ongoing savings of $318.5 million
Specifically, Shared Services Canada will:
- standardize platforms, including realigning enterprise software offerings to match current needs
- eliminate low-use or redundant licences
- eliminate non-essential telephone fixed lines in all Government of Canada buildings, which will reduce expenses, and deploy cost-effective softphones to all workers
- review, consolidate and renegotiate contracts to eliminate duplication, secure better pricing and align spending with enterprise needs
- leverage emerging technologies to automate repetitive tasks, use artificial intelligence-driven tools to optimize operations and service delivery, automate common information technology support requests to reduce call volumes and costs while improving user experience
- build its in-house capacity and expertise to reduce spending on external consultants and contractors for ongoing operations
- simplify the Government of Canada cloud footprint by consolidating over 287 departmental partner cloud environments into GC Cloud One, Shared Services Canada’s enterprise cloud
- reduce and rationalize the remaining 190 legacy data centres across Canada into 4 enterprise data centres, 1 High Performance Computing Centre, 5 consolidation data centres, and approximately 50 edge computing sites

Background

Shared Services Canada (SSC) is responsible for modernizing, securing and managing the IT infrastructure that supports departments and agencies. This ensures reliable and effective service delivery to Canadians, both domestically and abroad. Treasury Board of Canada Secretariat’s Office of the Chief Information Officer sets government-wide direction for data, IT, cyber security and service management, while individual departments and agencies remain responsible for their own applications and data.

33. Cyber security

Issue

The Government of Canada, like all organizations worldwide, faces ongoing cyber threats from bad actors, on a national and international level, that require constant attention and strong security measures. Cyber threats are becoming more complex and sophisticated. These include criminal activities such as ransomware attacks and attacks by state-sponsored adversaries.

Key facts

The number of cyber events blocked by Shared Services Canada varies from day to day and from year to year. In 2025, Shared Services Canada blocked approximately 7.7 trillion cyber events, representing an average of 21.02 billion events a day
Investments in strong cyber security systems reduce the costs associated with service disruptions and recovery

Key messages

Together, Shared Services Canada and the Communications Security Establishment’s Canadian Centre for Cyber Security provide sophisticated cyber security tools, including proprietary sensors that provide additional defence beyond industry capabilities and have no commercial equivalent
Shared Services Canada provides state-of-the-art enterprise infrastructure and employs modern commercial cyber security solutions to defend Government of Canada systems against a wide range of cyber threats
Shared Services Canada employs multiple layers of cyber security defences, including firewalls, network defences, anti-denial of service measures, anti-virus and anti-malware tools, encryption, virtual private networking and robust identification and authentication services
Shared Services Canada is actively reducing security vulnerabilities by consolidating, standardizing and modernizing information technology systems across the Government of Canada
To strengthen data protection, Shared Services Canada is implementing zero-trust principles—minimizing reliance on implicit trust within networks and deploying modern, industry-leading security solutions
In consultation with the Treasury Board of Canada Secretariat and the Communications Security Establishment, Shared Services Canada integrates security and privacy by design when developing new services

If pressed on supply chain integrity:

together with the Cyber Centre, Shared Services Canada has completed over 83,000 Supply Chain Integrity reviews since 2012 to help ensure that components used in systems do not compromise safety or security

If pressed on quantum computing:

a quantum computer capable of compromising many cryptographic standards could be available in the next 5 to 8 years
departments and agencies will be required to develop customized migration plans to transition their systems to post-quantum cryptography. Shared Services Canada is developing a comprehensive strategy to ensure its enterprise solutions align with the cryptographic recommendations from the Cyber Centre

If pressed on small departments and agencies:

Shared Services Canada is working with 43 small departments and agencies to deliver a targeted set of secure information technology services. By the end of 2024 to 2025, 23 small departments and agencies had fully transitioned to government-managed Internet and remote access services, while 15 had adopted the shared government email system
by the end of 2026 to 2027, all remaining eligible small departments and agencies are expected to fully transition

If pressed on provincial and territorial cooperation:

in September, all 14 federal, provincial and territorial jurisdictions signed a historic cyber security agreement to share real-time intelligence, tools and services to counter cyber threats
the agreement strengthens Shared Services Canada’s cyber security posture through secure intergovernmental collaboration on threat intelligence and incident response

Background

Cyber security is a shared responsibility across the Government of Canada (GC):

the Treasury Board Secretariat (TBS) sets government-wide cyber security policies and leads the response to major cyber incidents
Shared Services Canada (SSC) builds and manages secure information technology (IT) systems, monitors key applications and ensures new services are designed with security and privacy in mind
the Communications Security Establishment (CSE) is the lead agency for cyber security. It provides defensive capabilities that are not currently available commercially, adding an additional layer of defence unique to the GC
all departments and agencies must protect their own systems and applications
Public Safety Canada leads the National Cyber Security Strategy, working with partners outside government to protect Canadians and businesses
the Royal Canadian Mounted Police (RCMP) investigates cyber crimes that target government systems
the Canadian Security Intelligence Service (CSIS) gathers intelligence on threats to national security and supports departments through security screening and foreign intelligence
the Canadian Armed Forces (CAF) shares cyber threat intelligence with allies and conducts foreign cyber operations

The GC Cyber Security Event Management Plan (GC CSEMP) outlines how different departments respond to cyber incidents. Smaller issues are handled by the affected department, while serious ones are managed by teams led by TBS and the Cyber Centre. SSC’s responsibilities during a cyber security event include watching for unusual network activity, blocking cyber threat activity, assessing service impacts, reporting through the Cyber Centre and implementing prevention, mitigation and recovery efforts, such as emergency patching and isolating infrastructure.

Page details

2026-08-14

Standing Committee on Government Operations and Estimates: May 5, 2026

On this page

General items

1. Opening statement

Opening

Public Services and Procurement Canada year-over-year variances

Capital investment

Comprehensive Expenditure Review

Pay and human resources

Additional Items

Shared Services Canada year-over-year variances

Closing

2. Public Services and Procurement Canada and the portfolio’s 2026 to 2027 Main Estimates overview

The net decrease is mainly due to the following year-over-year variances

Long-term capital investment plan and pre-planning for capital

Reason for the variance

Comprehensive Expenditure Review

Reason for the variance

Government of Canada’s pay administration program

Reason for the variance

Presidency of the 2025 G7 Summit in Canada

Reason for the variance

Electronic Procurement Solution

Reason for the variance

Non-discretionary expenses associated with Crown-owned buildings and leased spaces

Reason for the variance

Next Generation Human Resources and Pay Strategy

Reason for the variance

Other

Crown Corporation 2026 to 2027 Main Estimates overview

The net decrease is mainly due to the following year-over-year variances:

Cash injections under section 31 of the Canada Post Corporation Act

Reason for the variance

National Capital Commission

3. Public Services and Procurement Canada’s 2026 to 2027 Departmental Plan

Issue

Key facts

Key messages

Background

Canadian General Standards Board

4. Shared Services Canada 2026 to 2027 Main Estimates overview

New funding: $101.4 million increase

(A) Funding for core Information Technology services

Purpose

(B) Funding for security information and event management solution

Purpose

Transfers: ($0.9 million) decrease

(C) Transfers between Shared Services Canada and other organizations

Purpose

Other Adjustments: ($240.0 million) decrease

(D) Reductions to implement the Comprehensive Expenditure Review

Purpose

(E) Adjustments in funding related to multi-year initiatives and projects

Purpose

(F) Compensation adjustments

Purpose

Statutory appropriations: $10.9 million increase

(G) Employee Benefit Plan

Purpose

Net nil effect

(H) Vote netted revenue

Purpose

5. Shared Services Canada’s 2026 to 2027 Departmental Plan

Issue

Key facts

Key messages

Digital services

Hosting

Connectivity and cyber security

Service delivery

Background

Key issues

6. Comprehensive Expenditure Review

Issue

Key facts

Key messages

Background

7. Buy Canadian

Issue

Key facts