Public Services and Procurement Canada
Quarterly Financial Report for the quarter ended September 30, 2024
On this page
- 1. Introduction
- 2. Highlights of fiscal quarter and fiscal year-to-date results
- 3. Risks and uncertainties
- 4. Significant changes to operations, personnel and programs
- 5. Approval by senior officials
- 6. Appendix
1. Introduction
This Quarterly Financial Report (QFR) should be read in conjunction with the Main Estimates. It has been prepared by management as required under section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Directive on Accounting Standards, GC 4400 departmental Quarterly Financial Report. It has not been subject to an external audit or review.
1.1 Raison d'être
Public Works and Government Services Canada (PWGSC) was established effective June 20, 1996, under the Department of Public Works and Government Services Act. As of November 4, 2015, PWGSC started operating as Public Services and Procurement Canada (PSPC). PSPC plays an important role in the daily operations of the Government of Canada. It supports federal departments and agencies in the achievement of their mandated objectives as their central purchasing agent, real property manager, linguistic authority, treasurer, accountant, pay and pension administrator, and common service provider. PSPC’s mission is to deliver high-quality, central programs and services that ensure sound stewardship on behalf of Canadians and meet the program needs of federal institutions. Its vision is to excel in government operations.
Further details on the department's authority, mandate and core responsibilities can be found in the Main Estimates and the Departmental Plan for the fiscal year ending March 31, 2025.
1.2 Basis of presentation
This quarterly report has been prepared by management using an expenditure basis of accounting and a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities. The accompanying Table 3: Statement of authorities (unaudited) includes the department's spending authorities granted by Parliament, and those used by the department and are consistent with the Main Estimates for the current fiscal year.
The authority of Parliament is required before money can be spent by the government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.
When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.
The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.
1.3 Public Services and Procurement Canada's financial structure
PSPC provides services to many government departments, agencies and Crown corporations through a variety of funding mechanisms. This includes budgetary authorities that are comprised of voted and statutory authorities, as well as non-budgetary authorities. The voted budgetary authorities include operating expenditures, vote-netted revenues and capital expenditures, while the statutory authorities are mainly composed of revolving funds, employee benefit plans and payments in lieu of taxes (PILT). The non-budgetary authorities consist primarily of the Seized property working capital account (the description can be found in paragraph 1.3.4).
PSPC's complex financial structure may result in significant fluctuations in authorities on a quarterly basis, which are due to timing differences that are resolved by year-end. These are summarized in the next 4 paragraphs:
1.3.1 Cost-recovery basis
For the most part, PSPC delivers its services on a cost-recovery basis, generating revenues via revolving fund (the funds) organizations and programs within the operating vote. These organizations and programs are mainly designed to provide services to other government organizations and are expected to recover the cost of their operations through revenues. However, the costs incurred by the funds are usually disbursed prior to invoicing the client, which generally occurs upon completion of a project or after services are rendered, and thus revenues may be collected in a subsequent quarter.
1.3.2 Project management
PSPC manages a variety of real property projects that progress through phases from planning to funding and from procurement to construction. Historical trends have shown that expenditures against these projects are not incurred evenly throughout the year; thus, quarter-to-quarter fluctuations are normal. Such projects include:
- the Alaska Highway in British Columbia and Yukon
- the rehabilitation of the Parliamentary Precinct in Ottawa
1.3.3 Payments in lieu of taxes
PILT issued by PSPC are funded through a statutory vote and paid on behalf of other participating federal departments. Payments are subsequently recovered from the participating departments and are recorded as statutory grants in the Public Accounts of Canada. Timing fluctuations can occur between the payments and the recoveries from the other departments.
1.3.4 Seized property account
PSPC also manages seized property for the Government of Canada pursuant to the Seized Property Management Act. The financial management of this activity is undertaken through the non-budgetary Seized property working capital account. Charged to this account are expenditures and advances made to maintain and manage any seized or restrained property. PSPC recovers its costs from this account once the property owner loses the right to the property and it is disposed of.
2. Highlights of fiscal quarter and fiscal year-to-date results
2.1 Significant changes to authorities
As presented in Table 3: Statement of authorities (unaudited), year-to-date PSPC authorities available for use decreased by $27.8 million as compared to the same quarter of the previous year ($4,836.3 million in the current fiscal year compared to $4,864.1 million in the previous fiscal year). The items responsible for the overall decrease are outlined in the table below, followed by a description for each variance:
| Initiatives | Operating | Capital | Budgetary statutory authorities | Total variance |
|---|---|---|---|---|
| Collective agreements | 96.4 | 0 | 16.4 | 112.8 |
| Laboratories Canada | 26.9 | 0 | 1.6 | 28.5 |
| Price and volume protection | 20.7 | 0 | 0 | 20.7 |
| Electronic Procurement Solution | 14.3 | 0 | 1.4 | 15.7 |
| Employee Benefit Plan adjustment | 0 | 0 | (55.3) | (55.3) |
| Refocusing Government Spending | (39.9) | (104.8) | (3.5) | (148.2) |
| Other | (2.2) | (20.0) | 20.2 | (2.0) |
| Cumulative variance in authorities available for use | 116.2 | (124.8) | (19.2) | (27.8) |
Groupings can change between quarters due to materiality of initiatives.
Amounts may not balance with other public documents due to rounding.
Collective agreements—increase of $112.8 million
Funding received from the Treasury Board Central Vote for Collective Bargaining as a result of the various collective agreements that were renewed, signed, and implemented following the 2023 to 2024 Main Estimates.
Laboratories Canada—increase of $28.5 million
The increase is due to Budget 2023 funding received to continue supporting the renewal of key science and technology infrastructure. The Laboratories Canada strategy (previously referred to as the Federal Science and Technology Infrastructure Initiative) was established in 2018 as a long-term strategy to be delivered in phases, to renew federal laboratories and support a collaborative approach to conducting science and technology.
Price and volume protection—increase of $20.7 million
The increase is a result of funding received for the protection from inflation and price variations relating to space requirements for real property elements over which PSPC has very little or no control such as rent, cost of utilities and accommodation costs.
Electronic Procurement Solution (EPS)—increase of $15.7 million
The EPS cloud-based solution is an integral part of PSPC’s modernization of acquisition services. The project delivery was completed and the EPS solution was transitioned to the in-service phase in July 2023. The new funding announced in Budget 2023 is for the steady-state operation of the EPS within PSPC, via an existing contract for contractor-managed cloud service delivery including infrastructure maintenance, software licenses and operations support.
Employee Benefit Plan (EBP) adjustment—decrease of $55.3 million
The decrease relates to the EBP rate adjustments as per the Treasury Board of Canada Secretariat (TBS) instructions which is applied on the year-over-year change in funding received.
Refocusing Government Spending—decrease of $148.2 million
As announced in Budget 2023, the federal government proposed a reduction in organizations’ spending. PSPC is planning to reduce its spending by $148.2 million in fiscal year 2024 to 2025, by $154.1 million in 2025 to 2026 and by $162.2 million in 2026 to 2027 and ongoing. PSPC will achieve these reductions by reducing targeted operating expenditures.
Other—decrease of $2.0 million
The decrease is the result of funding variances in miscellaneous projects and activities.
2.2 Significant changes to year-to-date net expenditures
As presented in Table 4: Departmental budgetary expenditures by standard object (unaudited), year-to-date total net budgetary expenditures have increased by $312.8 million as compared to the same quarter of the previous year ($2,672.3 million in the current fiscal year compared to $2,359.5 million in the previous fiscal year).
| Standard object | September 30, 2024 Year-to-date used at quarter end |
September 30, 2023 Year-to-date used at quarter end |
Year-over-year variance |
|---|---|---|---|
| Personnel | 1,046.5 | 926.8 | 119.7 |
| Transportation and communications | 37.6 | 30.2 | 7.4 |
| Information | 8.2 | 5.5 | 2.7 |
| Professional and special services | 1,100.6 | 880.3 | 220.3 |
| Rentals | 646.1 | 651.8 | (5.7) |
| Repair and maintenance | 505.2 | 507.9 | (2.7) |
| Utilities, materials and supplies | 22.6 | 44.5 | (21.9) |
| Acquisition of land, buildings and works | 406.4 | 278.4 | 128.0 |
| Acquisition of machinery and equipment | 39.2 | 25.1 | 14.1 |
| Transfer payments | 154.8 | 188.2 | (33.4) |
| Public debt charges | 48.0 | 52.6 | (4.6) |
| Other subsidies and payments | 204.4 | 182.5 | 21.9 |
| Revenues netted against expenditures | (1,547.3) | (1,414.3) | (133.0) |
| Total net budgetary expenditures | 2,672.3 | 2,359.5 | 312.8 |
Comparative figures have been reclassified to conform to the current year's presentation.
Amounts may not balance with other public documents due to rounding.
The year-over-year net increase of $312.8 million is mainly attributable to:
- personnel—increase of $119.7 million
- the increase is mainly due to:
- increase in salaries as a result of the ratification of various collective agreements
- workforce dedicated to reducing the backlog of pay transactions and to stabilize pay operations
- workforce required to meet business needs mainly in Real Property Services Revolving Fund activities as well as the Next Generation Human Resources and Pay System Initiative
- the increase is mainly due to:
- professional and special services—increase of $220.3 million
- PSPC’s mandate as real property manager includes entering into multi-year projects that require specialized skills and technical expertise. The increase in professional and special services is related to the increase in the momentum of key property and infrastructure projects, mainly due to the following:
- Real Property Services Revolving Fund as a result of higher business volume related to other government departments, mostly in remediation projects such as Giant Mine as well as modernization of laboratory facilities such as the Sidney Centre for Plant Health
- continue to implement the Long Term Vision and Plan (LTVP), a multi-decade strategy to restore and modernize Canada’s Parliamentary Precinct, such as the Centre Block building rehabilitation project, the construction of the new Parliament Welcome Centre as well as the redevelopment of Block 2 (the urban block bounded by Metcalfe, Wellington, O’Connor and Sparks streets in Ottawa, Ontario)
- major projects in the National Capital Region (NCR), such as the rehabilitation of Les Terrasses de la Chaudière and the West Memorial building as well as the replacement of Alexandra Bridge
- PSPC’s mandate as real property manager includes entering into multi-year projects that require specialized skills and technical expertise. The increase in professional and special services is related to the increase in the momentum of key property and infrastructure projects, mainly due to the following:
- repair and maintenance—decrease of $2.7 million
- the decrease is mainly due to expenditures for Energy Services Acquisition Program (ESAP) being reclassified from “Repair and maintenance” to “Acquisition of land, buildings and works” in the fourth quarter of the previous year
- the decrease is offset by an increase in several projects across Canada performed via Real Property Services Revolving Fund such as the maintenance of the Alaska Highway in Pacific region and the restoration of the Province House National Historic Site for Parks Canada in Atlantic region
- utilities, materials and supplies—decrease of $21.9 million
- the decrease is mainly due to Optional Services Revolving Fund (OSRF) as a result of the herpes zoster vaccine (Shingrix) no longer being ordered through OSRF’s vaccine bulk purchase program on behalf of provincial and territorial governments, federal departments and agencies. Changes in client demand for other vaccines and timing of vaccine purchases and recoveries also contribute towards the variance
- acquisition of land, buildings and works—increase of $128.0 million
- the increase is mainly due to:
- projects performed via the Real Property Services Revolving Fund such as the renewal of Place du Portage III in the NCR, the reconstruction of wharfs in Atlantic region for Fisheries and Oceans Canada and the construction of an aircraft hangar facility for Transport Canada in Iqaluit, Nunavut
- major capital projects across Canada such as the construction of the new federal building in Shawinigan, Quebec and the modernization of the Daniel J. MacDonald Building in Charlottetown, Prince Edward Island
- expenditures for ESAP being reclassified from "Repair and maintenance" to "Acquisition of land, buildings and works" in the fourth quarter of the previous year noted above
- the increase is partially offset by a decrease due to the completion of the rehabilitation project at 25 St. Clair Avenue East in Toronto, Ontario last fiscal year
- the increase is mainly due to:
- acquisition of machinery and equipment—increase of $14.1 million
- the increase is mainly due to acquisition of software for the Contract Modernization Initiative (CMI), which was developed as part of the department’s commitment to modernize procurement. The CMI simplifies the Government of Canada’s contractual documents, changing both the structure and content for greater consistency and transparency
- transfer payments—decrease of $33.4 million
- the decrease is due to a timing difference between when a payment in lieu of taxes is issued to municipalities and when the cost is recovered from other government departments
- other subsidies and payments—increase of $21.9 million
- the increase is mainly due to:
- timing difference related to payments in lieu of taxes for PSPC-owned buildings
- increase in in card acceptance fees related to point-of-sale transactions as sales of goods and services in federal departments and agencies have increased mostly related to passport and other citizenship services
- the increase is mainly due to:
- other standard objects—decrease of $0.2 million
- the decrease is mainly due to changes in expenditures related to day-to-day operations
- revenues netted against expenditures—increase of $133.0 million
- the increase is mainly due to higher revenues in Real Property Services Revolving Fund as a result of higher business volume related to other government departments, mostly in remediation projects such as Giant Mine, as well as other projects in different regions across Canada
- the increase is partially offset by a decrease due to timing differences in invoicing other government departments for digital services and for human resources services related to MyGCHR
3. Risks and uncertainties
PSPC integrates risk management principles into business planning, decision-making and organizational processes to minimize negative impacts and maximize opportunities across our diverse range of services and operations. Risk management at PSPC is carried out in accordance with the TBS's Framework for the Management of Risk, the Management Accountability Framework, and PSPC's Integrated Risk Management Framework.
The key risks identified as having a potential financial impact on PSPC's operations are:
3.1 Funding mechanism and coordination
PSPC may be unable to achieve its departmental investment objectives and targets, due to the variety of funding mechanisms employed by the department and the need to have better tools to effectively implement the OnePSPC concept, which may impede on-going relationships with clients and the efficiency and effectiveness of the department’s programs and services. To mitigate this risk, PSPC is taking the following measures, among others:
- improving PSPC’s Investment Management Framework and associated governance, further refining an enterprise-wide prioritization model for all of PSPC’s asset portfolios and aligning resources to priorities
- implementing Project Costing Model Modernization initiative, with focus on 4 key deliverables:
- PSPC Integrated Project Costing Framework
- Monte Carlo simulation model
- costing guides and tools
- project gating amendments
3.2 Supply and delivery risk
The effective and efficient delivery of major PSPC initiatives may be impeded due to the nature of large-scale and complex work (project scale, complexities, partner dependencies, evolving security requirements) along with current global events (inflation, supply delays and industry capacity limitations) which may affect the department’s credibility with stakeholders. To mitigate this risk, PSPC is taking the following measures, among others:
- developing a plan to accommodate forecasted growth and deliver based on allocated funds within the continual improvement framework
- structuring, financing and accelerating the modernization of the office space to deliver on the GCworkplace vision
3.3 Compromised assets
The integrity, safety and accessibility of PSPC real property and infrastructure assets could be compromised by climate change, natural disasters, infrastructure deterioration and original design insufficiencies, as well as human related actions, which may impede the continuity of government operations and the well-being of Canadians. To mitigate this risk, PSPC is taking the following measures, among others:
- continuing to deliver various projects to:
- preserve buildings
- stop or reduce ongoing deterioration
- respond to urgent building repair requirements
- address health and safety issues
- reduce the cost and complexity of future work
- continuing to implement adaptation measures based on the Parliamentary Precinct climate change vulnerability assessment
- continuing to adjust security measures in the Parliamentary Precinct to meet evolving threats such as:
- restricting vehicular access to certain areas
- protecting assets and occupants while encouraging public engagement
- maintaining a functional space for those working there
3.4 Effective delivery
PSPC may encounter delays to achieving full stabilization of pay administration for the Government of Canada because of the sustained increase in intake of Human Resources (HR) transactions while facing capacity constraints. Persistent intake growth could further impede efforts to increase stakeholder trust and lessen liabilities to the Government of Canada. To mitigate this risk, PSPC is taking the following measures, among others:
- addressing critical cases in the backlog and maintaining intake service standards while ensuring that efforts will also be placed on eliminating the remaining non critical backlog cases, as capacity allows
- implementing a hiring plan to maintain compensation capacity at the Pay Centre and continue expanding skillsets of existing workforce
- providing reports on HR-to-Pay stabilization to assist with the identification of upstream issues that affect pay
4. Significant changes to operations, personnel and programs
This section highlights significant changes in operations, personnel, and programs during the second quarter of the current fiscal year. The following changes in senior personnel were made since the last published quarterly report:
- the departure of Wojciech (Wojo) Zielonka, Assistant Deputy Minister and Chief Financial Officer, effective August 30, 2024. Following the end of the second quarter, Michael Hammond was appointed Assistant Deputy Minister and Chief Financial Officer, effective November 4, 2024
5. Approval by senior officials
Approved by:
Arianne Reza
Deputy Minister
Gatineau, Canada
November 26, 2024
Michael Hammond, CPA
Assistant Deputy Minister and
Chief Financial Officer
Gatineau, Canada
November 18, 2024
6. Appendix
| Breakdown by authorities | Fiscal year ending March 31, 2025 | Fiscal year ending March 31, 2024 | ||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending March 31, 2025 table 3 note 1, table 3 note 2 | Used during the quarter ended September 30, 2024 |
Year-to-date used at quarter end | Total available for use for the year ending March 31, 2024 table 3 note 1, table 3 note 2 | Used during the quarter ended September 30, 2023 |
Year-to-date used at quarter end | |
| Vote 1 | ||||||
| Gross operating expenditures | 4,605,951 | 1,157,607 | 2,170,769 | 4,483,737 | 1,123,845 | 2,039,186 |
| Vote-netted revenues | (1,405,199) | (328,558) | (586,396) | (1,399,243) | (379,065) | (642,925) |
| Net operating expenditures | 3,200,752 | 829,049 | 1,584,373 | 3,084,494 | 744,780 | 1,396,261 |
| Vote 5—Capital expenditures | 1,435,135 | 449,593 | 705,911 | 1,559,955 | 364,251 | 574,848 |
| Real Property Services Revolving Fund | ||||||
| Gross expenditures | 2,451,434 | 651,016 | 1,031,526 | 2,308,780 | 525,938 | 820,801 |
| Revenues | (2,430,634) | (639,694) | (884,455) | (2,305,280) | (523,277) | (686,700) |
| Net expenditures | 20,800 | 11,322 | 147,071 | 3,500 | 2,661 | 134,101 |
| Translation Bureau Revolving Fund | ||||||
| Gross expenditures | 183,945 | 39,718 | 76,306 | 182,525 | 43,122 | 76,043 |
| Revenues | (178,870) | (37,000) | (67,878) | (174,456) | (39,097) | (70,677) |
| Net expenditures | 5,075 | 2,718 | 8,428 | 8,069 | 4,025 | 5,366 |
| Optional Services Revolving Fund | ||||||
| Gross expenditures | 15,104 | (540) | (6,529) | 15,630 | 15,356 | 9,485 |
| Revenues | (15,208) | (6,833) | (8,560) | (15,815) | (1,554) | (14,014) |
| Net expenditures | (104) | (7,373) | (15,089) | (185) | 13,802 | (4,529) |
| Total of all revolving funds | ||||||
| Gross expenditures | 2,650,483 | 690,194 | 1,101,303 | 2,506,935 | 584,416 | 906,329 |
| Revenues | (2,624,712) | (683,527) | (960,893) | (2,495,551) | (563,928) | (771,391) |
| Total revolving fund net expenditures | 25,771 | 6,667 | 140,410 | 11,384 | 20,488 | 134,938 |
| Other budgetary statutory authorities | ||||||
| Contributions to employee benefit plans | 173,581 | 43,395 | 86,790 | 207,435 | 32,601 | 65,202 |
| Minister of Public Services and Procurement—Salary and motor car allowance | 99 | 25 | 50 | 95 | 24 | 48 |
| Refunds of amounts credited to revenues in previous years | 0 | 0 | 0 | 0 | 0 | 0 |
| Spending of proceeds from the disposal of surplus Crown assets | 999 | 5 | 5 | 732 | 47 | 47 |
| Collection agency fees | 0 | 0 | 0 | 0 | 0 | 0 |
| Payment in lieu of taxes to municipalities and other taxing authoritiestable 3 note 2 | 0 | (272,835) | 154,791 | 0 | (187,508) | 188,152 |
| Total other budgetary statutory authorities | 174,679 | (229,410) | 241,636 | 208,262 | (154,836) | 253,449 |
| Total budgetary authorities | 4,836,337 | 1,055,899 | 2,672,330 | 4,864,095 | 974,683 | 2,359,496 |
| Non-budgetary authorities | 0 | 0 | 0 | 0 | 0 | 0 |
| Total authorities | 4,836,337 table 3 note 3 | 1,055,899 | 2,672,330 | 4,864,095table 3 note 3 | 974,683 | 2,359,496 |
Table 3 Notes
|
||||||
| Breakdown by standard object | Fiscal year ending March 31, 2025 | Fiscal year ending March 31, 2024 | ||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 2025table 4 note 1, table 4 note 2 |
Expended during the quarter ended September 30, 2024 |
Year-to-date used at quarter end | Planned expenditures for the year ending March 31, 2024table 4 note 1, table 4 note 2 |
Expended during the quarter ended September 30, 2023 | Year-to-date used at quarter end | |
| Expenditures | ||||||
| Personnel | 2,084,397 | 531,795 | 1,046,509 | 1,957,093 | 485,280 | 926,847 |
| Transportation and communications | 69,009 | 20,908 | 37,599 | 66,038 | 17,655 | 30,191 |
| Information | 33,901 | 5,306 | 8,188 | 16,517 | 3,195 | 5,540 |
| Professional and special services | 2,110,043 | 724,637 | 1,100,591 | 2,397,729 | 569,865 | 880,331 |
| Rentals | 1,335,047 | 306,743 | 646,138 | 1,350,778 | 329,329 | 651,783 |
| Repair and maintenance | 1,495,814 | 284,708 | 505,239 | 1,193,380 | 307,841 | 507,856 |
| Utilities, materials and supplies | 174,851 | 14,766 | 22,640 | 150,391 | 34,758 | 44,535 |
| Acquisition of land, buildings and works | 888,071 | 264,972 | 406,395 | 955,109 | 177,538 | 278,392 |
| Acquisition of machinery and equipment | 138,497 | 16,967 | 39,160 | 153,017 | 20,545 | 25,132 |
| Transfer paymentstable 4 note 2 | 0 | (272,752) | 154,791 | 0 | (187,508) | 188,152 |
| Public debt charges | 119,631 | 24,013 | 48,004 | 124,808 | 26,710 | 52,567 |
| Other subsidies and payments | 416,987 | 145,921 | 204,365 | 394,029 | 132,468 | 182,486 |
| Total gross budgetary expenditures | 8,866,248 | 2,067,984 | 4,219,619 | 8,758,889 | 1,917,676 | 3,773,812 |
| Less revenues netted against expenditures | ||||||
| Revolving funds revenues | (2,624,712) | (683,527) | (960,893) | (2,495,551) | (563,928) | (771,391) |
| Vote-netted revenues | (1,405,199) | (328,558) | (586,396) | (1,399,243) | (379,065) | (642,925) |
| Total revenues netted against expenditures | (4,029,911) | (1,012,085) | (1,547,289) | (3,894,794) | (942,993) | (1,414,316) |
| Total net budgetary expenditures | 4,836,337 | 1,055,899 | 2,672,330table 4 note 3 | 4,864,095 | 974,683 | 2,359,496table 4 note 3 |
Table 4 Notes
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