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The report provided a biting overview of the federal government’s dealing with of this system, from sole-source contracting to restoration of ineligible funds
Printed Dec 02, 2024 • Final up to date 19 minutes in the past • 5 minute learn
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Auditor Normal Karen Hogan. Picture by Adrian Wyld/The Canadian Press/File
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OTTAWA — The federal authorities “compromised” its emergency COVID-19 mortgage program due to “poor” administration, non-competitive contracts that paid a whole bunch of thousands and thousands of {dollars} to a single vendor and an absence of oversight that led to $3.5 billion in loans to ineligible corporations, says auditor basic Karen Hogan.
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The auditor basic report on the Canada Emergency Enterprise Account (CEBA) provided a biting overview of the federal government’s dealing with of this system, from contracting to restoration of ineligible funds.
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Established early within the COVID-19 pandemic, CEBA provided emergency loans of $40,000 to $60,000 to small companies and forgave $10,000 to $20,000 if the sum was reimbursed by a sure date. Administered by Export Growth Canada (EDC), this system doled out $49.1 billion in loans to almost 900,000 small companies.
“The program was not managed with due regard for value for money,” Hogan instructed the general public accounts committee Monday.
EDC’s poor administration “compromised” the worth for cash of CEBA, Hogan concluded. That included distributing $3.5 billion to ineligible recipients and granting over $300 million value of sole-source, non-competitive contracts to world IT big Accenture to run this system on EDC’s behalf.
The report revealed some staggering “mismanagement” by EDC of its contracting with Accenture, corresponding to permitting the corporate to primarily write its personal contracts for years and failing to make sure the federal government had full possession of program information.
Total, the audit discovered that this system disbursed loans shortly and in a well timed method in the course of the pandemic. It additionally discovered that the overwhelming majority (91 per cent) of mortgage recipients audited have been eligible, although the remaining 9 per cent of ineligible recipients represented a $3.5-billion expenditure.
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In a joint assertion, Liberal ministers Chrystia Freeland and Rechie Valdez defended CEBA as a “critical lifeline” for small companies in the course of the pandemic and took a swipe at Hogan’s report. They mentioned the audit “fails to properly acknowledge that CEBA was designed and delivered during a global pandemic.”
Conservative MP Kelly McCauley criticized EDC for throwing away taxpayer’s cash to Accenture.
At committee, Liberal MPs Iqra Khalid and Nate Erskine-Smith took subject with the very fact Hogan emphasised the 9 per cent of ineligible recipients versus the 91 per cent of eligible small companies who obtained a mortgage.
“This report … is taking the 9 per cent and really highlighting what went wrong when we know that 91 per cent of it went right,” Khalid instructed Hogan.
In an announcement, EDC senior vice-president Todd Winterhalt mentioned the company was “very proud” of its work on CEBA, a “net-new program with no precedent or instruction manual to follow.”
He additionally mentioned EDC had already begun implementing most of that OAG’s suggestions, corresponding to strengthening its contract and vendor efficiency administration practices for present and future contracts.
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Hogan was important of EDC’s determination to instantly outsource supply of the CEBA to Accenture by way of a collection of sole-source, non-competitive contracts initially valued at $1 million however that finally ballooned to $313 million. The company did not “exercise basic controls” in its contracting with the worldwide IT big, she mentioned.
“We found significant weaknesses in EDC’s contract management,” Hogan instructed MPs. “The non-competitive contracts awarded to Accenture represented 92 per cent of the total value of $342 million in contracts related to the CEBA program.
“EDC failed to exercise basic controls and contract management, such as monitoring whether amounts paid aligned (with) the work performed,” she added. “Since ongoing program delivery uses Accenture’s proprietary IT systems, EDC will have to rely on these non-competitive contracts until at least 2028.”
At one level, Hogan mentioned EDC even requested the corporate to run a “quasi-competitive” bidding course of that was in the end received by an Accenture subsidiary.
“It is that kind of lack of managing a conflict-of-interest that I would have expected EDC to have done better,” Hogan mentioned, noting that it was “unacceptable” that Accenture and its subsidiary weren’t faraway from the method.
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“The mismanagement of those contracts leads me to conclude that the government compromised that value for money. It could have been done for less in a more efficient way,” Hogan instructed MPs.
EDC contracted out CEBA’s supply as a result of it shortly realized that it didn’t have the interior capability to function this system, the report reads.
Roughly one 12 months after granting the sole-source, non-competitive contract to Accenture, EDC deliberate on launching a aggressive bidding course of, however in the end “abandoned” the thought to deal with assortment of the primary set of loans in default, the auditor basic mentioned.
“As a result, EDC’s sole-source relationship with Accenture was solidified rather than mitigated,” reads the report.
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EDC additionally accepted loans primarily based on assessments made by Accenture even in circumstances the place documentation submitted by the enterprise applicant “clearly” confirmed it was ineligible or failed to offer fundamental data, the OAG famous.
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“For example, documents were accepted without a business name or for expenses outside of the eligible period of the program. EDC’s 2021 internal audit also found similar issues in its review of expense documents submitted, but the corporation decided to consider these loans as eligible,” reads the report.
Hogan additionally criticized Finance Canada and World Affairs Canada for failing to correctly oversee EDC’s work.
Hogan instructed MPs she was additionally involved with the very fact EDC solely “partially” agreed along with her advice that the company take into account all choices to recoup loans from ineligible small companies.
“I’m concerned that there is a resistance to want to follow up on recovering funds, and if the government doesn’t want to do that, they should just be transparent with Canadian taxpayers,” she instructed MPs.
“Unlike other COVID-19 programs, CEBA is a loan program with repayments that will be ongoing for several years while action on defaulted loans is just beginning. Value for money will be further compromised without better monitoring and improved plans to recover on defaulted loans,” she added.
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Winterhalt, the EDC senior vice-president, mentioned in his assertion that the company was evaluating with Finance Canada to see if it was value attempting to recoup these sums.
“In practical terms, implementing it would be challenging and may also come at significant cost as it requires assessing the full population of loans in the non-deferrable expense stream,” he mentioned.
Accenture referred questions on the OAG’s report back to EDC.
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