Report to the Minister of Public Works and Government Services on Three Contracts Awarded to Groupaction

Auditor General refers contracts to RCMP

Ottawa, 08 May 2002 — On Monday, the Auditor General of Canada, Sheila Fraser, referred the government’s handling of three contracts worth a total of $1.6 million to the RCMP for further investigation. The decision follows the completion of the audit requested in March by the Minister of Public Works and Government Services. The audit revealed significant shortcomings at all stages of the contract management process. The Auditor General presented her report to the Minister on May 6.

"Senior public servants broke just about every rule in the book," said Ms. Fraser. "I have referred this matter to the RCMP and I am undertaking a government-wide value-for-money audit of advertising and sponsorship programs of the Government of Canada."

Government files on the three contracts are so poorly documented that key questions about the selection of the contractor and the basis for establishing the price and scope of work for the contracts remain unanswered. The Auditor General could not provide any assurance that the Government of Canada obtained value for money from any of these contracts.

Ms. Fraser noted that the audit did not look at the actions of the communication firm Groupaction.

"The rules that were broken – the Financial Administration Act and government contracting regulations – apply to public servants, not contractors," said Ms. Fraser.

In her report on the three contracts awarded to Groupaction between 1996 and 1999, the Auditor General identified the following deficiencies:

• The government did not receive everything it contracted for. Key elements specified in contracts were never delivered and no one has been able to locate a report for the second contract for which the government paid $549,990.
• Officials approved payments for work that varied from or failed to satisfy contract specifications.
• Officials told us payments were made for advice, even when advice was not stipulated in any of the three contracts, and was not documented as having been received.
• What Groupaction delivered under the third contract has similarities to what it provided under the second because the government had asked for similar work in both.

"This is a completely unacceptable way for government to do business. Canadian taxpayers deserve better," said Ms. Fraser.

The three contracts were awarded by the Advertising and Public Opinion Research Sector and the Communications Coordination Services Branch (CCSB), when they were part of Public Works and Government Services Canada. Responsibility for public opinion research and advertising now rests with Communication Canada, and PWGSC is still the contracting authority for these services.

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