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Top Suppliers: Numbers to nowhere

by Dan Turner

Here is a thought-provoking question and, one would think, an important one: Why can't the Government of Canada easily tell Canadians how much it is paying out to whom?

Oh, the government tries. Take Canada's Public Accounts that, by definition, belong to the Canadian people. Their job, at the completion of each fiscal year, is to reveal to taxpayers how much money the Receiver General of Canada paid out to myriads of internal and external contractors on behalf of the government's various departments.

There is only one problem. The numbers don't seem to add up. The Public Accounts may be useful as vague indicators of which companies are doing the most business with the federal government - or they may not. Nobody is quite sure. The only thing we can be certain of is that there are enough discrepancies to sorely perplex us and others who have tried their best to sort this whole thing out for you, Summit's readers.

Take the Public Accounts for the fiscal year ending March 31, 2000. When one adds up the cheques that the Reciever General has written on behalf of all federal departments, it would appear that EDS Systemhouse was the No. 1 beneficiary of federal public funds, at $130,335,061, followed by Bombardier Inc., at $90,287,368. Could be. But, based on computations from earlier versions of the accounts, nothing is certain.

We took the time to do an ATIP (Access to Information and Privacy) request on dispensations that the Receiver General made on behalf of the Department of National Defence (DND) over the fiscal year 1997-98 and 1998-99. In 1997-98, the best seller to DND, according to the department's own records, was Computing Devices Canada Ltd., at $218,373,092.90, followed by Bombardier Inc., at $171,222,367.88.

If you have handy a copy of Summit for November 1998, you might want to take a peek at it. In that issue, we did our first "Canada's Best Sellers" feature, laying out the companies that did the most business with the Government of Canada the previous year. Computing Devices Canada Ltd. had a boffo record that year, according to the Public Accounts, where it ranked No. 6 in sales to the federal government, at $72,403,949. But wait. By our calculations, and the calculations of PricewaterhouseCoopers, that amount is $145,969,143.90 less than Computing Devices Canada took in from DND alone in 1997-98 as reported in the ATIP.

As for Bombardier, whose $171,222,367.88 in sales to DND would, on their own, have placed the company fifth on our November 1998 list, its Canadadair Defence Systems Division finished 75th on the list at $1,645,821. There were no other listings under Bombardier over $100,000, which is the cutoff point to make the Public Accounts list. Does this mean that Bombardier racked up at least $171,222,367.88 minus $1,645,821 in sales that year in contracts in which departments paid out less than $100,000 to a contractor - which don't show up in the totals? Or is the company operating under another name most of the time? Or what?

You may well ask what the problem is. Corruption? There is no evidence of that. Attempts to mislead? This seems improbable. The best guess is sloppiness but, if that be the case, this is one heck of a lot of oversight. "The nagging fear in saying that the government numbers don't add up, is that maybe we're not being fair in some way," says Steve Tudor of PricewaterhouseCoopers' Ottawa office, the firm that helped us put together the list. "But if somebody can't explain why the numbers don't add up, then maybe there is something wrong with the way they are being put forward." (By the way, PricewaterhouseCoopers ranks No. 21 on the list of best sellers at $12,160,991, a number they say is considerably different from actual payments.)

John Williams, chairman of the House of Commons Public Accounts Committee (the only Commons Committee chaired by a member of the Official Opposition), says it "doesn't make any sense" that the numbers don't jibe. "We certainly need a lot more openness in government - government has to be more accountable. It almost seems like there is an intentional desire to make the system complex and vague."

Williams does not believe that the federal government's planned shift to an accrual system of accounting from a "modified cash system" (recording cash plus payables) will make much difference. "Accrual is better, but in terms of simple number-crunching I can't see that it's going to be that much more transparent."

Hopefully the fact that more attention might be paid to "balancing the books" each year will lead to more attention to detail.

So what can one say about the Public Accounts numbers for leading contractors that have been put forward for 1999-2000? Assuming that, even if they are incomplete, they depict at least vague trends, there are some observations that can be made:

• Two years ago, the biggest sellers were mostly defence suppliers, followed by computer hardware suppliers. Health care/heath insurance companies were 21st on the list. This year the list of major suppliers is sprinkled with names from the health industry, including Liberty Health, First Canadian Health, Parkwood Hospital, Sunnybrook Health Science Centre, Pan American Health (Washington, D.C.), and several others - 13 of the top 50.
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• Outsourcing government activities continues. For instance Ottawa's Frontec Logistics Corp., which administers facilities such as armed forces bases, is No. 6 on the list, at $35,892,546. However, some quasi-government firms maintain a hammerlock on their traditional duties within the federal family. The Canadian Corps of Commissionaires, for instance, which provides security services to the government, is No. 3 on the list at $86,087,786. Defence Construction Ltd., Ottawa, still wholly-owned by DND, is No. 26.
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• Although there are all kinds of information and communications technology hardware, software and services firms on the list, including five in the top 10 - EDS Systemhouse, IBM Canada, Media Vision Inc., CGI Group Inc. and Automated IPC Billing - some firms didn't skyrocket the way they might have been expected to during the infamous year of Y2K. EDS Systemhouse, for instance, was first on the list at $130,335,061, but that was up less than $4 million over 1998-99.

These are all trends, or at least we think they are trends. But with a big chunk of the numbers apparently tucked away somewhere else, who knows?

Dan Turner, who covered Parliament Hill for two decades, is an Ottawa writer and consultant.

Source: Public Accounts 2000, www.pwgsc.gc.ca/text/pubacc-e.html

 

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