Yukon procurement not showing value for money, not well monitored, AG report finds

The Yukon government's contracting and procurement is not demonstrating value for money, according to a new report from Canada's auditor general. 

In the report, tabled in the Yukon legislature Tuesday morning, the office of the auditor general (OAG) looked at a sample of 53 government contracts from April 1, 2019, to Jan. 31, 2024, plus an additional 10 high-value contracts looking at procurement with sums of $250,000 or higher. 

The OAG found that the territory was not creating a competitive environment for local and First Nation businesses.

"It's important because the government committed to creating this environment," Normand Lanthier, senior principal with the OAG, said at a news conference Tuesday. 

Over two thirds of the contracts in the OAG's sample were awarded to companies directly, and in eight per cent work had already begun before the contract was signed. 

In one case, for a contract worth $2 million, work started almost a year before the contract was signed. There was also no competitive process, according to the report. 

In addition to creating a non-competitive procurement environment, the OAG also found the territorial government failed to collect important information about conflicts of interest, or monitor procurement to ensure projects are meeting procurement policy outcomes. 

The report notes that government organizations were reaching out to the department of Highways and Public Works — which oversees the management of procurement and contracting across the Yukon government — for advice on procurement in cases with potential to violate the policy. That includes violations like bypassing the lowest- or highest-ranked response, to a change that increases the contract value above the threshold for competitive tender.  

Those organizations were ignoring advice on how to comply with the territory's own policies 38 per cent of the time, the auditor general found.

In the report, the OAG recommends more robust reporting requirements including whether the department's advice was accepted, and trends in procurement. It also recommends implementing a process to report conflicts of interest and implementing a process to ensure procurement decisions are documented and contracts are signed before work begins. 

The government has agreed to all recommendations.

Report focuses on documenting, not process itself: minister

In a written statement on Tuesday, Nils Clarke, minister of Highways and Public Works, noted that the report recommends improvements to reporting and not to procurement itself. He said that in the contracts under $50,000 reviewed by the OAG, over 80 per cent of were awarded to Yukon businesses and that no instances of fraud of conflict of interest were found in the review — only that the OAG recommends the territory improve its guard rails. 

Clarke also responded to a part in the report pointing to a lack of market research prior to awarding contracts.

"While improving documentation is an area of improvement that we intend to pursue, limited or no competition across markets can also reflect the reality of doing business in a remote or rural jurisdiction," he said.

Clarke said the department is developing an action plan to implement the recommendations and will review the procurement policy in 2025. 

"Together, these initiatives will continue to improve our procurement processes and ensure they remain transparent, consistent and aligned with best practices," he said.