Government defends hiring consulting firm KPMG to find ways to save money

The federal government is defending a contract it awarded to international professional services company KPMG, saying the company helped the Natural Resources department identify ways it could save money on real property and information technology.

"There are times when you actually need an external perspective to help you to think about how to find cost efficiencies … There are times where organizations are actually used to doing things in a certain way and an external perspective can help you find efficiencies," Natural Resources Minister Jonathan Wilkinson told reporters Tuesday on his way into cabinet.

"And that was what this was all about, to actually help us reduce costs."

Wilkinson's comments came in the wake of news reports saying the government paid KPMG nearly $670,000 to find ways to save money — and after the the Trudeau government announced an initiative to tighten spending and reduce its reliance on outside consultants.

Wilkinson said KPMG's contract predates that initiative.

"The contract was issued well before budget 2023, which was the commitment around reducing consulting," he said. "So it happened a long time ago and the focus was actually on helping us reduce costs on real property and IT."

Miriam Galipeau, spokesperson for the Natural Resources department, said the contract was awarded in July 2022 "to produce analyses on cost-saving opportunities, specifically in IT and real property."

She said the department was also able to leverage its pre-existing contract with KPMG to "support [the department's] proposal to the Treasury Board due in October 2023."

She said between the work done by KPMG and the department's own internal analysis and assessment of programs, Natural Resources was able to come up with proposals that could see potential savings of $5 million a year starting in 2026.

In the House of Commons, NDP MP Gord Johns tabled a question asking for details of any contracts awarded to outside firms for help in identifying spending cuts. In response, Natural Resources provided details of two tasks assigned to KPMG — one valued at $325,000 that was due Aug. 25, 2023 and another at $344,650, due Oct. 31, 2023.

The first task was to find ways to optimize IT costs; it produced three reports related to cost reduction opportunities in areas such as IT contracting, desktop cloud-based computing and software asset management.

Titles for the second task were marked simply "TBD" (to be determined).

No other government department indicated that it had hired an outside company to help it find cost savings.

Anita Anand said she has taken steps since being named Treasury Board president to reduce the government's reliance on outside consultants and issued guidance for government departments on outsourcing.

She said the guidelines "require anyone considering using external consultants to ensure that they follow those guidelines, including undertaking a review of whether those services can be performed within the Government of Canada, and also to ensure that this is absolutely necessary within the context in which it is being proposed.

"All in all, what we are trying to do is to ensure that we take a risk-based approach to the use of external consultants."

Anand said details of how the government plans to reduce its spending will be tabled soon in the House of Commons.

Kevin Dove, spokesperson for KPMG, declined to comment.