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The Professional Institute of the Public Service of Canada > News & Events > Communications Magazine > Vol. 36, No. 4, Autumn 2010 > The Shadow Public Service Number of Outsourced Employees Explodes
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The Shadow Public Service
Number of Outsourced Employees Explodes

As public service professionals endure round after round of cost cutting, the waste that surrounds them in the form of the unnecessary contracting out of services has become a source of genuine consternation. The federal government spends millions of dollars each year on externally-contracted services that it could provide more effectively and cheaply in house.

According to the 2008-2009 Public Accounts, the federal government spent about $7.5 billion on professional and special services. Temporary help agency employment in particular has grown dramatically in the federal government.

Temp workers are increasingly doing jobs that amount to full-time work, with one in five having assignments that last more than a year. The longest was more than three years. Compare that to the 1980’s, when a temporary help contract couldn’t exceed eight weeks.
-Maria Barrados
President of the Public Service Commission

Besides raising concerns about its consequences on a politically-neutral, independent, committed and professional public service, contracting out is wasteful. Actual costs are typically higher than specified in successful bids, since the value of the final contract commonly rises as the winning bid becomes a ‘foot in the door’ rather than a final amount. Temporary help agencies tack on exorbitant wage mark-ups that lead to cost inefficiencies, and the consulting services industry, which increasingly targets government and public institutions, enjoys substantial profit margins. As managers become more and more dependent on private staffing firms, knowledge and skills begin to reside outside the government, and the latter becomes increasingly reliant on a handful of private firms that provide the outsourced service. Departments and agencies become less flexible in responding to changing needs and technology, and firms are able to charge additional fees for changing technology and services. Without in house capacity, the government’s ability to negotiate effectively with private firms diminishes as well.

Managers may find it convenient to avoid the lengthy delays associated with internal staffing processes, but this comes at a substantial cost, as constant vigilance is required to rein in fees and to contain costs associated with the tendency for the scope of contracts to expand. Limited outsourcing has its place, but the scale and growth of government contracting out harms the public interest, wastes scarce resources, and violates the terms of the Treasury Board’s own policies.

Top 10 Contract Areas Since 2005-06

Description Total Since 2005-06
Other Professional Services $3,734,462,993
Architectural and Engineering Services $3,370,732,063
Computer Equipment $3,021,551,311
Management Consulting $2,092,818,301
IT Consulting $1,993,442,748
Business Services $1,060,362,699
Telephone and Voice Services $916,440,369
Software $862,656,273
Temporary Help Services $813,882,988
International Development Goods & Services $704,728,821

Public Service Commission Report

Support for the Institute’s battle cry continues to pour in. In addition to widely- available anecdotal evidence and the Auditor General’s 2008 report, in October 2010 the Public Service Commission (PSC) released its study on the Use of Temporary Help Services in Public Service Organizations. PSC’s study reviewed temporary help services in 11 public service organizations, collectively accounting for 50% of all temporary help service expenditures by federal departments in 2007-2008. This study confirms PIPSC’s long-standing concerns with contracting out in the public service:

  • With very few exceptions, all hiring for federal services must be done by the Commission via the Public Service Employment Act (PSEA). Contracting-out flies in the face of this legal requirement.
  • The use of contracting out means that key PSEA principles for hiring may be ignored, namely that hiring be guided by merit, non-partisanship, fairness, access, transparency and representativeness. This is of particular concern given the PSC’s finding that 73.2% of temporary help workers eventually obtain indeterminate positions.
  • 37.3% of contracts reviewed for 2007-2008 were for professional or technical/operational workers.
  • Managers have been improperly using contract services to respond to long-term staffing needs, effectively creating a parallel public service. 1/5 contracts reviewed by the PSC exceeded 52 weeks. Long-term contracts were more common for professional and technical workers. 59.2% of contracts for technical/operational resources and 51.3% of contracts for professional help were for 26 weeks or longer.
  • Expenditures for temporary help services have increased at double the rate of personnel costs. In 2008-2009, for every dollar spent on casual salaries, $1.21 was spent on temporary help services.
  • The majority of contracts are undertaken in the National Capital Region (79.4%).
  • Maximum time limits for contracted services have been continuously expanding.
  • Lack of coordination between contracting, financial and HR reporting has made it difficult to monitor temporary help.

Institute Strategy

The contracting-out portfolio is shared by Vice-Presidents Debi Daviau and Shannon Bittman. A multi-pronged strategy is in place to address contracting out. Members are encouraged to share contracting out cases from their workplace experience. Please email sgodwin@pipsc.ca.

Highlights of PIPSC Strategy

  • Communications with members via PIPSC’s website, Communications magazine, consultations and more.
  • Gathering Information and warning the employer. A number of Access to Information requests have been filed to determine the scope of contracting out. Consultation committees are hard at work gathering information and letting the employer know we are watching and ready to take action. Employers need to think twice before abusing contracting out.
  • Collective Agreement Negotiations. Where possible, PIPSC will propose strengthened language in the Collective Agreement to prevent the government from contracting out public service work.
  • PSMA Review. PIPSC has made recommendations on the 5-year Review of the Public Service Modernization Act. The government needs to amend the Public Service Employment Act, Public Service Labour Relations Act and the Financial Administration Act to define contractors and casuals as public service employees, and allow the PSLRB to make determinations in the case of disputes over their employment status. Currently, unless the Public Service Commission has provided its stamp of approval, even long-term contractors are left without important labour protections and representation.
  • Enable a solution. PIPSC is interested in proposing a bridging mechanism to convert contractors to employees, where warranted, without usurping the fundamental principles of the PSEA.
  • Pre-budget submission. PIPSC provided information concerning the consequences and costs of contracting-out to the budget discussions. The real financial and resource costs of contracting out must be identified.
  • Legal Action. With the right scenario in hand, the Institute will not hesitate to hold the government to account for the failure to abide by the terms of the PSEA.