Government Operations Committee on Oct. 21st, 2025

[The Chair, Conservative, Kelly McCauley]

I call the meeting to order.

Welcome to meeting nine of the House of Commons Standing Committee on Government Operations and Estimates, known as the mighty OGGO, the only committee that matters.

Pursuant to Standing Order 108(3)(c), the committee is holding a briefing session with the procurement ombudsman on his mandate and his most recent report on bait and switch practices.

I would like to welcome back Mr. Jeglic, whom I consider a great friend of OGGO. It's wonderful to have you back.

Also, there's another Kelly. We can never have enough Kellys here. Welcome, Ms. Kilrea.

The floor is yours for five minutes, sir. Welcome back.

[Alexander Jeglic, Procurement Ombud, Office of the Procurement Ombud]

Thank you very much, Chair.

I would like to begin by acknowledging that the land on which we gather is the traditional unceded territory of the Algonquin Anishinabe people.

Thank you, Chair and members of the committee, for inviting me here today.

As mentioned, my name is Alex Jeglic, and I have been the procurement ombud for over seven years. I appreciate the opportunity to appear before you to provide an update on my office's activities, including a summary of the findings in our recently published bait and switch review.

While I have appeared before this committee many times, there are new members around the table, so I would like to take a moment to briefly introduce our office.

My office is a neutral and independent organization, which was established in 2008 to help resolve contract disputes between Canadian businesses and the federal government.

We investigate complaints, provide mediation services and make recommendations to improve systemic procurement issues.

My office is at arm’s length from other federal organizations, including Public Services and Procurement Canada. While I report to the Minister of Government Transformation, Public Works and Procurement, the minister has no involvement in my office’s daily activities or in the content of my reports.

My annual report was tabled two weeks ago, and every year it tells a strikingly similar story: The demand for our services keeps rising.

In 2024-25, we received a record number of 670 cases, almost double what we saw at the beginning of my mandate in 2018-19, yet our budget has not increased since the office was created 17 years ago. This growing gap puts the fulfillment of my legislative mandate at risk.

My annual report also highlights systemic issues that persist year after year. Canadian businesses, procurement experts and parliamentarians regularly raise issues of overly complex processes, unclear accountabilities and fragmented rules. I also repeatedly identify these issues in my procurement practice reviews of federal departments.

These issues prevent the system from working effectively and negatively impact Canadians' trust in government. As I told this committee last December, band-aid solutions are no longer acceptable, and what is needed now are foundational changes.

To meet this challenge, my office, in consultation with industry leaders, procurement experts and key stakeholders within government, has identified the top five foundational changes needed to improve the federal procurement system.

Our first recommendation is the creation of a chief procurement officer at the federal level. Right now, procurement is fragmented across departments, with no single point of accountability.

Our second recommendation is the creation of a government-wide vendor performance management, or VPM, system.

A government-wide vendor performance management program would address the fact that departments have no formal way of using suppliers' past performance, good or bad, to inform future contracting decisions.

The third recommendation is the development of a single set of universally applicable federal procurement rules. We wrote about this in early July, and I'm hearing enthusiasm for the idea, which gives me cause for optimism.

The fourth required change is the use of artificial intelligence advancements to modernize federal procurement tools and systems.

The fifth is the establishment of a framework for procurement data collection to increase the transparency of federal procurements.

All five of these areas are critical to improving the fairness, openness and transparency of federal procurement, and the first one, a chief procurement officer, could and should take the lead in implementing the other four, and, most importantly, be accountable.

Just last week, my office published a report detailing the findings of our procurement practice review of replacement resources in federal professional services contracts, also known as bait and switch. This review stems from issues identified in previous reviews conducted by my office, as well as a request from this very committee to look further into this matter.

The review revealed mixed outcomes. We found that in more than half of the files reviewed, the practice of replacing resources was done correctly and did not impact the government's selection of the best-value supplier. However, in 41% of cases, replacement resources did not meet or exceed the qualifications of the original resource proposed to secure the bid, calling into question Canada's selection of the winning supplier and the fairness of the procurement process.

We also noted how recent policy changes made by PSPC, such as focusing on corporate rather than individual work experience, have largely eliminated the use of bait and switch tactics. However, these changes could cause other unintended consequences for some suppliers, including making it harder for smaller-sized firms to demonstrate the experience required to obtain federal contracts.

Before I close, I want to emphasize that as the procurement ombud, my office has a unique role. Unlike other departments involved in procurement, my office exists solely to focus on federal procurement, and we have a government-wide lens that allows us to see the full picture.

We hear directly from both Canadian suppliers and federal buyers. This unique perspective gives us valuable insight into the challenges and opportunities that the procurement system faces. My office will continue to work with all federal procurement stakeholders to improve the system and ensure that it is open, fair, and transparent and meets the evolving needs of Canadians, but we need a fair and reasonable budget to do this important work at such a critical time.

In the coming months, my office will be publishing our procurement practice review of indigenous procurement. We will also continue to push for the implementation of our five foundational changes. We also hope to launch a new review on construction contract administration.

This committee plays a critical role in promoting transparency and accountability, and I appreciate your continuing support of our office.

Thank you for listening.

I'd be pleased to answer your questions. Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

I will start a six-minute round with Mr. Patzer.

Go ahead, please, sir.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Thank you very much, Mr. Chair.

Thank you to our guests for being here today. I really appreciate the work that you are doing.

I noticed in your “Bait and Switch” report—it's been getting a bit of attention in the media as well—that government officials asked you to remove an entire section from the report. Who was it that asked you to remove that section?

[Alexander Jeglic]

That's part of the formal process in the back-and-forth between ourselves and the department.

It was the department that asked for the removal formally in writing. We included their full response in writing in the report. We also included our full written response in writing.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Building off that, at the end of the day why did you decide to keep that portion in your report and go against what the department asked?

[Alexander Jeglic]

That's a great question. The reason is that it's directly about the consequences of the change.

If you look at the report, you see it has essentially two effects. The first is through the first three LOEs, where we have a universe where bait and switch is in fact possible. Then you have the policy change that occurred as a result of a decision taken by the department. That scope period post change is quite short, but as we were writing the report we were also hearing from procurement stakeholders who were being impacted by that change. We didn't think it would be appropriate to not mention those potential consequences and also add accountability to the department and include transparency associated with what we were hearing about that change in the report, because we saw it as directly relevant.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Thank you for that.

To your point about accountability, trying to remove an entire section of the report about the consequences just strikes me as odd. Why would someone want that removed?

[Alexander Jeglic]

Again, I don't want to put myself in the shoes of the department, but based on the language that was used in their response, they believed that it was speculative and out of scope for the review, in the sense that the files we looked at wouldn't have dealt with those unintended consequences.

The report itself includes a response on a request for information. We also included the response from the department, which identifies a concern from a small or medium-sized business about what the consequence will be in terms of their ability to secure future contracts.

Then, simultaneously, we were hearing through other channels from small and medium-sized businesses about these same impacts. Rather than mute those voices, we thought it was incredibly important to have them represented in the report. The department disagreed, because they felt like it was too speculative to be included.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

I'll talk about the “bait and switch” issue here. You talked about this in your opening remarks—41% saw unqualified or.... That's a pretty large number of projects that were impacted by this.

Can you spell out really quickly for the listeners what impact that 41% would have on projects? What concerns do you have about that going forward if it's unaddressed?

[Alexander Jeglic]

What I'll do is first address the impact on the procurement process. In that 41%, the actual attributes of the resource were a big part of the decision-making process as to who would ultimately deliver on that project. The quality of the resource was defined by the government as being important. When that resource is replaced, it's incredibly important that this important resource reflect those same attributes.

What we were suggesting is that in 41% of those instances, that resource didn't reflect those same attributes. What that means is a lower standard in many of these instances when a resource was provided, perhaps at a higher price point. Then, from a procurement standpoint, it could have potentially altered the sequencing in terms of who ultimately would have been the successful supplier.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Are there specific departments in which this practice is more widespread than others?

[Alexander Jeglic]

Of the seven, I can say that three were through GAC and three were through Shared Services. GAC, Global Affairs Canada, and Shared Services Canada were the two highest departments.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Again, for people who are watching this, how concerning is that?

[Alexander Jeglic]

I have to go back to a previous answer that speaks to the universe before and after the change.

If a change hadn't been made and these practices continued, I would be very concerned. The tone that I would be striking would be very different. As opposed to talking about unintended consequences, we could still be talking about the practice of bait and switch if left unaddressed. To pay the appropriate amount of respect to what the department did, it did seek to address the bait and switch issue.

I don't mean to half answer your question, but I'm not as concerned, given that the change has already taken place. Where my concern lies is now in the unintended consequences of that change.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Thank you.

I think I have only about 20 seconds left, so I'll wrap it up there.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Mr. Gasparro, go ahead, please.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you.

It's great to see you again. As I say to a lot of the public servants who come in here, thank you, both for your public service and for dedicating your career to helping our country.

Just to be clear, you believe that the use of subcontractors more broadly is a standard practice, and it's something that will continue.

[Alexander Jeglic]

I just want to clarify the question: Do you mean subcontractor or resources, because the bait and switch isn't necessarily about subcontractors; it's about the resources.

Is this a common practice? Absolutely. This is why there are methods of supply specifically geared towards this type of activity.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

That's right. It's a common practice, and it's something that will continue, and we will continue to have some flexibility built into the system.

What I don't want to see happen, and I know you're not suggesting this, is that there's a freeze on the use of subresources.

You're not suggesting that, but that's a practice that will continue more broadly.

[Alexander Jeglic]

That's right. Just to clarify, what we also say in the report is that many of the contractual tools necessary to mitigate bait and switch already existed in the previous universe, so it would just be more successful implementation of those tools to have addressed the issue.

That's also what we speak to in the unintended consequences section. We could, perhaps, have resolved this differently, but again, paying respect to the pressure that the department was under.... We're talking at the height of the ArriveCAN reviews, so the department was under pressure to react. This reaction resulted in a removal of the possibility of bait and switch in most circumstances.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Great. Thank you.

Moving on to another topic, you mentioned AI.

How can the Government of Canada utilize AI to modernize our procurement process and help guide you and your office in improving efficiency?

[Alexander Jeglic]

It's a great question. Within our office, we are trialling all different facets in which we can use AI ourselves, meaning even vetting the recommendations that we make based on the information available when it's publicly available, to assure ourselves that we're looking at the right things and essentially to help us create rough drafts of documents that are overseen by humans.

In the larger procurement span, there are certainly things that can be done, particularly on repetitive practices. For things like statements of work that are somewhat generic in nature, can an AI tool be used to generate a statement of work and make modifications with human oversight? I think the answer is yes, the tools currently exist to do that.

I wouldn't suggest there shouldn't be human oversight that is able to identify errors made using the tools, but at this stage there are certainly implications for AI.

Moving forward, I think there's even more hope in terms of.... If the AI is incorporated into all facets of procurement, it could even identify the likelihood of success for suppliers bidding on certain prices, scanning the total environment of that acquisition over the last several years. That data would be incredibly useful from an efficiency standpoint if you were a supplier trying to figure out whether it's a worthwhile exercise to spend your time and effort bidding on a process where your win percentage is 1%, as an example.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you for that.

In my past life—which, depending on the day, I now refer to as the good old days—I served on the board of directors of Postmedia. It made a bit of news for a Liberal to join that board, but that's another conversation as well. We talked about the utilization of AI. Some of the concerns we had then and that we had to manage a little were the safeguards around AI, copyright and a whole bunch of other things that were pertinent to the media industry.

In our case, there have to be some safeguards in place. Can you talk a little about that and the responsible nature of the integration of AI into your office?

[Alexander Jeglic]

What I can say is that this is a continually evolving space. What I say today may be obsolete in a matter of weeks or months. That being said, so long as the information is publicly available and is not protected in any manner, then we feel like that is appropriate to use to perform AI analysis.

What I mentioned before is that we did vet some of the recommendations that we've made in previous reports through an AI model to determine whether, in fact, we were providing accurate recommendations based on the model. With the limited sample size that we used, it did, in fact, confirm that the recommendations made were analogous with the recommendations made by the AI tool. That demonstrates a.... I don't want to say anything overtly positive about either ourselves or the office, but we were consistent.