Opposition calls on Trudeau government to crack down on over-billing contractors

The federal Conservatives are calling on the Trudeau government to make a serious effort to recover up to $72 million in overpayments to contractors, many of them in the defence industry.

OTTAWA — The federal Conservatives are calling on the Trudeau government to make a serious effort to recover up to $72 million in overpayments to contractors, many of them in the defence industry.

Procurement critic Steven Blaney says the Liberals owe it to taxpayers to recover the money and to diligently reform the system along the lines of an independent report that was originally commissioned by the Harper government.

“On cost recovery, we started this process and we expect the government to get serious and recover money owing to taxpayers,” Blaney said Tuesday.

A series of internal audits have found that Ottawa is routinely overcharged by its contractors — to the tune of tens of millions of dollars — in a practice that has been going on for decades.

NDP defence critic Randall Garrison set his sights on both the Liberals and the Conservatives, saying the system has been mismanaged.

“It’s the responsibility of the government to ensure that Canadians get value for money on procurement,” Garrison said in an email Tuesday. “The Conservatives need to explain why they failed to prevent these overpayments in the first place — and now the government must ensure that taxpayers aren’t on the hook for the mistake.”

As of the last budget year, the internal auditors had looked at $7.3 billion of contracts and cumulatively found $72 million in potential “over claims and excess profits.”

Only a fraction of the cash — $2.8 million — has been recovered and public services spokesman Pierre-Alain Bujold says the outstanding amount “is presently subject to negotiations.”

Up to $1.9 million in claims are at risk of not being reimbursed because of “inaction,” said an Oct. 3, 2014 audit — one of a series of documents — obtained by The Canadian Press under access to information legislation.

Blaney said the government should be enforcing the terms and conditions of agreements, not just negotiating.

Bujold said the department has been actively trying to stop the overbilling before it happens and playing hardball with some contractors.

“Since identifying this issue, (procurement services) has strengthened its recovery regime by augmenting the level of engagement, leveraging existing resources and expertise and employing available contract clauses such as hold-backs to encourage settlement,” he said in a statement.

Officials are also trying to rejig the system, using so-called alternative contracting approaches and incentivizing contract performance.

But the audit said there is a reluctance, particularly at National Defence, to crack down and ask for repayments from contractors who overbill.

“Concerns have been expressed that imposing contractual limits in profit may be counterproductive and undermine sustainability of service delivery and financial viability of the contractor over time,” the report said. “We are aware that contractors have made direct representations to DND and (Public Works) officials echoing this possibility.”

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