Canada hired 110,000 federal employees to reduce outsourcing. Outsourcing grew 135% anyway. The combined bill for personnel and external contractors hit $90.9 billion in 2024–25 — roughly 18 cents of every federal dollar. ArriveCan is not an anomaly; it is what the system looks like when there is no mechanism connecting the workforce that was built to the work that needed doing.
Read the full analysis, sources, and counter-arguments ↓spending 2024-25
contracting 2024-25
workforce cost
since 2015
- Federal personnel expenditure totalled $71.4 billion in 2024-25. In 2015-16, the equivalent figure was $39.6 billion — an increase of 80% over a decade. [1]
- The federal government spent $19.5 billion on external professional and special services in 2024-25, an increase of approximately $2 billion from the previous year. Total professional and special services spending was $23.1 billion, of which 85% went to external parties. [2, 3]
- Combined personnel and external professional services spending totalled approximately $90.9 billion in 2024-25 — approximately 18% of the $502.8 billion in budgetary spending requested in the 2026-27 Main Estimates. [1, 2, 4]
- External contracting spending grew from approximately $8.3 billion in 2015-16 to $19.5 billion in 2024-25 — an increase of approximately 135%. Over the same period, the federal civil service grew from 257,000 to 367,000 employees — an increase of 43%. Both lines rose simultaneously. [2, 3, 5]
- Total compensation per FTE rose from $136,345 in 2023-24 to $143,271 in 2024-25, which the PBO characterised as a second consecutive year of historically high growth in spending per FTE. This figure includes base salary, employer payroll taxes, health and dental benefits, defined benefit pension contributions, and non-recurring payments including retroactive collective agreement lump sums and severance. [1]
- The 448,000 FTE headcount encompasses the broader federal public sector, including the Canadian Armed Forces, the RCMP, and self-funded Crown Corporations such as Canada Post and CBC that operate primarily on service fees and commercial revenue. [1]
- The Department of National Defence accounted for $6.9 billion of professional and special services spending in 2024-25. Immigration, Refugees and Citizenship Canada accounted for $1.7 billion. [2]
- Deloitte received $308 million in federal contracts in 2024. McKinsey received more than $100 million in federal contracts since 2015, compared to $2 million under the previous government. [3, 6]
- The Auditor General estimated the cost of ArriveCan at $59.5 million but stated the precise figure was impossible to determine due to the Canada Border Services Agency’s poor documentation and weak controls. The average per diem cost for external ArriveCan contractors was $1,090; the average daily cost for equivalent internal positions was $675. [7]
- GC Strategies, a two-person IT staffing firm, was the primary ArriveCan contractor and has been awarded more than $100 million in total federal contracts. The firm was involved in developing requirements for a $25-million contract it subsequently won. The Procurement Ombudsman found the criteria “heavily favoured” the company. GC Strategies has since been suspended from federal contracting for seven years. [7, 8, 9]
1. The $90.9 Billion Workforce
The federal government’s personnel bill and its outsourcing bill are typically discussed as separate line items. They appear in different reports, are scrutinized by different committees, and are defended by different institutional actors. But from the perspective of the taxpayer funding both, they are a single question: how much does Canada spend on the people who run the federal government, whether those people are on the payroll or on a contract?
In 2024-25, the answer was $90.9 billion. That figure combines $71.4 billion in personnel expenditure (the PBO’s figure for total compensation across 448,000 FTEs) with $19.5 billion in external professional and special services (the Public Accounts figure for contracted work performed by outside parties). Against the $502.8 billion in budgetary spending requested in the 2026-27 Main Estimates, the combined workforce cost represents approximately 18 cents of every federal dollar.
This is not a salary figure. The PBO’s “total compensation” includes base salary plus employer-side payroll taxes (CPP contributions, Employment Insurance, provincial payroll taxes), health and dental benefits, pension contributions (the federal defined benefit plan), and — in 2024-25 specifically — non-recurring lump-sum payments from retroactive collective agreements and Transition Support Measures (severance) from the ongoing layoff exercise.
A federal employee earning a base salary of $90,000 might appear in PBO data at $130,000 or more once all employer costs are included. This is standard in any total-compensation analysis, but the distinction matters because the $143,271 figure is often cited as if it represents take-home pay. It does not.
The $19.5 billion on the other side of the ledger is not a salary figure either. It encompasses everything the government buys from external parties under the “professional and special services” category: management consultants, IT contractors, engineering firms, health service providers, military training specialists, and the intermediary staffing companies that broker between contractors and departments. Of the $23.1 billion spent on all professional and special services in 2024-25, 85% went to external organizations. The remaining 15% went to internal government service providers.
Together, the two lines tell a story that neither tells alone. Personnel spending grew 80% over a decade. External contracting spending grew 135% over the same period. The government added 110,000 employees and $11.2 billion in outsourcing simultaneously. The question Part 1 of this series examined — why hiring didn’t reduce outsourcing — produces a fiscal answer in Part 2: because nothing in the system required it to.
2. The Spending Curve
The trajectory of external contracting spending traces an unbroken ascent through every promise to reduce it.
| Fiscal Year | External Prof. & Special Services | Notable Event |
|---|---|---|
| 2015-16 | ~$8.3B | Liberal government takes office; platform pledges to reduce external consultants |
| 2017-18 | ~$9B | |
| 2019-20 | ~$10.5B | PIPSC releases outsourcing research documenting $11.9B in IT/management consulting (2011–2018) |
| 2020-21 | $11.8B | COVID-19 emergency spending; ArriveCan development begins |
| 2021-22 | ~$14B | Globe and Mail reports outsourcing up 41.8% since 2015 |
| 2022-23 | ~$15.5B | Parliamentary committee studies outsourcing; McKinsey spending scrutinized |
| 2023-24 | $17.8B | Budget 2023 pledges to cut consultants; Anand releases non-binding manager’s guide |
| 2024-25 | $19.5B | New record. Budget 2025 pledges 20% reduction. Carney platform pledges “significantly reducing reliance on external consultants” |
Every formal commitment to reduce outsourcing — the 2015 platform, the 2023 budget, the October 2023 manager’s guide, the 2025 budget, the 2025 campaign platform — was followed by higher spending the next year. The trajectory did not pause for pledges. It did not slow for reviews. It set a new record in each year following each promise to bring it down.
The Treasury Board’s explanation for the growth is structural rather than discretionary: increased spending on engineering and architectural services for shipbuilding programs, health services to support refugee claimants, and specialized military training. These are not pandemic overruns or temporary measures. They are ongoing program commitments embedded in departmental mandates. The Department of National Defence alone accounted for $6.9 billion in professional and special services in 2024-25. Immigration, Refugees and Citizenship Canada accounted for $1.7 billion. The programs that drive outsourcing are expanding, not contracting — the 2026-27 Main Estimates allocate $48.4 billion to National Defence.
3. The Top of the Pyramid
The outsourcing dollars do not distribute evenly. A small number of large firms receive a disproportionate share of federal contracting revenue. Deloitte received $308 million in federal contracts in 2024. McKinsey & Company received more than $100 million in federal contracts since the Liberal government took office in 2015, compared to $2 million under the previous Conservative government. McKinsey’s former global managing director, Dominic Barton, chaired the government’s Advisory Council on Economic Growth from 2016 to 2018 while still leading the firm, and was subsequently appointed Canada’s ambassador to China.
Below the large consultancies sits a layer of intermediary staffing firms that operate as brokers between the government and the contractors who actually perform the work. These intermediaries add cost without adding capacity. The government contracts with the broker; the broker subcontracts to specialists; the specialists do the work. In documented cases, the government did not know who was actually performing the services it was paying for.
GC Strategies — the firm at the centre of the ArriveCan controversy — is the most visible example. A two-person company, it brokered more than $100 million in total federal contracts. GC Strategies did not build ArriveCan. It assembled a team of subcontractors to build it, adding a margin at each layer. The Auditor General found little documentation to explain how or why the firm was chosen for the initial contract through a non-competitive process.
The government hires a broker. The broker hires the contractor. The contractor may hire subcontractors. Each layer takes a margin. The government pays the top-line invoice but often does not have visibility into who is performing the work, at what rate, or whether the rates charged are consistent with market value. This is not a bug specific to ArriveCan. The Procurement Ombudsman has described it as a structural feature of how federal contracting operates.
4. ArriveCan: The Receipt
The ArriveCan application was launched in April 2020 to collect travellers’ contact and health information at the Canadian border during COVID-19. The initial development cost was estimated at $80,000. By the time the Auditor General published her findings in February 2024, the estimated cost had grown to $59.5 million — a figure she emphasized was approximate, because the Canada Border Services Agency’s documentation was too poor to determine a precise number.
The Auditor General’s findings documented a pattern that extends well beyond a single application. The CBSA determined at the onset of the pandemic that it lacked internal resources to build the app — a defensible conclusion under emergency conditions. The failure was in what came after: the agency never transitioned from external contractors to internal capacity, even as the emergency passed and the application was updated 177 times over two and a half years. The Auditor General found no evidence of a plan to bring the work in-house.
The cost differential was significant. External ArriveCan contractors were paid an average per diem of $1,090. The Auditor General estimated the average daily cost for equivalent internal positions at $675. Had the CBSA transitioned to internal resources after the initial emergency build, the ongoing costs would have been materially lower. The agency did not make that transition.
Eighteen percent of invoices submitted by contractors lacked sufficient documentation to determine whether the expenses related to ArriveCan or to another IT project entirely. GC Strategies was involved in developing requirements for a subsequent $25-million general IT services contract — a contract the firm then won after no other bids were submitted. The Procurement Ombudsman found the criteria used in awarding that contract were “overly restrictive” and “heavily favoured” GC Strategies.
In June 2025, the Auditor General published a second audit focused on all government contracts awarded to GC Strategies. The findings were consistent with the ArriveCan report: federal employees paid contractors without verifying work was performed, without reviewing time sheets, and without confirming proper security clearances. Public Services and Procurement Canada subsequently suspended GC Strategies from all federal contracting for seven years.
ArriveCan is frequently treated as an outlier — a cautionary tale about pandemic-era excess. The sourced record suggests otherwise. The failures the Auditor General documented — poor record-keeping, layered subcontracting, no transition to internal capacity, invoices paid without verification — are structural features of the contracting system that the Procurement Ombudsman had been flagging for years before the pandemic began. ArriveCan did not create these problems. It made them visible.
5. The Accountability Gap
External contractors performing federal work operate under a different accountability framework than the public servants they work alongside. Federal employees are subject to the Public Servants Disclosure Protection Act, the Values and Ethics Code, the Access to Information Act, and duty of loyalty obligations. Contracted personnel are not. When a public servant makes a decision, it can be scrutinized through ATIP requests, parliamentary questions, and Auditor General audits of departmental practices. When a contractor makes the same decision on the same file, the information trail is thinner.
University of Ottawa professor Matt Malone has described the distinction as the core problem with the outsourcing architecture: outside consultants are not held to the same accountability and transparency rules as public servants. PIPSC, the union representing federal professionals, uses the term “shadow public service” — a contracted workforce operating alongside government with fewer constraints and, in documented cases, at higher per-unit cost.
The accountability gap is not just about transparency. It is about what happens when things go wrong. The Phoenix pay system — outsourced to IBM under the previous Conservative government and launched by the Liberal government in 2016 — caused widespread payroll failures affecting thousands of public servants. Some went unpaid for months. Some lost their homes. The system is still not fully resolved a decade later. The ArriveCan investigation has generated multiple parliamentary committee hearings, two Auditor General audits, an RCMP investigation, and a Procurement Ombudsman report — and the systemic contracting problems it revealed remain structurally unaddressed. The timeline from failure to accountability, in both cases, is measured in years.
The pattern is consistent: the government contracts work externally, loses visibility into cost and performance, discovers the failure through an audit or investigation, pledges reform, and then continues to grow the contracting line. The accountability architecture applies consequences to individuals and firms (GC Strategies was suspended; RCMP investigations are ongoing) while leaving the structural incentive — the ease and speed of contracting out versus the difficulty of building internal capacity — intact.
Critics of federal outsourcing spending omit: ArriveCan was initiated during a pandemic emergency in which the government explicitly directed departments to prioritize action and move oversight controls to the back end. The initial reliance on contractors was defensible — the CBSA determined it did not have internal resources. Not all outsourcing is waste: specialized shipbuilding engineering, cybersecurity, and military training do not exist at scale inside the civil service and cannot be replicated quickly. The $143,271 per-FTE compensation figure includes one-time severance payouts from the active layoff exercise, temporarily inflating the cost curve. The combined $90.9 billion figure includes Crown Corporations that are substantially self-funded, the Canadian Armed Forces, and the RCMP — all of which have distinct cost structures. A narrower accounting of core public administration plus directly substitutable outsourcing would produce a smaller number.
Defenders of federal outsourcing spending omit: The ArriveCan pattern — poor documentation, ballooning costs, intermediary contractors, no knowledge transfer to internal staff — is not unique to the pandemic. The Auditor General’s second GC Strategies audit (June 2025) found the same failures across contracts unrelated to COVID-19. The Procurement Ombudsman flagged the same structural issues for years before ArriveCan existed. The $19.5 billion in 2024-25 set a new record after every formal commitment to reduce outsourcing — the 2015 platform, the 2023 budget, the 2023 manager’s guide, the 2025 budget, and the 2025 campaign platform. The Treasury Board’s structural explanation (shipbuilding, refugee health, military training) actually strengthens the case that outsourcing is embedded in program architecture, not responsive to political direction to reduce it.
The dual-workforce problem is a fiscal architecture issue, not a spending discipline issue. The government built a permanent workforce and a permanent contracting layer simultaneously, with no mechanism to force substitution between them. ArriveCan is not an outlier — it is the most visible example of a system where outsourcing persists regardless of internal capacity because the contracting architecture operates on its own inertia. The $90.9 billion combined figure represents the cost of running two parallel systems with no structural connection between them.
The distribution of this cost follows a pattern visible across this site’s other investigations. In the housing series, the Bank of Canada issued a signal and families absorbed the correction. In the immigration series, the federal government set intake volumes and municipalities absorbed the fiscal and shelter costs. Here, the government expanded the dual workforce and taxpayers absorbed the bill — while the workers hired under the expansion mandate, and the Canadians who depend on federal services, will absorb the cost of the correction now underway. Part 3 of this series examines that correction and the people in its path. In each case, the decisions were made in one place and the costs were borne in another.
Counter-interpretation: The combined $90.9 billion figure overstates the problem by aggregating distinct categories with different justifications. The government has now acted on both sides: workforce reductions targeting approximately 330,000 and a pledged 20% cut to management consulting over three years. The Auditor General’s investigations have produced concrete consequences — GC Strategies was suspended for seven years, RCMP investigations are ongoing, and the Procurement Ombudsman’s reform recommendations are on record. The correction, however belated, is underway. Furthermore, comparing federal total compensation to private-sector base salaries without accounting for the pension differential overstates the gap between public and private pay.
- If 2027-28 Public Accounts show both personnel costs and outsourcing costs declining simultaneously, the correction is working on both sides of the ledger — the first time this will have happened.
- If the Auditor General’s ongoing GC Strategies audit reveals that contracting failures were concentrated in a small number of firms and departments rather than systemic, ArriveCan would be a procurement failure, not an architecture failure.
- If the 20% management consulting reduction pledged in Budget 2025 is achieved within its three-year window and departmental program delivery is maintained, the outsourcing architecture may be more responsive to policy direction than the previous decade suggests.
- If Treasury Board publishes data showing outsourcing as a share of total program spending remained stable or declined even as absolute spending rose, the growth would be proportionate to government size, not a policy failure.
- If detailed Treasury Board data shows that the majority of outsourcing growth went to genuinely non-substitutable expertise — naval architecture, cybersecurity, specialized medical services — the “shadow public service” framing would overstate the problem.
- If a breakdown of the $143,271 per-FTE figure into base salary versus employer costs is published separately, it would allow meaningful comparison to private-sector compensation and clarify how much of the cost curve is structural versus discretionary.
This page will be updated as new Public Accounts data, PBO personnel expenditure reports, and Auditor General findings are released.
- Parliamentary Budget Officer — “Personnel Expenditure Analysis Tool Update: 2024-25 Personnel Expenditures” (Published February 17, 2026)
- Treasury Board of Canada Secretariat — Public Accounts of Canada, Reconciliation of External Expenditures, Professional and Special Services (2024-25); Treasury Board statements via Canadian Press (November 13, 2025)
- Globe and Mail — “Ottawa spent record amount on outsourcing despite vow to rein in practice” (February 19, 2025); “Liberals spend billions more on outsourced contracts since taking power” (January 18, 2022)
- Treasury Board of Canada Secretariat — Main Estimates 2026-27 (Tabled February 26, 2026)
- Treasury Board of Canada Secretariat — Federal Public Service headcount data; CBC / Canadian Press — “Government spends $19 billion on external services, despite vow to trim spending” (November 13, 2025)
- Globe and Mail — McKinsey federal spending analysis (multiple reports, 2022–2025); Consulting.ca — “Federal government defends hiring KPMG for cost savings advice” (November 9, 2023)
- Auditor General of Canada — Report 1: ArriveCAN (February 12, 2024)
- Procurement Ombudsman Alexander Jeglic — ArriveCan report (2024); systemic reform recommendations (July 2025)
- Auditor General of Canada — Performance audit of GC Strategies contracts (June 2025); Public Services and Procurement Canada — GC Strategies suspension announcement (2025)
Do you have access to Treasury Board outsourcing breakdowns, departmental contract disclosure data, compensation modelling, or Auditor General findings that bear on the claims on this page? We welcome corrections, additional context, and contrary evidence. Contact: tips@thereceipts.ca