Federal government spent $19 billion on external consultants last year

OTTAWA — The federal government spent $19 billion on external consultants last year, despite a promise to cut back on its use of outside contractors.

The government’s audited financial statements for last year, released Friday, show the government spent almost $19.2 billion on external professional and special services in 2025-26.

That’s almost as much as the $19.5 billion it spent on those services the year before.

Organizations contracted by the government last year include Bell Canada, KPMG, Microsoft Canada Inc. and the City of Toronto.

The Liberals have been criticized for years over how much they spend on outside consulting. Prime Minister Mark Carney promised in his election platform to significantly reduce the government’s reliance on external consultants, and to improve the capacity of the public service to hire expertise in-house.

In its budget, released last week, the federal government said it had already taken steps to reduce spending on external management and other consulting services by 20 per cent, in the hopes of reaching annual savings of $900 million by 2028-29.

Sean O’Reilly, president of the Professional Institute of the Public Service of Canada, said while the federal government keeps promising to cut outsourcing, all Canadians get are bigger bills.

“Despite a promised 20 per cent reduction, actual spending in 2025—26 was barely lower than the year before, and projected spending for 2026—27 is the highest on record,” he said. “The government is cutting its own public service experts, then paying a premium to rent that expertise back.

“That’s not efficiency. That’s waste.”

The Liberals’ 2025 budget outlined a plan to slash the public service by 10 per cent by the end of the 2028-29 fiscal year to reduce spending.

The federal public service has shed more than 23,000 staffers over the last two years, according to Canada’s parliamentary spending watchdog.

An online tool released by the Office of the Parliamentary Budget Officer in September estimates there were 344,970 federal employees in the second quarter of this year, down 6.5 per cent from two years ago.

The government’s financial statements show, that when you include external contracting and contracts signed with other government departments, the total spent on contracted services last year was $22.8 billion. The government’s estimates show that number is expected to reach $26.6 billion in 2026-27.

The Public Service Alliance of Canada said in 2023 it negotiated language in contracts to protect public service jobs and reduce outside contracting. It also said the government had committed to a consultation process on the issues associated with contracting out in the federal public service.

The government and the Public Service Alliance of Canada are now taking part in contract negotiations again. Among the union’s key issues in those negotiations are job security and the need to end “wasteful” contracting services.

Nathan Prier, president of the Canadian Association of Professional Employees, said the union has been calling for years to end the “wasteful shell game of replacing public servants with more expensive external consulting firms — especially during times of cuts.”

“If there’s work to be done, we should be investing in our own people and not in McKinsey or Deloitte,” he said. “Contractors cost taxpayers 20 per cent more than public servants, but don’t have the same expertise or institutional knowledge.”

“Every outsourced contract means expertise walking out the door and the public will have to pay a higher price next time.”

This report by The Canadian Press was first published Nov. 9, 2026.

Catherine Morrison, The Canadian Press