Federal government aims to cut external consultant spending by 20%

The federal government is aiming to find millions in savings on external management and other consulting services in the public service. CTV’s Austin Lee report

The federal government is aiming to find millions of dollars in savings on external management and other consulting services as part of its plan to find $60 billion in savings over five years.

The spring economic update, released on Tuesday, outlines the next step in the comprehensive expenditure review, saying the government is now focusing on federal procurement contracts, external management consulting and “thematic reviews of horizontal programming.”

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The government is proposing to reduce spending on external management and other consulting services by 20 per cent over the next three years, achieving savings of $450 million in 2027-28 and $900 million a year starting in 2028-29.

“As a first step, the Spring Economic Update 2026 focuses on reducing the use of external management and other consulting services by relying more on existing talent within the public service,” the document said.

“Implementation of this measure will protect the government’s defence priorities while strengthening internal capacity and accelerating in-house skills development.”

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According to the government, total spending on management and other consulting was $5 billion during the 2024-25 fiscal year, while spending on professional and special services was $23.1 billion.

“Savings achieved will count toward the Budget 2025 commitment to save at least $7.75 billion over three years, starting in 2027-28, and $3.25 billion ongoing by optimizing productivity in government,” the document said.

A federal union says the focus on finding savings on external consultants and management doesn’t go far enough.

“The government boasted of its 20 per cent reduction in consultant expenses, but that is only coming out of the $5 billion management consultant tranche and is just a fraction of the $23.1 billion consultant piece of the pie,” the Canadian Association of Professional Employees (CAPE) said in a statement.

The union says the government could find savings on “wasteful return-to-office renovation spending” and office real estate.

The Professional Institute of the Public Service of Canada says while the government plans to reduce spending on consultants by 20 per cent, “spending on outsourcing remains at record highs.”

“Twenty-six billion dollars is going to private consultants this year, while wildfire analysts, safety engineers, and food inspectors are being let go,” PIPSC said.

“When in-house expertise is cut, the work doesn’t disappear - it is shifted to consultants at higher cost, with less oversight and weaker accountability. That’s not efficiency — that’s waste.”

The economic update also says the government recently launched the Federal Contracts Review, examining the largest value contracts to “identify opportunities for cost reductions and alternative strategies.”

“The government will no longer settle for a good price; Canadians deserve the best price,” the document said.

“Pricing in contracts will be supported by best practices and global benchmarking.”

According to the fiscal update, the results of the other reviews of federal spending will be available in Budget 2026, expected later this year.

The Canada Strong Budget 2025, tabled in November, outlined the comprehensive expenditure review to achieve up to $60 billion in savings over five years, including reducing the size of the federal public service by 40,000 jobs between March 2024 and the 2028-29 fiscal year. The spring economic update provides no update on the government’s plan to reduce the public service through job cuts, attrition and early retirement.

The public service and the comprehensive expenditure review were only mentioned on one page in the 178-page economic update, titled “Canada Strong for All Spring Economic Update 2026.”

$36 million for federal pay centre

The federal government is earmarking millions of dollars in one-time funding to process payments and paperwork for public servants leaving their positions through job cuts and early retirement.

The Spring Economic Update provides $36 million to the Pay Centre for surge capacity as the government implements the comprehensive expenditure review. Staff say the funding will cover contract extensions for temporary employees in the centre.

Thousands of federal public servants are expected to leave the government over the next three years as part of the comprehensive expenditure review.

Financial Crimes Agency

Canada’s first federal law enforcement agency dedicated to investigating “serious and complex financial crimes” will be located in the national capital region.

The Spring Economic Update proposes establishing the Financial Crimes Agency, billing it as a “best-in-class law enforcement agency.” The new independent agency will have a “mandate to investigate serious and complex financial crimes, such as money laundering, serious fraud and major capital market crimes,” according to the document.

The Financial Crimes Unit will receive $352.7 million over five years and $82.1 million in ongoing funding.

Hadrian Mertins-Kirkwood of the Canadian Centre for Policy Alternatives says the federal funding for the new Financial Crimes Unit is “pretty significant” at a time the government is cutting spending in other departments.

“In terms of expansion to the public service, this is pretty noteworthy in the context of a lot of other departments actually shrinking right now,” Kirkwood said.

Kirkwood says while it will be a “major institution that’s going to tackle financial crimes,” it’s not clear how big of a problem financial crimes are in Canada.

“Is $400 million going to be enough to tackle financial crimes? But they are taking this seriously; they want to bring some serious expertise,” he told CTV News Ottawa.

Dan Kelly of the Canadian Federation of Independent Business said the new agency is “welcome news.”

“When a small business is hit by some kind of financial crime, fraud, whatever, the police generally don’t have a good pathway for that to be investigated and resolved,” Kelly said. “So, if Ottawa is now building a new infrastructure to try to focus on that, I think given its growth in society this would be good news for Canadians and for Canadian small businesses.”

The Public Prosecution Service of Canada and the Department of Finance will also receive millions of dollars in funding to launch and support the new agency.

“We are delivering on our commitment to create a best-in-class agency with the personnel, resources, mandate, and supportive legislative tools needed to tackle sophisticated financial crimes,” the document said.

“This will protect Canadians by detecting and dismantling the complex illicit financing that fuels crime across Canada.”

Library and Archives Canada

Library and Archives Canada will receive $81 million over four years to support access to information and privacy requests.

The department proves access to federal government records and archival material through the Access to Information and Privacy requests.

The Spring Economic Update calls for $15 million in funding in 2027-28, and $22 million a year over the next three years.

As of Sept. 30, 2025, there were 4,806 outstanding requests through the access to information system.

Library and Archives Canada tasked to find millions of dollars in savings as part of the comprehensive expenditure review.

‘Artificial Intelligence for All’

A new artificial strategy is under development by the federal government.

The economic update outlines “The Government’s Vision: Artificial Intelligence for All,” with six pillars for the strategy.

“Canadians want AI that is safe and sovereign, and to drive AI adoption, create new economic opportunities, strengthen public services and improve our quality of life,” the government said.

The six pillars of the upcoming AI strategy are:

• Pillar 1: Protecting Canadians and Safeguarding our Democracy
• Pillar 2: Empowering Canadians
• Pillar 3: Powering AI Adoption for Shared Prosperity
• Pillar 4: Building the Canadian Sovereign AI Foundation
• Pillar 5: Scaling Canadian Champions
• Pillar 6: Building Trusted Partnerships and Global Alliances

In December, the government announced it was turning to artificial intelligence to enhance productivity and improve services within the public service.

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