Government of Canada Releases Forensic Audit Results of SNC-Lavalin O&M Contracts

February 4, 2011

Gatineau, Quebec – The Honourable Rona Ambrose, Minister of Public Works and Government Services Canada and Minister for Status of Women, issued the following statement regarding an audit reviewing repair and maintenance contracts with SNC-Lavalin O&M Inc. worth $5.9 billion:

The Government of Canada is committed to ensuring that the tax dollars of hard working Canadians are spent wisely.

That is why last year I directed my Department, Public Works and Government Services Canada, to undertake an independent third-party audit of the SNC-Lavalin O&M contracts. In the process, PricewaterhouseCoopers identified that SNC-Lavalin’s annual audits have not reconciled actual costs of project management labour fees with estimated costs. We believe that estimated costs should always be checked against actual expenditures, and therefore this will now be done for these contracts.

We recently received the PricewaterhouseCoopers report. We have studied it carefully, and have posted it on-line.

To date, results confirm there was one transaction that did not provide best value for Canadians. As a result, SNC-Lavalin O&M has voluntarily reimbursed the Government of Canada $33,493.11 (GST included). This is in addition to a previous reimbursement of over $128,000 following an internal cost audit.

To ensure that there are not systemic issues across the $5.9 billion worth of contracts with SNC-Lavalin O&M, the independent third-party forensic audit is on-going and using forensic audit procedures to thoroughly review all relevant costs, invoices, and procedures. The forensic audit will continue to:

  • Review consultant costs, construction costs, security costs, management fees and taxes charged across a broader number of contracts
  • Match each invoice to proof of payment, as well as the total cost of the project to the estimate identified on the approved project request
  • Confirm that every project was requested and approved
  • Review the procurement process used to issue sub-contracts
  • Review terms and conditions of each contract
  • Examine invoices issued under the contract
  • Review breakdown of cost (i.e. labour or materials) on each invoice
  • Review legislative requirements governing rates charged by professional trades

In addition, I, along with the President of the Treasury Board, have instructed our Departments to write guidelines for all tenants of government to know conclusively what is reasonable and appropriate for office expenditures. These guidelines will be launched across Government soon after the Budget.

Finally, Public Works and Government Services Canada commenced the re-procurement process for building management services in December 2010.

Our Government is committed to fiscal prudence, eliminating wasteful spending and achieving the best value for taxpayer's dollars.