Public Services and Procurement Canada
Quarterly Financial Report for the quarter ended December 31, 2020

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1. Introduction

This Quarterly Financial Report (QFR) should be read in conjunction with the Main Estimates. It has been prepared by management as required under section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Directive on Accounting Standards, GC 4400 Departmental Quarterly Financial Report. It has not been subject to an external audit or review.

1.1 Raison d'être

Public Works and Government Services Canada (PWGSC) was established effective June 20, 1996, under the department of Public Works and Government Services Act. As of November 4, 2015, PWGSC started operating as Public Services and Procurement Canada (PSPC). PSPC plays an important role in the daily operations of the Government of Canada. It supports federal departments and agencies in the achievement of their mandated objectives as their central purchasing agent, real property manager, linguistic authority, treasurer, accountant and pay and pension administrator. The department's vision is to excel in government operations, and its strategic outcome and mission are to deliver high-quality, central programs and services that ensure sound stewardship on behalf of Canadians and meet the program needs of federal institutions.

A summary description of the department's core responsibilities can be found in Part II of the Main Estimates.

1.2 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting and a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities. The accompanying Statement of authorities (unaudited)—For the quarter ended December 31, 2020 (in thousands of dollars) includes the department's spending authorities granted by Parliament, and those used by the department are consistent with the Main Estimates for the current fiscal year.

The authority of Parliament is required before money can be spent by the government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

1.3 Public Services and Procurement Canada's financial structure

PSPC provides services to many government departments, agencies and Crown corporations through a variety of funding mechanisms. This includes budgetary authorities that are comprised of voted and statutory authorities, as well as non-budgetary authorities. The voted budgetary authorities include operating expenditures, vote-netted revenues and capital expenditures, while the statutory authorities are mainly composed of revolving funds, employee benefit plans and payments in lieu of taxes (PILT). The non-budgetary authorities consist primarily of the Seized Property Working Capital Account (see description below).

PSPC's complex financial structure may result in significant fluctuations in authorities on a quarterly basis, which are due to timing differences that are resolved by year-end. These are summarized as follows:

For the most part, PSPC delivers its services on a cost-recovery basis, generating revenues via revolving-fund ("the Funds") organizations and programs within the operating vote. These organizations and programs are mainly designed to provide services to other government organizations, and are expected to recover the cost of their operations through revenues. However, the costs incurred by the Funds are usually disbursed prior to invoicing the client, which generally occurs upon completion of a project or after services are rendered, and thus revenues may be collected in a subsequent quarter.

PSPC manages a variety of real property projects that progress through phases from planning to funding and from procurement to construction. Historical trends have shown that expenditures against these projects are not incurred evenly throughout the year; thus, quarter-to-quarter fluctuations are normal. Such projects include the Alaska Highway in British Columbia and Yukon, and the rehabilitation of the Parliamentary Precinct in Ottawa.

PILT issued by PSPC are funded through a statutory vote and paid on behalf of other participating federal departments. Payments are subsequently recovered from the participating departments and are recorded as statutory grants in the Public Accounts of Canada. Timing fluctuations can occur between the payments and the recoveries from the other departments.

PSPC also manages seized property for the Government of Canada pursuant to the Seized Property Management Act. The financial management of this activity is undertaken through the non-budgetary Seized Property Working Capital Account. Charged to this account are expenditures and advances made to maintain and manage any seized or restrained property. PSPC recovers its costs from this account once the property owner loses the right to the property and it is disposed of.

1.4 COVID-19 pandemic

The COVID-19 pandemic represents a serious global health threat that has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. PSPC has been actively engaged in supporting the Government of Canada's pandemic response, through procurements in response to an unprecedented and urgent demand for personal protective equipment (PPE), COVID-19 testing kits and supplies, vaccines and vaccination supplies and other medical equipment such as ventilators and emergency mobile medical units and beds. PSPC also received funding to operationalize the Essential Services Contingency Reserve to support the provision of PPE for essential services in Canada. This has led to an increase in PSPC expenditures over the third quarter of the previous fiscal year. At the same time, COVID-19 is having a major impact on government operations, which has led to a decrease in requests from other government departments for PSPC services. As a result, PSPC revenues have decreased. COVID-19 will continue to have an impact on PSPC's financial picture for the foreseeable future as the department continues to play a central role in response and recovery efforts. PSPC secured additional funding and the required authorities to support its increased activities and ensure financial sustainability for the Government of Canada’s pandemic response.

2. Highlights of fiscal quarter and fiscal year-to-date results

2.1 Significant changes to authorities

When compared to the same quarter of the previous year, year-to-date PSPC's authorities available for use increased by $1,262.5 million ($5,660.9 million in Q3 of the fiscal year ending March 31, 2021; $4,398.4 million in Q3 of the fiscal year ending March 31, 2020) as reflected in Statement of authorities (unaudited)—For the quarter ended December 31, 2020 (in thousands of dollars) table. Major reasons for the increase are outlined below:

Table 1: Year-over-year variances in authorities available for use (in millions of dollars)
Project Operating Capital Budgetary
statutory
authorities
Total variances
Payments to provide supplies for the health system 400.0 0 600.0 1,000.0
Predictable capital funding 8.4 308.0 0 316.4
Price and volume protection 77.5 0 0 77.5
West Memorial Building (1.4) 30.2 0 28.8
Les Terrasses de la Chaudière 1.1 21.4 0 22.5
Improving Crossings in Canada’s Capital Region 0.9 6.3 0 7.2
Carry forward 2.8 (19.7) 0 (16.9)
Engineering assets (7.3) (26.5) 0 (33.8)
Long term vision and plan (2.8) (134.9) 0 (137.7)
Other (7.9) 1.1 5.3 (1.5)
Cumulative variance in authorities available for use 471.3 185.9 605.3 1,262.5

Groupings can change between quarters due to materiality of initiatives.

Amounts may not balance with other public documents due to rounding.

The cumulative net increase of $1,262.5 million from the third quarter of the fiscal year ending March 31, 2020 can be explained by:

Payments to provide supplies for the health system—increase of $1,000.0 million
This funding increase is to allow PSPC to meet expected needs related to the COVID-19 pandemic by expanding its procurement scope, acquiring critical goods and services without unnecessary delays, and establishing the Essential Services Contingency Reserve to which essential service organizations can apply for temporary, urgent access to PPE and other critical supplies.
Predictable capital funding—increase of $316.4 million
As announced in Budget 2019, this funding is to continue to establish a long-term predictable capital funding strategy to manage PSPC's portfolio of assets.
Price and volume protection—increase of $77.5 million
This funding increase for accommodation costs protects PSPC from inflation (price) and any variations in space requirements for public servants (volume).
West Memorial Building—increase of $28.8 million
This funding increase is to rehabilitate the West Memorial Building which will be used as interim accommodation during the renovation of the Supreme Court of Canada Building.
Les Terrasses de la Chaudière (LTDLC)—increase of $22.5 million
This funding increase is to support the project in the design stage and preparation for delivery of the envelope replacement of the LTDLC complex.
Improving Crossings in Canada’s Capital Region – increase of $7.2 million
This funding increase is for inspections and repair work to ensure the Alexandra Bridge remains safe and accessible for pedestrians and cyclists.
Carry forward of unused funds from previous fiscal year—decrease of $16.9 million
Treasury Board Secretariat allows departments to transfer a portion of unused funds from one fiscal year to the following year. A carry forward of $53.5 million was received in the second quarter of this fiscal year. During the same quarter last year, PSPC received $70.4 million in carry forward.
Engineering assets—decrease of $33.8 million
Consists of the sunset of Budget 2016 capital funding received to address program integrity funding pressures faced by the Real Property Program for its portfolio of 17 public infrastructures across Canada.
Long term vision and plan (LTVP)—decrease of $137.7 million
Significant progress has been made in the LTVP to preserve and rehabilitate Parliamentary buildings. The current focus is on advancing the rehabilitation of Centre Block, as well as the rehabilitation of remaining assets still in need of intervention. Moving forward, PSPC is shifting away from a building-by building approach and adopting a holistic approach to create an integrated parliamentary campus.
Other—decrease of $1.5 million
The net decrease of $1.5 million is the result of funding variances in miscellaneous projects and activities such as the Cape Breton Operations and the Advertising Program.

2.2 Significant changes to year-to-date net expenditures

As presented in Departmental budgetary expenditures by standard object (unaudited)—For the quarter ended December 31, 2020 (in thousands of dollars) table, year-to-date total net budgetary expenditures have increased by $443.9 million when compared with the same quarter of the previous year ($3,230.9 million in the current fiscal year compared with $2,787.0 million in the previous fiscal year).

Overall, total spending at the end of the third quarter represents 57% of annual planned expenditures for this current fiscal year, compared with 63% for the third quarter of the previous year.

Table 2: Year-over-year variances in net budgetary expenditures (presented by standard object) (in millions of dollars)
Standard object December 31, 2020 Year-to-date used at quarter end December 31, 2019 Year-to-date used at quarter end Year-over-year variance
Personnel 1,194.4 1,160.2 34.2
Transportation and communications 75.7 50.4 25.3
Information 7.1 10.3 (3.2)
Professional and special services 1,190.9 1,165.1 25.8
Rentals 887.4 859.3 28.1
Repair and maintenance 643.5 764.7 (121.2)
Utilities, materials and supplies 430.7 179.7 251.0
Acquisition of land, buildings and works 477.3 402.3 75.0
Acquisition of machinery and equipment 57.1 70.4 (13.3)
Transfer payments 145.5 84.7 60.8
Public debt charges 88.5 91.3 (2.8)
Other subsidies and payments 223.7 263.7 (40.0)
Revenues netted against expenditures (2,190.9) (2,315.1) 124.2
Total net budgetary expenditures 3,230.9 2,787.0 443.9

Comparative figures have been reclassified to conform to the current year's presentation.

Amounts may not balance with other public documents due to rounding.

The year-over-year net increase of $443.9 million is mainly attributable to:

3. Risks and uncertainties

PSPC integrates risk management principles into business planning, decision-making and organizational processes to minimize negative impacts and maximize opportunities across our diverse range of services and operations. Risk management at PSPC is carried out in accordance with the Treasury Board Secretariat's Framework for the Management of Risk, the Management Accountability Framework, and PSPC's Policy on Integrated Risk Management.

The following key risks were identified as having a potential financial impact on PSPC's operations:

PSPC's dependency on clients' expenditures: More than half of PSPC's financial and human resources are tied directly to cost-recovered services and activities. In a context of reduced expenditures on the part of client departments and agencies, there is a risk that PSPC could face unpredictable and reduced business volumes and associated reduced resources. In response to this risk, PSPC continually adjusts to fluctuations in operational demands while maintaining the quality of its services. This includes sustaining rigorous management of revenues, expenditures, forecasting and commitment monitoring, and working closely with other departments through the client service network to identify changing requirements and their impacts on the department.

PSPC's ability to undertake and deliver complex, transformational and interdepartmental major projects and procurements: There are inherent risks in PSPC undertaking and delivering complex, transformational and interdepartmental major projects and procurements on time, within the approved budget and according to scope, which could ultimately have an impact on the department's service strategy. In order to address these risks, PSPC has implemented disciplined investment and project management processes; established service agreements and service standards with clear identification of responsibilities; ensured sound contract management; engaged early with client departments and other stakeholders; and developed the departmental Investment Plan (IP).

In 2016, the department implemented a new pay system as part of the Pay Transformation Initiative. The implementation was a major undertaking that experienced challenges. In collaboration with other departments, central agencies and union partners, the department will continue to address the recommendations related to Phoenix from the 2017 Fall Report and 2018 Spring Report delivered by the Auditor General of Canada to the Parliament of Canada.

The COVID-19 pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption globally resulting in an economic slowdown. The duration and impact of the COVID-19 outbreak is unknown at this time. As a result, it is not possible to reliably estimate the length and severity of the impact on PSPC's financial results in future periods.

4. Significant changes to operations, personnel and programs

There were no significant changes to operations, personnel and programs during the third quarter ended December 31, 2020.

Approved by:

Bill Matthews
Deputy Minister
Public Services and Procurement Canada

Gatineau, Canada
March 1, 2021

Wojciech Zielonka
Chief Financial Officer
Public Services and Procurement Canada

Gatineau, Canada
March 1, 2021

Table 3: Statement of authorities (unaudited)—For the quarter ended December 31, 2020 (in thousands of dollars)
Fiscal year ending March 31, 2021 Fiscal year ending March 31, 2020
Total available for use for the year ending March 31, 2021 Table 3 note 1 Table 3 note 2 Used during the quarter ended December 31, 2020 Year-to-date used at quarter end Total available for use for the year ending March 31, 2020 Table 3 note 1 Table 3 note 2 Used during the quarter ended December 31, 2019 Year-to-date used at quarter end
Vote 1
Gross operating expenditures 4,519,196 1,019,072 2,852,016 4,041,175 938,683 2,694,495
Vote-netted revenues (1,232,682) (343,245) (906,164) (1,226,006) (339,661) (890,091)
Net operating expenditures 3,286,514 675,827 1,945,852 2,815,169 599,022 1,804,404
Vote 5—Capital expenditures 1,587,144 310,924 715,269 1,401,327 288,154 688,739
Revolving fund authorities
Real Property Services Revolving Fund
Gross expenditures 2,174,293 479,845 1,146,631 1,991,322 572,387 1,297,030
Revenues (2,155,385) (476,080) (1,044,731) (1,980,108) (546,792) (1,184,725)
Net expenditures 18,908 3,765 101,900 11,214 25,595 112,305
Translation Bureau Revolving Fund
Gross expenditures 172,866 45,214 114,055 174,058 45,604 121,605
Revenues (162,322) (40,895) (97,083) (165,908) (40,577) (107,213)
Net expenditures 10,544 4,319 16,972 8,150 5,027 14,392
Optional Services Revolving Fund
Gross expenditures 173,488 112,949 141,146 176,708 88,563 133,974
Revenues (173,488) (113,841) (142,870) (176,500) (81,497) (133,097)
Net expenditures 0 (892) (1,724) 208 7,066 877
Total of all revolving funds
Gross expenditures 2,520,647 638,008 1,401,832 2,342,088 706,554 1,552,609
Revenues (2,491,195) (630,816) (1,284,684) (2,322,516) (668,866) (1,425,035)
Total revolving fund net expenditures 29,452 7,192 117,148 19,572 37,688 127,574
Other budgetary statutory authorities
Contributions to employee benefit plans 157,140 28,878 86,635 161,749 27,120 81,361
Minister of PSP salary and motor car allowance 89 22 67 88 22 66
Refunds of amounts credited to revenues in previous years 0 0 0 0 0 0
Spending of proceeds from the disposal of surplus Crown assets 579 0 282 526 95 95
Collection agency fees 0 0 0 0 0 0
Payments to provide supplies for the health system 600,000 25,817 220,006 0 0 0
Payment in lieu of taxes to municipalities and other taxing authoritiesTable 3 note 2 0 14,848 145,660 0 (27,140) 84,743
Total other budgetary statutory authorities 757,808 69,565 452,650 162,363 97 166,265
Total budgetary authorities 5,660,918 1,063,508 3,230,919 4,398,431 924,961 2,786,982
Non-budgetary authority
Seized Property Working Capital Account 0 0 0 0 0 0
Total authorities 5,660,918 1,063,508 3,230,919 4,398,431 924,961 2,786,982

Table 3 notes

Table 3 note 1

Includes only authorities available for use and approved by Parliament at quarter-end. Amounts may not balance with other public documents due to rounding.

Return to Table 3 note 1 referrer

Table 3 note 2

Consistent with the presentation in the Main Estimates, "Total available for use for the year", for both fiscal years ending March 31, 2021 and March 31, 2020, under PILT, is presented net of planned PILT made to municipalities and the equivalent planned recoveries from other government departments. A description of PILT is provided in section 1.3 Public Services and Procurement Canada's financial structure of this report.

Return to Table 3 note 2 referrer

Table 4: Departmental budgetary expenditures by standard object (unaudited)—For the quarter ended December 31, 2020 (in thousands of dollars)
Fiscal year ending March 31, 2021 Fiscal year ending March 31, 2020
Planned expenditures for the year ending March 31, 2021 table 4 note 1 table 4 note 2 Expended during the quarter ended December 31, 2020 Year-to-date used at quarter end Planned expenditures for the year ending March 31, 2020 table 4 note 1 table 4 note 2 Expended during the quarter ended December 31, 2019 Year-to-date used at quarter end
Expenditures
Personnel 1,590,716 409,525 1,194,420 1,546,703 424,693 1,160,191
Transportation and communications 84,872 3,449 75,700 82,009 17,995 50,425
Information 15,939 2,895 7,110 22,704 3,819 10,321
Professional and special services 2,170,897 547,178 1,190,918 2,174,273 523,161 1,165,130
Rentals 1,110,012 297,146 887,414 1,198,519 294,555 859,280
Repair and maintenance 1,650,523 255,371 643,540 1,394,170 291,349 764,672
Utilities, materials and supplies 1,291,344 189,195 430,665 304,716 106,694 179,685
Acquisition of land, buildings and works 646,530 204,453 477,311 502,486 178,719 402,251
Acquisition of machinery and equipment 196,662 24,445 57,052 130,740 30,925 70,356
Transfer paymentstable 4 note 2 0 14,847 145,450 0 (27,140) 84,743
Public Debt charges 123,798 29,750 88,492 123,452 30,190 91,379
Other subsidies and payments 503,502 59,315 223,695 467,181 58,528 263,675
Total gross budgetary expenditures 9,384,795 2,037,569 5,421,767 7,946,953 1,933,488 5,102,108
Less revenues netted against expenditures
Revolving funds revenues (2,491,195) (630,816) (1,284,684) (2,322,515) (668,866) (1,425,035)
Vote-netted revenues (1,232,682) (343,245) (906,164) (1,226,007) (339,661) (890,091)
Total revenues netted against expenditures (3,723,877) (974,061) (2,190,848) (3,548,522) (1,008,527) (2,315,126)
Total net budgetary expenditures 5,660,918 1,063,508 3,230,919 4,398,431 924,961 2,786,982

table 4 notes

table 4 note 1

Includes only authorities available for use and approved by Parliament at quarter-end. Amounts may not balance with other public documents due to rounding.

Return to table 4 note 1 referrer

table 4 note 2

Consistent with the presentation in the Main Estimates, "Planned expenditures for the year" for both fiscal year ending March 31, 2021 and year ended March 31, 2020, under "Transfer Payments", are presented net of planned Payments in Lieu of Taxes (PILT) made to municipalities and the equivalent planned recoveries from other government departments. A description of PILT is provided in section 1.3 Public Services and Procurement Canada's financial structure of this report.

Return to table 4 note 2 referrer

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