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Public service stands to gain from an integrated procurement approach

Photographic portrait of Aaron Smith
Aaron Smith

Partner, Public Sector and Health Consulting, Ernst & Young LLP

5 minute read 16 May 2025
Co-authors: Sandeep Bajaj, EY Canada Digital Procurement Leader and Wyatt Plain, Manager, EY Canada Public Sector & Digital Procurement

Across Canada’s public service, teams are under pressure to rethink how services are procured, reviewed, approved and tracked to measure return on investment.

In brief
  • In an operating environment rife with complexity, government needs a refreshed procurement approach to succeed and increase velocity around buying.
  • Leading-practice procurement has been proven to optimize costs and value for money, and help organizations achieve strategic objectives.
  • Integrating new capabilities within an effective operating model can help public service organizations address these challenges now and generate value in the long term.

Recent pressures have led the federal government to a critical point in reframing procurement. There are ambitious targets to reduce spending across Canada’s public service, evolving guidance on the use of contracted professional services and strong calls for improved governance around the procurement, management and approval of services. These forces present new challenges and opportunities to empower the public service with the right procurement capabilities and operating model to create meaningful value today and in the long term.

What kinds of procurement challenges does Canada’s government face today?

Canada’s government and public service organizations are operating in a remarkably complicated macroeconomic environment. Several recent turning points have heightened the urgency for the government to improve procurement overall.

In August 2023, Canada’s Treasury Board president made headlines by setting a clear new goal: federal ministers were tasked with identifying $15 billion in spending cuts. This announcement set in motion a series of priority shifts in the government procurement space, cascading to all levels of government. These priority shifts included increased scrutiny on contractor/consulting spend and supplier performance, more rigorous oversight and management of procurement trends and departmental performance, and reassessment of outdated procurement practices.

Additionally, recent months have exposed an ever-shifting political landscape with tariff threats coming from our greatest trading partner. This has led governments at all levels to increase prioritization of procurement from Canadian suppliers to support the local economy.

These evolving objectives and challenges make it difficult for even the best-intentioned procurement teams to effectively operate. To achieve these ambitious goals and address these real challenges, it is imperative for governments to adopt modern procurement capabilities within a modern operating model.

What capabilities does the government need to improve procurement?

  • Simplified procurement practices: Modernizing procurement procedural guidance with an increased focus on value — cost, economic development and other areas — can simplify the procurement process for buyers and suppliers alike, leading to improved compliance and procurement accessible for Canadian small and medium enterprises (SMEs) and other underrepresented suppliers.
  • Review of legislative and regulatory frameworks: Legislative and regulatory frameworks should be reviewed to drive harmonization and cut down on complexity, and to make recourse mechanisms streamlined and fit for purpose.
  • Outcomes-based procurement: A shift towards procuring desired outcomes rather than specific solutions can improve value delivered, encourage innovation and competition among suppliers, and improve accountability and traceability in service delivery.
  •  AI-enabled enterprise capabilities for procurement management: By enabling enterprise-wide AI-enabled solutions, procurement teams can drive streamlined workflows to reduce cycle time, improve collaboration across teams and departments, and improve procurement visibility and compliance across government.
  • Supplier lifecycle and performance management: Implementing standardized supplier lifecycle and performance practices that are aligned with the industry standard can help government improve relationships with suppliers and incentivize suppliers to continuously deliver on expected outcomes.
  • Strategic sourcing and category management: By analyzing spending patterns and consolidating purchases, governments can negotiate better prices, streamline processes and foster stronger supplier relationships. These methods also enhance transparency and align procurement with broader policy goals so that taxpayer money is used effectively.

Related Services

Building these capabilities is only one piece of the puzzle. It’s equally important to connect them in an effective operating model designed to help teams work better and generate value together. At EY, we believe that to generate value, you must focus not only on functional components, but on the operating environment in which they are enabled.

Historically, procurement in the public sector has focused on risk reduction, with less focus on cost optimization or value generation. This has left government with highly cumbersome procurement procedures and complex policies that are difficult to interpret. As governments’ priorities shift, the existing procurement operating environment has become misaligned with the organization’s broader strategic objectives. Restoring this alignment is a critical step in helping procurement teams drive optimal value for Canadians.

 

What are the pillars of an effective procurement operating environment?

  • Talent: Better empower your procurement workforce by establishing an effective organizational model, investing in talent development and promoting a shared ownership and understanding of strategic objectives.
  • Culture: Foster a mindset shift towards outcomes, empowering execution within your teams, emphasizing flexibility, collaboration, agility and client-centric approaches. By fostering a psychologically safe environment, it allows procurement teams to share concerns and feedback and promote continuous improvement while moving away from a compliance- and risk management-first approach.
  • Analytics: Establish KPIs that are aligned with departmental strategic objectives, employing data for insights that improve agility and behaviour change, driving further accountability and transparency.
  • Policy and process: Develop smart, simplified policy frameworks focused on outcomes, implement policies that enable a digital ecosystem, and increase collaboration between department/agency business leaders and procurement professionals.
  • Technology: Implement procurement technology that streamlines the procurement process, provides data-driven insights and improves compliance.

Taken together, an effective procurement operating environment with the right capabilities can support public organizations at all levels in addressing complex procurement challenges, creating long-term value while maintaining transparency.

 

What’s the bottom line?

Government and public service organizations are facing procurement challenges on many different fronts. As these competing priorities converge, the public sector needs new, holistic solutions fit for purpose in today’s complicated working world. Acquiring new capabilities and connecting them in an effective operating model design can help the public service work better and generate value across procurement now.

 

Summary 

An integrated, capability-driven approach to procurement can help Canada’s public service meet today’s complex demands while delivering long-term value. By modernizing practices, enabling smarter operating models, and aligning culture, policy, and technology, governments can shift from transactional processes to strategic value creation.

About this article

Photographic portrait of Aaron Smith
Aaron Smith
Partner, Public Sector and Health Consulting, Ernst & Young LLP
Authentic leader and problem-solver. Passionate about driving purposeful culture change. Works with public sector and health care organizations.
Related topics
Government and Public Sector
Consulting

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