OTTAWA — The small business loan program the federal government rolled out during the COVID-19 pandemic wasn't managed with "due regard for value for money," auditor general Karen Hogan said Monday.
The Canada Emergency Business Account program lent 898,000 small businesses $49.1 billion to help cover expenses such as rent and payroll during the pandemic.
Hogan said while Export Development Canada, which was responsible for the program, acted quickly to get the loans out, it relied on sole-source contracts and a single vendor without strong checks and balances.
Hogan's report says the Crown corporation gave that vendor, Accenture, "too much control over key aspects of contracts, such as the scope of work and pricing, and failed to exercise basic controls in contract management, such as monitoring that amounts paid aligned with the work performed."
At the same time, it says the federal government didn't provide effective oversight to ensure the program was cost-effective.
The report estimates $3.5 billion of the loans went to recipients that were ineligible.
Hogan told reporters she is "concerned that EDC only partially agreed with our recommendation that it should carry out additional work to identify all ineligible recipients and recover the amounts involved."
In an emailed statement, Export Development Canada said it only partially agreed because in "practical terms, implementing (the recommendation) would be challenging and may also come at significant cost." Todd Winterhalt, its head of communications and public affairs, said in the statement it would explore potential options to recoup the money.
The auditor general's report outlined the example of a call centre that was set up to provide information about the loan program.
"The initial contract awarded for the call centre was expected to last four months and cost $2.78 million. However, as of March 31, 2024, the call centre was still operating with a cumulative total cost of approximately $23.2 million," the report outlines.
The costs per call, meanwhile, increased to $589 per call in the spring of 2023, up from $31 on average in 2020. Because Expert Development Canada didn't require timesheets, it didn't realize that the number of calls had dropped in 2022 and agents were answering six calls a day, while it "continued to pay for full-time work."
Winterhalt said the organization was asked to "design, develop and launch the program within two weeks."
He said the organization is "very proud of what we were able to accomplish on behalf of the Government of Canada for Canadian small businesses. This was a net-new program with no precedent or instruction manual to follow."
The report found that as of March of this year, $8.5 billion of the loans hadn't yet been repaid.
Hogan noted in the press conference that the program is ongoing. "Payments … will be ongoing for several years while action on defaulted loans is just beginning," she said.
"Value for money will be further compromised without better monitoring and improved plans to recover defaulted loans."
This report by The Canadian Press was first published Dec. 2, 2024.
Anja Karadeglija, The Canadian Press
