Rush order for 31,000 smartphones signals return of ‘March Madness’ budget rush

Rush order for 31,000 smartphones signals return of ‘March Madness’ budget rush
April 29, 2018 editorial-team
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Liberal government took huge delivery of smartphones last month to spend cash before year-end

Federal bureaucrats scrambled to take delivery of a massive order of smartphones by March 31 of this year in an apparent eruption of ‘March Madness’ – the practice of shovelling unspent departmental funds out the door before the end of a fiscal year.

On Feb. 20, Shared Services Canada sent an urgent order to Bell Mobility for about 31,000 smartphones, with delivery required within five weeks in order to qualify as 2017-2018 expenditures.

“Bell will bill partners [departments] directly for these orders, and will ship to partners by March 31, 2018,” says an internal memo on the rush order.

Normally, Shared Services Canada – the government’s IT agency – would order the equipment and pay the bill itself, charging back the amounts to individual departments.

But the rush order and its large size overwhelmed the agency, which required each department to pay its own bills for the delivered hardware.

CBC News obtained the memo and other information about the bulk purchase through the Access to Information Act.

March Madness is a long-observed phenomenon in Ottawa which sees federal departments quickly spend all of their remaining annual budgets in the last month of the fiscal year to avoid losing the cash altogether in the following budget – a use-it-or-lose-it strategy.

The bonuses paid to some executives in government are also partly dependent on how close to budget they are at year-end, since they’re expected to spend all of their budgets in order to fully enact programs and services approved by Parliament.

The previous Conservative government issued a stern public edict against the practice.

“This type of expenditure — dictated by the fiscal calendar rather than real departmental needs — is something that our government strongly opposes,” then-Treasury Board president Tony Clement said in a February 2012 letter that year to his cabinet colleagues.

There is some evidence the warning had an impact: no March spikes in spending were observed in 2013 and 2014.

Twenty-seven departments and agencies participated in the bulk order last month, which was valued at $21.5 million, taking into account a $6 million volume discount from Bell Mobility.

Android devices, such as the Samsung S7 and S8 smartphones, made up about 80 per cent of the order. About 20 per cent was for iOS devices — Apple iPhones. Three departments — Privy Council Office, Industry and SSC — together ordered 1,800 iPhone 8 models.

The largest departmental order by far was from Global Affairs Canada, with 5,500 devices split evenly between the iPhone7 and the Samsung S7.

Absent from the order were BlackBerrys, once ubiquitous in Ottawa but now disappearing. BlackBerry announced in 2016 the firm would no longer manufacture mobile devices, and Shared Services Canada has been managing the gradual transition to Android and iOS devices, while still supporting the dwindling number of BlackBerrys still in use.

The agency defends the rush order as simply a response to demand.

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