Federal agencies boost contractor spending after missing outsourcing targets
Agencies that failed to cut outsourcing in 2024-25 then expanded contractor contracts by 35% in the next year.
Fourteen federal agencies missed their outsourcing reduction targets for 2024-25, then ditched new targets for 2025-26. The 14 agencies increased contractor commitments by 35 per cent, from $74.2 million to $100.5 million, instead of cutting spending.
The year they were supposed to cut, their consultant contracts jumped 42 per cent, from $242.5 million to $344.2 million. A recent audit found agencies simply reclassified routine public service work as non-core, sidestepping the rules.
Union leaders accuse them of gaming the system while public servants face workload pressure and skill loss. The government has now scrapped mandatory reduction targets entirely from 2026-27.
- 14
- Agencies that missed targets
- 35 percent
- Contractor spending increase
- $74.2 million to $100.5 million
- Dollar jump 2023-24 to 2025-26
- 42 percent
- Consultant jump in cut year
Why it mattersTaxpayers pay for expensive contractors while public service capability erodes and staff face workload pressure.
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