The blistering findings mark the second time in less than a year that Canada's procurement ombudsman has discovered bureaucrats carefully tailoring contract requirements to get the suppliers they prefer.
The latest case involves a dozen training contracts — together worth $170,000 — awarded by the Canada School of Public Service between 2009 and 2011.
Ombudsman Frank Brunetta found that the school split contract amounts and generally stacked the deck so that a retired public servant who was already collecting a pension could get all the work.
Brunetta's report cites inappropriate sole-source contracts awarded repeatedly, even after key officials at the school warned against the practice.
The Canada School of Public Service is a federal agency that, among other things, provides values and ethics training to federal public servants.
The report, submitted last week to Public Works Minister Rona Ambrose, determined the school was "favouring an existing contractor by issuing repetitive sole source contracts and contract splitting."
In July last year, Brunetta found parallel problems at the Public Service Commission of Canada, which issued four sole-source contracts crafted in a way that ensured favoured workers got hired.
The public service commission's role is to ensure transparency and openness in the hiring process.
The Canada School of Public Service was created in 2004 to "foster a common sense of purpose, values and traditions in the public service."
The school currently has an annual budget of $101 million and 744 employees, though recently announced it is getting out of language training, leaving that work to the private sector.
The ombudsman's report does not identify the favoured supplier at the school, other than to say the person previously worked with Treasury Board to develop policy and was recommended to teach related subject matter.
Brunetta began investigating after receiving a formal complaint by another potential supplier, who also was not identified.
The individual contract amounts awarded to the favoured supplier ranged from $4,200 to $54,240 — a contract that got underway in May and continues to the end of September this year.
The report suggests the school deliberately split a $30,900 contract in two to get around a government rule that prevents contracts worth more than $25,000 from being awarded to former public servants who are receiving a pension.
The ombudsman's office, created in 2008 as part of the Tories' Federal Accountability Act, does not impose penalties, but says the school has since agreed to fix the problems.
A spokesperson for the school was not immediately available for comment.
Andrea Mandel-Campbell, spokeswoman for Treasury Board President Tony Clement, the minister responsible for the educational agency, said school officials failed to uphold the high standards expected by the government.
"We are very concerned about some of the findings in this report, and we find the actions of the school unacceptable," Mandel-Campbell said in an interview. Treasury Board will be monitoring to see whether the school's action plan is producing results, she added.
Allan Cutler, a former whistleblower whose career was damaged in the sponsorship scandal, says the school should now have all its contracts over the last few years audited in depth.
"CSPS has long been known as an area that contracts by favouritism," he said. "This includes senior former public servants who already receive a generous pension."
Cutler, who co-founded the non-profit Canadians for Accountability in 2008, was a complainant in the case involving four sole-source contracts at the public service commission. He left the public service and ran unsuccessfully for the Tories in the 2006 federal election.
A spokesman for the ombudsman cautioned against concluding from incidents in the two reports that the procurement system is broken.
"These things are in the vast, vast minority but they get the most attention," said David Rabinovitch. "It's not fair to generalize."
In 2010-2011, the ombudsman received 110 formal complaints, three-quarters of which were about the way contracts were awarded.
The office has previously cited sole-source contracting as one of the biggest areas of abuse in federal procurement.