Ottawa signed $1.15B in no-bid IBM, VMware deals in 2025

Shared Services Canada, the federal department that runs Ottawa’s computer systems, signed two software contracts in 2025 without competition worth a combined $1.15 billion, federal contract records show.

A $776.6-million licence and maintenance deal with IBM Canada, signed in July 2025, is the largest non-competitive contract reported by any federal institution other than National Defence in the government’s contracts database. It has since been amended upward to $814.4 million. A $373.8-million deal with VMware International, signed in March 2025, works out to more than three times as much per year as the department’s previous VMware contract.

The two contracts account for 81 per cent of the value of all 373 non-competitive contracts Shared Services Canada reported signing in 2025, according to a Canada News Media analysis of the government’s proactive disclosure data.

Shared Services Canada did not respond to detailed questions sent Oct. 26 by the Oct. 28 deadline.

The IBM contract covers licence and maintenance fees for operating system and utility software for servers, storage and related equipment. It runs from June 25, 2025 to June 24, 2029. The department listed it as non-competitive, cited “exclusive rights” as the reason, and recorded one bid.

It is the third consecutive sole-sourced IBM contract of its kind at Shared Services Canada since 2017. The first, signed in November 2017 for $499.3 million, was reported by CBC News in 2018. Its last reported value was $506.7 million.

The second, signed in 2021 for $600.3 million and running to June 2025, was amended repeatedly. By its final report it stood at $762.8 million, $162.5 million or 27 per cent more than when it was signed. Canada News Media found no earlier news coverage of that contract or of the 2025 deal.

The 2025 contract started 29 per cent higher than the 2021 contract did. In the three quarterly reporting periods after the one in which it was signed, amendments added $37.7 million, raising it to $814.4 million.

Together, the latest reported values of the three IBM contracts come to $2.08 billion.

In an emailed statement, Lorraine Baldwin of IBM Canada’s communications team said: “IBM is committed to meeting its obligations under its contracts with the Government of Canada and complying with applicable procurement requirements.” IBM did not answer the specific questions Canada News Media asked about the contracts.

The VMware deal was the first the department signed with the company after a change in ownership. VMware’s software lets one physical server run many virtual ones, and U.S. chipmaker Broadcom completed its purchase of VMware on Nov. 22, 2023.

Shared Services Canada’s previous VMware contract, which ran from March 31, 2023 to March 30, 2025, was signed for $52.8 million and amended to $75.6 million, or about $37.8 million a year. The new contract, signed March 20, 2025, is worth $373.8 million over three years, or about $124.6 million a year.

The department again listed the reason as exclusive rights. The record notes that for contracts with task authorizations, the amount actually spent “may be less than the amount proactively published,” depending on the department’s needs.

The records do not say whether the increase reflects higher prices, more software, or more departments using it.

Non-competitive contracts are allowed under federal rules when only one supplier can do the work, such as when a company owns the rights to the software being licensed. Moving government systems off a platform can take years and carries its own costs and risks. Canada News Media has previously reported on the cost of fixing the Phoenix payroll system, another large federal IT project.

Shared Services Canada’s own 2026-27 Departmental Plan says “dependence on foreign IT providers, limited local options, and vendor lock-in create risks.” The department has launched a separate procurement for sovereign cloud services that prioritizes Canadian-owned and controlled providers, according to a February 2026 Question Period note.

Both 2025 deals were signed before Ottawa’s Buy Canadian Policy took effect on Dec. 16, 2025. That policy applies first to procurements worth $25 million or more.

Canada News Media also asked Shared Services Canada whether it published an Advance Contract Award Notice for either contract, what approvals it obtained, what the IBM amendments paid for, how much it has spent to date and whether it plans to reduce its reliance on either vendor. The department did not answer by the deadline.

The records do not show any rule was broken. Exclusive-rights contracts are a recognized exception in federal procurement and in Canada’s trade agreements. Published contract values can be ceilings rather than money spent, and the yearly VMware comparison assumes even spending over each contract’s term, which the records do not confirm.

Canada News Media asked Shared Services Canada and IBM on Oct. 26 to explain the contracts and the increases, with a deadline of 5 p.m. ET on Oct. 28. IBM replied with the statement above. Shared Services Canada did not respond by the deadline.

Canada News Media was unable to download records from the federal lobbyists registry for this story and has not determined whether either company lobbied the department before the contracts were signed.

The same public contracts file has turned up other anomalies, including a CBSA contract listed with a signing date still in the future.

How we did this. Canada News Media downloaded the federal government’s “Contracts over $10,000” database from open.canada.ca on Oct. 23, 2026. It holds 1.3 million quarterly reports filed by federal institutions. Because each contract is reported again every time it changes, we grouped reports by procurement number and used the original value and the most recent total value for each contract. “Non-competitive” means the department coded the contract that way. To rank the IBM deal, we compared the original value of every contract coded non-competitive since consistent coding began around 2009, excluding National Defence, whose military equipment contracts are not comparable. Yearly VMware values divide each contract’s total by the length of its term and assume even spending. The 2025 share counts Shared Services Canada contracts first signed in calendar 2025.

Sources: contract records for IBM 2025, original (P000074033), IBM 2025, latest amendment, IBM 2021 (P000025961), IBM 2017 (700398223), VMware 2025 (2B0KBQ0600) and VMware 2023 (P000048122); the Contracts over $10,000 dataset; Shared Services Canada 2026-27 Departmental Plan; Question Period note SSC-2026-QP-0902; PSPC on the Buy Canadian Policy; Broadcom on the VMware acquisition; CBC News, 2018.