Auditor General finds failures in governance and procurement processes leading to lab services disruption 

Edmonton, Alberta, Canada—November 19, 2025—Auditor General Doug Wylie’s An Examination of Community Laboratory Services (Contract with DynaLIFE) found issues across governance and oversight, financial management, and procurement, which contributed to the following: 

• non-value-add expenditure of taxpayer dollars ($125 million between 2013-2023) 

• disrupted services 

• adverse impacts on patients and staff 

“Based on sworn testimony and an examination of documents and communications, our work identifies notable breakdowns in due diligence, risk assessment, and financial analysis,” said Auditor General Doug Wylie. “Decisions about how public funds are spent on health care can have far-reaching consequences. When procurement processes are guided by evidence and strong governance, they protect taxpayer dollars and ensure services meet the needs of Albertans.” 

See backgrounder for key findings. 

Access to Information Restricted 
The Auditor General Act gives the Auditor General the authority to obtain evidence that relates to the subject of an examination (section 14—Access to Information), including the authority to compel testimony and evidence (section 14.1—Evidence Under Oath)—which was done in this examination.  

“While we received a considerable amount of information, it is important and necessary to emphasize that we did not receive all the relevant information we requested and cannot be certain we had access to all pertinent information,” said Wylie.  

“Documents were either not provided or were heavily redacted. While verbal explanations and alternative sources helped bridge some gaps, we cannot determine the full extent to which the absence of this information may have impacted our findings or conclusions. This constitutes a scope limitation. The nature and impact of this limitation are indeterminate, as we do not know what information was withheld or how it might have influenced our analysis.” 

Recommendations 

The Auditor General made two recommendations: 

• We recommend that the Department of Hospital and Surgical Health Services and the Department of Primary and Preventative Health Services ensure their own procurement processes, and those of their reporting entities, are followed, specifically that an analysis is conducted and retained to support the expenditure of public money prior to proceeding with major procurements. 
   

• We recommend that the Department of Hospital and Surgical Health Services and the Department of Primary and Preventative Health Services ensure their records management processes document all key decisions, directions, and recommendations—including who made them and rationale. The departments should ensure the same standards are met for their various reporting entities. 

In late 2019, Alberta Health Services (AHS) began the process to outsource community laboratory services for the provincial healthcare system. This led to a $4.8 billion contract signed with DynaLIFE Dx (DynaLIFE) in May 2022, with service delivery scheduled to begin in December 2022. Eight months later, in August 2023, AHS terminated the agreement at the request of DynaLIFE’s owners. 
 
The report, An Examination of Community Laboratory Services (Contract with DynaLIFE), was released today to all Members of the Legislative Assembly and Albertans, and is available at oag.ab.ca. 

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The Office of the Auditor General is independent of government and those it audits. Its work is mandated in legislation, and is not negotiated under contract, ensuring its independence of what it audits and how it reports the results of its work. This ensures its work is objective. The Office of the Auditor General is a credible and trusted source of information on government spending and activities. 

BACKGROUND—KEY FINDINGS 

Governance and Accountability (pages 13 to 16) 

• Minister and Department of Health involvement in AHS operational matters undermined the integrity of the governance framework and compromised organizational autonomy. (page 13) 

• Evidence demonstrated that the Minister and the Department of Health expected AHS to proceed with community laboratory services outsourcing even as concerns about cost savings, COVID-19 pressures, and only having one proponent were raised by AHS. (page 14) 

• Minimal records were kept of important discussions between AHS executives, the Minister, and the Department of Health—including those where key decisions were made. (page 15) 

• The AHS Board was not directly involved in the strategic decision to outsource community laboratory services. However, AHS management kept the Board informed and the Board provided guidance and approvals during key stages of the procurement process. (page 15) 

• AHS staff reported feeling discouraged from voicing concerns with the department due to fear of repercussions which strained relationships between AHS and the Department of Health. (page 16) 

Procurement Initiation (pages 17 to 19) 

• The Minister and the Department of Health directed AHS to implement a plan for private delivery of community laboratory services across Alberta. (page 18) 

• Neither AHS, nor the Department of Health, followed its own processes to prepare a business case for outsourcing community laboratory services. (page 18) 

• Although cost savings was the primary objective for outsourcing community laboratory services, calculation errors and subsequent financial analysis indicated most of the estimated forecasted savings may not be realized. (page 19) 

Request for Proposal (pages 20 to 21) 

• The RFP document met the standards set out in AHS internal procurement policy and the Government of Alberta’s Procurement Accountability Framework. (page 20) 

• The RFP was not re-evaluated despite significant risks, including the pressures of COVID-19 and the fact that only one proponent remained in the competitive process. (page 21) 

Due Diligence (pages 22 to 24) 

• AHS continued with the procurement despite knowing that the main objective of cost savings was  likely unattainable. (page 22) 

• AHS did not evaluate the assumptions and accuracy of DynaLIFE’s financial proposals. (page 23) 

• AHS risk assessments lacked depth and detail and were not updated as the procurement process progressed. (page 24) 

Negotiation (pages 25 to 26) 

• AHS management and the AHS Board did not complete or approve the negotiation plan, and the draft that was prepared remained incomplete. (page 25) 

• Responsibility for the pension plan of Alberta Precision Laboratories (APL) employees transferring to DynaLIFE remained unresolved during negotiations, which further reduced anticipated cost savings. (page 26) 

• The Alberta Labour Relations Board ruled that DynaLIFE must comply with existing collective agreements, resulting in higher costs. (page 26) 

Transition and Contract Monitoring (pages 27 to 31) 

• AHS management and DynaLIFE proceeded with the transition despite essential requirements—such as Lab Information System readiness—being incomplete. (page 28) 

• AHS management and DynaLIFE did not share key operational plans during the transition, which contributed to increased wait times and diagnostic errors. (page 29) 

• Performance issues—such as an above average number of errors in pathology results—compromised patients. (page 30) 

• AHS management progressively increased its oversight and intervention efforts in response to ongoing performance issues with DynaLIFE. (page 31) 

• Frequent changes to Alberta’s community laboratory services model created operational challenges and impacted staff engagement, without achieving sustained improvements. (page 31) 

Termination (pages 32 to 33) 

• As performance declined, DynaLIFE sought additional funding, but AHS required service improvements before approving further payments. (page 32) 

• DynaLIFE requested early termination of the contract. (page 32) 

• AHS management and DynaLIFE followed the transition-back agreement, and AHS stabilized laboratory operations after resuming control in September 2023. (page 33) 

Cost to Alberta Taxpayers (pages 34 to 36) 

• Between 2013 and 2023, Alberta taxpayers paid $125 million in non-value-added costs for government-initiated laboratory procurements that were abandoned or unsuccessful. (page 35) 
  This includes:
   
  • $77 million for the outsourcing of community laboratory services (2019–2023) 
  • $13 million for the outsourcing of community laboratory services for Northern Alberta and its subsequent cancellation (2013–2015) 
  • $35 million for the procurement of the central hub lab construction and its subsequent cancellation (2015–2019) 

• In addition, $32 million was paid by AHS to acquire DynaLIFE’s remaining assets and liabilities at fair value following the termination of its contract (2023). (page 36)