Feds cancel $13.8-million co-working space contract amid budget cuts
LAUFT says it's on the hook for $2.5 million it invested in the co-working space plan.
By Matteo Cimellaro, Ottawa Citizen
Published Oct 21, 2025 | Last updated 6 hours ago
A company that opened a co-working space in Gatineau for the federal government earlier this year has already shut the office, saying the government has ended its $13.8-million contract.
LAUFT opened the co-working space on Boulevard du Plateau in March. It only lasted in September when the government pulled the plug on the contract, said Jesse Sharratt, LAUFT’s co-founder.
“So we ended up building this workspace they probably knew they were only going to use for six months,” said Sharratt, who added the company is now on the hook for $2.5 million it invested in the plan.
Sharratt told the Ottawa Citizen that the government only provided $300,000 of the three-year 13.8-million contract to the company before it wasn’t renewed by Public Services and Procurement Canada (PSPC). Sharratt said that the company generated revenue through monthly invoices sent to the government while the office space was in operation.
Sharratt said his company put “everything on the line” with the contract, and that all indications from PSPC were positive until the new federal government initiated its plans to cut spending.
Hailed as the future of hybrid work for public servants when it first opened, the original proposal was for LAUFT to launch a pilot at 11 sites in the National Capital Region.
LAUFT was hoping to position themselves for national contract that would scale the model across Canada for federal public servants.
However, Sharratt said that only 130 workers were ever onboarded into the company’s software before it closed when the contract was ended. That number of workers was far from the 11,000 PSPC had said would be onboarded “as early as this year, at the beginning of January.”
“They really killed it from within, you know, killed adoption,” Sharratt said. “They also brought in a (director general) who required that every person who used the co-working space would have to go through a secure in person security training session.”
PSPC did not provide comment on the contract by deadline.
Prime Minister Mark Carney’s government announced a plan in July to find up to 15 per cent in savings over three years from operational budgets across most departments and agencies, including PSPC.
When PSPC first awarded the contract to LAUFT in 2022, public servants were still working from home five days a week as part of the remote work model. However, departmental plans were being arranged for hybrid work with some remote and in-office workdays.
New return-to-office rules in 2024 mandated that most public servants work in offices at least three days a week. Executives have been required to work in office for at least four days a week.
Meanwhile the federal government has also been working towards offloading 50 per cent of its office real estate.
Sharratt pitched his working spaces as a cost-effective alternative since the upfront capital costs were on LAUFT and allowed the government to avoid long-term leases.
He added that the workspaces were better for the climate and work-life balance because they would reduce commute times. The working spaces could have also provided economic stimulus to rural and suburban communities outside the downtown cores of Ottawa and Gatineau.
“It makes sense on paper, but then the mandate comes down to cut costs and densify the existing workspace that they have,” he said. “The line was that we’ll be able to squeeze as many people into Soviet-era office space that we can to try and save some dollars.”
An estimated 15 people were laid off because the contract was cancelled, Sharratt said.
He added that he won’t be working with the federal government “anytime soon,” claiming small and medium sized businesses have a “heavy burden” when it comes to federal procurement.
“I don’t think for a business of our size, it’s worth it,” he said. “The upfront investment you have to do have to make, to do business with the government of Canada and learn the way they operate, navigate all their processes.
“That’s why a lot of these contracts have a large enterprise that can afford to wait.”
Sharratt and his co-founder are now eyeing markets in the United States for expansion “because it’s just a lot more capital… and frankly they are a bit more excited about building business than we seem to see in Canada.”
https://ottawacitizen.com/public-ser...lauft-canceled
Prev
Linear Mode
