Government Operations Committee on Feb. 14th, 2024

[The Chair, Conservative, Kelly McCauley]

I call this meeting to order.

Welcome to meeting number 102 of the House of Commons Standing Committee on Government Operations and Estimates, also known as the mighty OGGO.

For the first two hours, the committee is resuming its study on the ArriveCAN application.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, October 17, 2022, the committee is meeting on the study of the ArriveCAN application.

As always, I remind you not to put the earpieces near the microphones, as it causes feedback and potential injury to our very valued interpreters.

We have with us the Auditor General. I understand there is an opening statement, probably a brand new, original one that we haven't heard this week.

Welcome back to OGGO. The floor is yours, Madam Hogan.

[Karen Hogan, Auditor General, Office of the Auditor General of Canada]

Thank you, Mr. Chair, and no, it is the same opening statement that you heard yesterday, but it's a good one.

Mr. Chair, I am pleased to be here today to discuss our audit report on the ArriveCAN application, which was tabled in the House of Commons on Monday.

I wish to acknowledge that the lands on which we are gathered are part of the traditional unceded territory of the Algonquin Anishinabe people.

I am accompanied today by Andrew Hayes, deputy auditor general, and Sami Hannoush and Lucie Després, who were responsible for the audit.

Our audit of the ArriveCAN application looked at how the Canada Border Services Agency, the Public Health Agency of Canada and Public Services and Procurement Canada managed the procurement and development of the application and whether they spent public funds in a way that delivered value for money.

I will discuss our findings, but first I have to say that I am deeply concerned by what this audit didn't find. We didn't find records to accurately show how much was spent on what, who did the work, or how and why contracting decisions were made. That paper trail should have existed. Overall, the audit shows a glaring disregard for basic management and contracting practices throughout ArriveCAN's development and implementation.

Government organizations needed to be flexible and fast in responding to the COVID‑19 pandemic, but they still needed to document their decisions and demonstrate the prudent use of public funds. In this audit, we found serious failures and omissions everywhere we looked.

Most concerning was that the Canada Border Services Agency, or CBSA, did not have complete and accurate financial records. Because of this, we were unable to calculate the exact cost of the ArriveCAN application. By piecing together the little information available, we estimated that ArriveCAN cost approximately $59.5 million.

There was confusion right from the beginning. From April 2020 to July 2021, we found that the Public Health Agency of Canada, or PHAC, and CBSA did not work together to establish each agency's responsibilities for ArriveCAN. In this accountability void, neither organization developed or implemented good project management practices—such as developing objectives and goals, and budgets and cost estimates.

In our examination of contracting practices, we saw little documentation to support how and why CBSA initially awarded GC Strategies the ArriveCAN contract through a non-competitive process. Only one potential contractor submitted a proposal, and that proposal did not come from GC Strategies.

Also concerning is that we found evidence that GC Strategies was involved in the development of requirements that were used when the agency later moved to a competitive process to award a $25-million contract for work on the ArriveCAN app. The requirements were very specific and narrow. This gave GC Strategies an advantage that other potential bidders did not have.

We also found that the Canada Border Services Agency's overall management of contracts was poor. Essential information was missing from awarded contracts, such as clear deliverables and the qualifications required of workers. When we looked at invoices approved by the agency, details about the work performed and who did the work were often missing. This greatly contributed to our conclusion that the best value for money was not achieved.

Finally, we found no evidence that CBSA employees disclosed invitations to private functions they received from contractors, as is required by the agency's code of values and ethics. This created a significant risk or perception of a conflict of interest or bias around procurement decisions.

Public servants must always be transparent and accountable to Canadians for their use of public funds. An emergency does not mean that all the rules go out the window or that departments and agencies are no longer required to document their decisions and keep complete and accurate records.

As I said earlier, I believe that this audit of ArriveCAN shows a glaring disregard for basic management practices. As a result, many questions that parliamentarians and Canadians are asking cannot be answered. The lack of information to support ArriveCAN spending and decisions has compromised accountability.

This concludes my opening statement. We would be pleased to answer any questions the committee may have.

[The Chair, Conservative, Kelly McCauley]

Thank you, AG Hogan.

We'll start with Mrs. Block.

Go ahead, please, for six minutes.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Mr. Chair.

Thank you, Ms. Hogan and your colleagues, for joining us here today.

I know you've had a very busy week. I'm not sure it's going to get less busy as a result of the very scathing report you tabled on Monday.

In that report, you found there was no evidence of contact between CBSA and GC Strategies to solicit a bid for the initial ArriveCAN contract. However, you did note—and this would have been in sections 1.38 and 1.39 on page 10—that one bid had been submitted by a company other than GC Strategies.

We have heard testimony at this committee that two options for ArriveCAN were presented. What I don't understand is how the option for ArriveCAN that was ultimately chosen could have been presented if there was no bid from GC Strategies. Did you look at the two options presented to Minh Doan and John Ossowski to see if there were companies attached to them? Did you examine how the option for ArriveCAN was chosen if there was no bid submitted? Who created the option for ArriveCAN that led to GC Strategies?

I recognize there are a number of questions there, so I can repeat them if needed, once you start answering.

[Karen Hogan]

Thank you. I'll try to answer them all, but I might look to Sami Hannoush to add some detail.

As we reported in our audit, officials at the Canada Border Services Agency told us that their decision to award the contract to GC Strategies was based on a proposal they had received from them. However, that proposal was not on file and was not provided to us.

We are aware that three organizations were approached. Even though it was a non-competitive process, typically the public service approaches a few vendors to see a proposal, just to know what they could do.

One proposal was received from those three vendors. It was not from GC Strategies, yet the non-competitive contract was given to GC Strategies. We found very little documentation about interactions with the vendor or the reasons. We did see an email between the Canada Border Services Agency and Public Services and Procurement Canada authorizing the contract and giving support for its being awarded to GC Strategies, yet there was no evidence to support the statements made in that email. That's why we concluded that there was very little documentation or proof as to why they were selected and how they had the skills and competencies to deliver on the contract.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

In regard to who chose GC Strategies, you indicated in a response to my colleague Mr. Brock at the public accounts committee yesterday that you were unclear as to whether it was Ms. Belanger or Mr. Doan. Once you gave that response, he asked if you had sought clarification with CBSA, and the response was “no”.

Can you explain to us why your office would not have gone back to CBSA to get that clarification, given the damning report that is in front of us?

[Karen Hogan]

The communication that you're talking about is some information that we did not receive from the Canada Border Services Agency. It was not provided in the official records. We received it from Mr. MacDonald.

When you look at it—and I've gone back to look at it yesterday—it appears to be a briefing note to prepare Ms. Belanger for a committee appearance. At the time, I believe she was the acting chief information officer at Canada Border Services Agency.

When you look at that document, it includes sample questions and possible answers. There are many answers there that are inaccurate or incorrect. It was a piece of evidence that we couldn't corroborate with anything. In fact, we could disprove many of the proposed answers as being inaccurate. We didn't feel it was necessary to return to Canada Border Services Agency and ask it any more about that document.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

In your investigation into ArriveCAN and GC Strategies and the awarding of these contracts, did you speak to any of the individuals named in the internal investigation?

Did you speak with Mr. MacDonald, Mr. Utano or anyone from GC Strategies, or were you simply looking at the processes involved in CBSA's awarding of these contracts?

[Karen Hogan]

During our audit, we speak with public servants who are still working in the public service. We did speak with Mr. Utano, Mr. MacDonald and Mr. Doan. We do not interact with private corporations or private citizens. We rely on the public service to maintain full, complete and accurate records of their interactions, unless there's a reason for us to do so. In this case, we did not.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you.

Mr. Kusmierczyk.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you, Mr. Chair, and thank you, Ms. Hogan and team, for your tremendous work.

We're on the same side here. We want to make sure we improve accountability. This is about accountability and making sure that if there was wrongdoing, we hold to account the public servants who conducted that wrongdoing and those breaches of the controls and code of conduct. I thank you very much for your work.

The ArriveCAN app was built under extraordinary circumstances during the COVID-19 pandemic. The app was built in 30 days. It's a complex system that was downloaded 18 million times by folks across all platforms. It protected the privacy of persons using the app, including their very sensitive health information. The information that was gathered was shared securely across provincial health agencies within minutes, almost instantly. The app was also accessible. When we spoke with the CBSA officials who came before us, they said they didn't have the in-house capabilities to be able to pull this off in such a short period of time.

In your report, on page 16, you raised a concern. You stated that the Canada Border Services Agency had “consistent requests for resources with the highest levels of IT experience”.

Again, the report stated:

In our view, this meant that the agency likely paid for senior resources when work could have been done by resources with less experience that are paid less.

Can you explain to us how you would recommend we balance the need for cost-effectiveness versus needing high expertise to be able to pull off a complex piece of software in such a short period of time?

[Karen Hogan]

I do agree that the application was developed and launched very quickly. Much of what the public service was doing at that time during the pandemic was being fast and effective to help support Canadians.

What we were looking at here was whether or not the government had achieved the best value for money and whether they could justify some of the decisions that had been made. What we saw is that there was very little justification for repeatedly asking for IT experience of 10 years or more, which is the highest level that is typically contracted out in the government. At the beginning, that might have made sense, but we would have expected that as time progressed, that reliance on external resources was likely not needed throughout the whole time.

It's an assessment that normally you would see at the outset. Figuring out if you had good project management practices in place, you would do an assessment of the needs, the resources and the skills that you need. Those were some of the things that were missing here with some of those fundamental project management processes. Both of those contributed to the fact that we likely paid too much for the app, because of that heavy, long-term reliance on external resources, often at the highest level.

The last thing I would add about that is that we saw instances in which individuals who were charged on invoices did not have 10 years of experience or more, yet the government paid the rate for 10 years of experience. Again, that contributed to our not getting good value for money.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you.

I also noticed in your report that you zeroed in on the information, science and technology branch of the CBSA, and you raised as one of the issues that they seemed to have a direct path to PSPC. They bypassed CBSA's own procurement directorate. Can you speak about why this is a concern, why this needs to be rectified and how big an issue that is?

[Karen Hogan]

Public Service and Procurement Canada is really the contracting specialist of the government. It typically plays an important role in ensuring that departments follow policies and best practices in contracting. That being said, every department and agency typically has its own procurement branch that would also ensure that specific policies within the agency or department are followed. It would usually be that intermediary between the business owners—those looking to contract out or do something in the department and agency—and Public Service and Procurement Canada.

It's another layer of ensuring that policies and procedures are followed, that the government achieves best value for money. Many of the things we would normally see done by the public service would be done. That's why the two procurement arms play a key role.

It's an important, key control in ensuring that a procurement is well done and well documented in the public service.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

You called it a “challenge function”. This directorate could have challenged, for example, some of the decisions that were made. Is that correct?

[Karen Hogan]

I would say Public Service and Procurement Canada is the challenge function. They're the ones who, in this instance, we saw push back when the Canada Border Services Agency said it was going to do a sole source. PSPC asked why they wouldn't do a competitive process, try to run a shorter one. Ultimately, the department doing the contracting—in this case Canada Border Services Agency—has the final decision. They decided at the start to do a non-competitive contract.

The challenge function comes from PSPC. The internal procurement branch is there to help ensure that policies are followed and controls are in place when it comes to contracting.

[The Chair, Conservative, Kelly McCauley]

Thanks. I'm sorry, but that is our time.

We'll go to Mrs. Vignola, please, for six minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

Ms. Hogan, Ms. Després, Mr. Hannoush and Mr. Hayes, thank you for being here.

I imagine you've had an extremely busy week as well.

This is how I would summarize your opening statement.

The processes weren't followed. Not only were the processes for awarding the contracts not followed, at least sometimes, but also, information to support the decisions that were made was missing.

The processes are laid out in policies. The processes are set out in rules and policies, and all public servants are required to follow them, whether a pandemic is going on or not. Do I have that right?

[Karen Hogan]

Yes, but I would add that, at the beginning of the pandemic, the Treasury Board gave government organizations some flexibility so they could respond quickly and effectively to support Canadians.

In giving that flexibility, the Treasury Board still required government organizations to document their decisions so as to ensure accountability.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

If I recall correctly, the Treasury Board gave organizations flexibility in order to achieve desired results, which you mentioned in your report. It still wanted organizations to pay attention to spending and the integrity of the process.

In no way did that flexibility mean that the usual way of doing things in the public service would go out the window. That is my understanding.

[Karen Hogan]

Yes. That is how I interpreted the Treasury Board Secretariat's notice. I know that is how it was understood within the public service.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Are there other situations where the processes weren't followed? Were any untendered contracts awarded, basically by mutual agreement? Did any companies submit proposals to the government so that it would post the proposal as though it was the government's idea? Have you seen that in other cases, during the pandemic or otherwise?

[Karen Hogan]

I can't say with certainty what happened before I became the Auditor General, but I can say that I never saw that in our auditing of other contracts awarded during the pandemic or after I was appointed in June 2020. I often see areas where the contracting process can be improved. In this case, we saw a glaring disregard for the usual rules.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Your report is very enlightening. We talked about it already this week, in another committee. It's shocking. It's truly shocking that an application that should have cost a few tens of thousands of dollars ended up costing some $59.5 million. It might be more, it might be less. We don't know since the documentation is missing.

As it turns out, COVID Alert is another application that was developed during the pandemic.

If I may, honourable members, I'd like to give notice of a motion that has to do with an application. We can debate the motion later. I will go ahead and read it. You should receive it shortly.

I move:

That, pursuant to Standing Order 108(1), the Committee order the government and Public Services and Procurement Canada (PSPC) to produce, in both official languages, a copy of all contracts, communications, memoranda, requests for proposals and proposal submissions involving GC Strategies, as well as all governmental or internal communications from any government authorities or departments, related to the COVID Alert application, no later than March 15, 2024, as long as these documents are free of any redactions.

The motion concerns an application involving GC Strategies, PSPC and Health Canada. We can talk about it a little later, if you like. I think, here again, there is a connection between GC Strategies and certain public servants at the time of their transfer to Health Canada.