Government Operations Committee on Feb. 14th, 2024

[The Chair, Conservative, Kelly McCauley]

Thank you, Mrs. Vignola.

Are you sending the motion to the clerk?

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

Yes, it should be a matter of seconds.

[The Chair, Conservative, Kelly McCauley]

Wonderful. Thanks very much. I appreciate that.

Next is Mr. Bachrach, please, for six minutes.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair, and thank you to the Auditor General for appearing on this very important topic.

I must say that there is a lot of anger and a lot of frustration around the findings of your report, and I think rightly so when we look at $50 million to $60 million. I represent a region in northwest British Columbia of mostly rural and remote communities that have a huge number of needs that could be taken care of with $50 million to $60 million.

I think of the City of Prince Rupert, which desperately needs to replace its water pipes and needs tens of millions of dollars of investment in core infrastructure. I think of Smithers, Fort St. James and Port Clements: All of them need waste-water treatment facilities that cost millions of dollars. Takla needs a new school.

These are all things that could be funded with the money the government has wasted on this app. It's frustrating and angering that either gross incompetence or negligence—or certainly what looks like misconduct—has led to so much public money being wasted.

I'll start on that note. The questions we have really have to do with procurement more broadly and the use of subcontractors to do the work the public service should be able to do.

I'll start with paragraph 1.39 of your report. You noted that GC Strategies was awarded a contract for ArriveCAN without any documentation and without having submitted a proposal. Your report says, “There was no evidence that the agency considered a proposal or any similar document from GC Strategies for this non-competitive contract.”

I'm curious as to what documentation your investigation was privy to in this regard. Was it only emails, or were you able to examine phone records, text messages, etc., on both personal and government devices? Also, do you suspect that the discussions for GC Strategies to be awarded the contract took place on channels that you didn't have access to?

[Karen Hogan]

Normally, we look to official records of the organization, however they might be maintained. I guess it's important to highlight that items like text messages, emails or MS Teams conversations are meant to be transitory unless they're of business value, in which case they should be saved and kept in official repositories or official documentation.

In this case, because there was so much missing information that the files were rather thin, we did turn to these transitory documents to try to, hopefully, fill in some of the blanks, but when it came to a proposal, as I mentioned earlier, while we were told that the decision was based on a proposal submitted by GC Strategies, there was none for us to review or look at.

We didn't need a big deck. We would have expected anything to just outline what GC Strategies could do and to demonstrate how they had the skills and competencies to deliver on the needs of the government, and we did not see that.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Following on that question, did you come away with a sense that officials in charge of this project were using certain channels because they were less likely to be scrutinized?

[Karen Hogan]

Again, I can't speak to the intent of what they were doing. What I can tell you is that at times we did have to go to emails to find some evidence of discussions or exchanges. At times, some of the documentation was maintained by Public Services and Procurement Canada, and it was provided to us, but all of that should have been maintained by the Canada Border Services Agency, as they were the ones entering into the contractual relationship with a vendor and they had an obligation to make sure that was properly documented to show accountability for the use of public funds.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

On the topic of public service capacity, you mentioned the fact that the government was essentially paying for top tier resources, but the people doing the actual work on the project were less experienced and less skilled. Was there a considerable amount of work done on this app that could have been accomplished by the public service itself, in your view?

[Karen Hogan]

At the beginning of this, we did look to see whether the Canada Border Services Agency and the Public Health Agency of Canada had done an assessment, and they did. It was a quick, small assessment, but it was an assessment that the public service did not have the skills and, more importantly, the capacity at that time, to develop this app.

I think it was a reasonable decision to seek out support from a third party, from the private sector, to develop the app, given the circumstances if you put yourself back in March and April of 2020, but what we would have expected to see was that eventually that dependency on a contractor would have decreased over time, so as to show that you were transferring parts of the operation—the maintenance or the ongoing day-to-day functioning—over to the public service and upscaling or transferring knowledge to the public service to be able to diminish that dependency on a third party. We did not see that.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you for that.

GC Strategies is essentially a headhunter. Can the public service not do its own IT recruiting? It seems like a role that could surely be accomplished by the public service.

[The Chair, Conservative, Kelly McCauley]

You have a couple of seconds for an answer.

[Karen Hogan]

Again, that was a decision we were hoping to see properly documented. Why was GC Strategies chosen, and how did it have the skills and competencies to develop the ArriveCAN application?

We did not find documentation to support that.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Ms. Hogan.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We'll go to Mrs. Kusie, please, for five minutes.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair.

Welcome back, Ms. Hogan, to our group.

You stated in paragraph 1.19 that 18% of invoices submitted by contractors did not have supporting documentation to explain whether expenses were related to ArriveCAN or other IT projects.

You also state that GC Strategies was paid $19.1 million to build ArriveCAN. That's $8 million more than was projected previously.

Is there a possibility that this number is higher than $19.1 million, due to the pay discrepancies?

[Karen Hogan]

The breakdown in that exhibit is of the dollars spent, allocated by contractor, on ArriveCAN. What's important to note is that's what the Canada Border Services Agency, in its financial records, has said was paid to a vendor and allocated to that contract.

We had difficulty at times seeing the evidence to support that the expenditures on invoices were actually linked to ArriveCAN and not to another IT project, so the dollar amounts listed by the vendor could be higher or lower. It really just speaks to the poor financial record-keeping at the Canada Border Services Agency.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

It could be higher. This is possible.

In section 1.53, you state that the agency reached out to firms it wanted to work with and slotted them into pre-existing contracts with GC Strategies through task authorizations. The CBSA also stated that $12.2 million is not properly accounted for due to a lack of TA documentation.

Was this an issue with GC Strategies or with the CBSA?

[Karen Hogan]

In my view, these were two examples of procedures that the Canada Border Services Agency should not do. I expect that if the Canada Border Services Agency felt it had an existing relationship with a vendor it knew was able to deliver on something, it should have entered into a contractual obligation directly with it.

We do not know. It's not clear why the vendor was then given the task authorization under a GC Strategies contract.

Those are examples of things I would have expected to see the CBSA do better at, because there are procurement rules around them.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

That's right.

We know, in this room, that GC Strategies has been contracting with the Liberal government since it was formed in 2015, but we just found out today that it has made over $250 million in that period of time. That's a quarter of a billion dollars. That is a lot of money.

Are you concerned that GC Strategies has been using these same tactics to procure lucrative contracts in other areas of the government?

[Karen Hogan]

I can't speak to the profit margins of a private corporation. That's not something we audit. I was responding to a motion here from the House of Commons to look at the ArriveCAN application, and that's what I can speak to today.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Could you give any assurances to Canadians today that the company has not continually been engaged in these practices across these past eight years?

[Karen Hogan]

I can speak only to what I saw as procurement rules, procurement processes or gaps in procurement processes between the Canada Border Services Agency and the vendors that were used for the ArriveCAN application.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Are you concerned that the 180-day suspension for GC Strategies at the CBSA will be lifted on May 1 this year?

[Karen Hogan]

Again, these are decisions that the public service has taken that I did not audit, and I really can't comment on them.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Do you think the company has been properly assessed to see whether it is within the federal government's procurement guidelines?