Government Operations Committee on March 13th, 2024

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

You were—

[The Chair, Conservative, Kelly McCauley]

I'm afraid that is past our time.

Mr. Jowhari, go ahead, please.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

Mr. Firth, I would like to focus on three areas, and I have only five minutes.

Number one is that in your testimony you referred to three companies. One is Veritaaq, of which you were an employee between 2007 and 2015. I also understand that there was a company named Coredal, which had three partners. Then, in 2015, two of you bought this company, which then applied for a name change through the CRA, etc., and became GC Strategies.

Are you telling me, or is my understanding correct, that you were an employee at Veritaaq and that you also had a company where you were part of a three-man show during that period?

[Kristian Firth]

No.

From 2007 to March 2015, I was an employee of Veritaaq. I was there for eight years. I and my two business partners approached a company called Coredal, which had previously been working independently from us. When we purchased it in April, we subsequently did the name change and everything else to rebrand.

[Majid Jowhari, Liberal, Richmond Hill, ON]

In your due diligence in buying that company, did you look into any type of connection that it had with the government or any contracts that it had in the past and projected contracts that it had in the future?

[Kristian Firth]

We went back five years, and we saw the contracts it previously had at PSPC. Then, I think, when we purchased it, it had only one contract outstanding, with Natural Resources Canada.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Are you in a position to tell us how much you bought it for, and how much of that was goodwill?

[Kristian Firth]

I don't think I can disclose that right now.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay. We'll leave that for now.

Let's go back to your opening remarks. The second area is that you have consistently said “the application build”, with emphasis on the build. We know that the Auditor General has said that this total application build and support and all of those things can be estimated at around $60 million. We don't know if that number is right or not. You are telling us that your part of the ArriveCAN build was $11 million. Can you clarify the difference when you specifically use the word ArriveCAN “build” with respect to GC Strategies and the big picture of what has potentially mushroomed into about $60 million?

[Kristian Firth]

Again, we were only servicing the build. When you look at call centres, I think you'll see that Service Canada had $7 million or $8 million for a call centre. There were cloud services with AWS and Microsoft. There were other components like cybersecurity. There was data management. I think there was a component for character recognition. There were things that we weren't involved in. We had a core team that was responsible for developing the app on the web and joint iOS—with no back-end components.

[Majid Jowhari, Liberal, Richmond Hill, ON]

You're in possession of those invoices. You haven't been asked to provide those invoices. It's good that you've gone through them and that you have an understanding of them. You are claiming that it was roughly...you're saying that you have shown a net income of $2.5 million of that $11 million. Am I right?

[Kristian Firth]

It's approximately $2.5 million, yes.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay. With about a minute and 10 seconds, I'd like to go to back to another comment you made, which was about the third area.

You talked about the rate to the Crown. How is that rate to the Crown determined? Is it determined by you, or is it determined by the Crown?

[Kristian Firth]

It's a combination. When you submit the RFP, if there are multiple options, there will be what they call a median band. They will take all of the bids and understand what the median price is between $1,500 to $1,200. Around $1,350 is what they'll say is the fair price for the Crown. That's what they've determined it to be.

[Majid Jowhari, Liberal, Richmond Hill, ON]

The Crown determines the Crown rate based on a methodology. Is that correct?

[Kristian Firth]

Yes, that's correct.

[Majid Jowhari, Liberal, Richmond Hill, ON]

When you go and bid, you bid on that Crown rate. It's not that you set the Crown rate or any of the 636 sets the Crown rate. Is that correct?

[Kristian Firth]

It's the off-market rate. What that means is we're always.... This is essentially why, I guess, this process was put in place in 2003 for the private sector. To be competitive and keep the prices down for the Crown, you need to have 636 people bidding on something every time.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Fair enough.

The rate is set up by the Crown based on a market rate. You will basically go back and try to negotiate with resources, and whatever margin is left is yours.

It's not that you are increasing the Crown rate, which is the established rate. Is that correct?

[Kristian Firth]

Yes. Once the rate is determined by the Crown, it's up to us to negotiate the resource—

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay. We'll come back to you again on that, because I'm out of time.

[The Chair, Conservative, Kelly McCauley]

Thank you very much, Mr. Jowhari.

It's 12:06. We will suspend for 10 minutes and start round three at 12:16 on the dot.

We are suspended.

[The Chair, Conservative, Kelly McCauley]

Thanks, colleagues. We are back.

We have Mr. Genuis for five minutes, please.

Go ahead, sir.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Chair.

Mr. Firth, this is a sad example of corruption and potential criminality, but it also exposes incredible waste within this government, especially in the area of procurement and contracts to well-connected consultants for, in many cases, no discernible work. I want to try, in my round of questions, to follow the money that was spent.

The Auditor General's report estimates that $59.5 million was spent on the app, and further, that your company received directly $19.1 million of that money, even though, by your own admission, all you did was recruit other individuals and companies. That's an incredible sum for “recruitment”.

However, you told the committee that the Auditor General's information is not correct. You dispute the $19.1-million figure. You say it was only $11 million. Is that correct?

[Kristian Firth]

For the application build, that's correct.