Government Operations Committee on July 24th, 2024

[Sean Boots]

All of our information comes from media coverage. To my knowledge, we've never received any information directly from public servants. Public servants who work in IT always tell us stories about projects that are at a standstill or in trouble, for example, but they don't disclose wrongdoing directly to us.

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

Thank you very much.

I'm going to ask my second question right away, because my questions a require a lot of background.

In October 2022, Ms. Royds reiterated that Public Services and Procurement Canada was looking to make procurement more fair, accessible and competitive while favouring an approach that provides the best value for Canada and Canadians. She said that PSPC had implemented procurement processes tied in with its accountability and integrity objectives and obligations, and that monitoring and verification measures were in place to ensure high-level oversight of procurement processes. However, at the same meeting, Treasury Board, which is responsible for major policies, admitted that it didn't follow up on departments' compliance with these policies or on the results they achieved, and that it was up to deputy heads to follow up, adding that the administration of government contracts was subject to internal audits by the departments concerned, as well as by the Office of the Auditor General.

When I re-read that testimony, I draw a connection to the policy brief “A Guide to Reforming Information Technology Procurement in the Government of Canada”, which you released in October 2022 and submitted to this committee. I can only wonder about those vaunted analysis and audit tools, particularly whether or not they are useful and above all, how often departments use them. I also wonder about this obsession with working in silos.

Are the tools really useful at the end of the day, or do we need to completely overhaul the work methods?

[Sean Boots]

I think, and this extends beyond the context of our research project, there's often a perception that when the Treasury Board Secretariat—where I worked for a number of years—comes up with a new set of rules, the departments start applying them immediately. The truth is, it takes many years for them to start improving their processes.

In my opinion, public disclosure can really make a difference. Rules that have no bearing outside the public service aren't very effective. It's always about improving public disclosure and having better data, particularly from proactive disclosure. Such tools can bring about positive change. As for the other measures, I'm not convinced that they will change things.

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

Thank you.

There's a kind of phenomenon where, if too many people are aware of a problem, no one does anything, because everyone thinks that someone else will do something. This happens in cases of murder or rape: everyone hears noise in the building, but no one makes a move because people think someone else will. It sounds like the same thing is happening in procurement. When people see that there's a problem and that an audit is needed, they think that someone else, somewhere, will do it.

Do I have the wrong impression here?

[Sean Boots]

You absolutely have the right impression. Reliance on modular contracting for huge projects has become so normalized in the public service that it's very hard to question.

Is anyone else seeing this?

It's amazing how normalized it is.

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

Thank you.

My last question is for Ms. Clarke.

As we speak, not only does Canada have a record number of employees, but it's also making unprecedented investments in outsourcing. We've learned that subcontractors with specialized skills don't necessarily transfer their knowledge to public servants.

Your brief lists the means the government has put in place to help its public servants become more specialized in information technology. I'm thinking in particular of the organization Code for Canada, the Canadian Digital Service and the Canada School of Public Service's Digital Academy.

Why is it that, despite the government introducing measures to have public servants acquire specialized skills, it continues to use that buzzword to explain the massive increase in spending on IT subcontractors?

[Dr. Amanda Clarke]

That's an excellent question.

I think the fact is that, side-by-side, growth in the public service—which is, in part, in line with the growth of the population but is also a significant percentage jump—has been mentioned in several media articles. Alongside this, especially in the IT space, great growth in contracting should raise questions about.... On the one hand, I suppose you could ask whether we are doing so much more in government right now—more ambitious programming and more ambitious policies—that we need more people. That could be true, and I think there's a debate to be had about whether the amount of contracting and the growth in staff is justified by the ambition of the government's agenda.

On the question of the internal capacity-building piece and why that hasn't perhaps displaced the need for contracting, that's such a good question. I think the Canada School of Public Service does what it can to retrain and upscale public servants, but there's no mandatory training right now in modern procurement practices, even for procurement officers. This is something that the Auditor General has identified as a problem, but certainly senior leadership across the federal government has risen through a system in which they were never asked to understand technology.

In fact, often what I hear from public servants when I interview them is that senior leaders would like to insulate themselves from tech projects because they know they so often fail. There's a kind of learned helplessness and a willful blindness to these problems and an assumption that the IT community will handle them, but we don't tend to raise IT experts to the position of deputy minister, for example. This is more that you move up through the policy ranks. We have this cadre of senior leaders who have power and influence and are responsible for a lot of this oversight who sign off on things like big IT contracts but aren't getting that mandatory training to be good stewards and understand the basics of technology. Other jurisdictions are focusing on the executive ranks. It's something that we could think about doing better in Canada as part of mandatory deputy minister training.

[The Chair, Conservative, Kelly McCauley]

Ms. Blaney, welcome back to OGGO.

The floor is yours.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you so much. It's very good to be here.

I really want to thank both our witnesses for being here and for their testimony. I will admit to being very frustrated listening to this. Before this work, I used to run a non-profit organization that had federal funding. I remember having to define what office supplies were. If I bought anything outside of the definition that I had provided in my application, I would not be reimbursed. So when I hear about people getting tons of resources with so little oversight, I just find it very shocking and frustrating.

Ms. Clarke, when you appeared before the committee in 2022 to discuss the ArriveCAN debacle, you said that this was a pretty standard story. You said that in your testimony today as well. We've heard from the Auditor General and from the procurement ombud, who sees this as a systemic issue in government contracting. When the procurement ombud spoke to the committee about his report on the McKinsey contracts, he said:

I do think that now is the time to act. We really need to reconsider federal procurement in its totality....I'm fearful that if I don't start acting in a more aggressive manner, significant changes will not come. I don't think band-aid solutions are the answer. I think there needs to be significant rethinking as to how federal procurement is done.

Do you agree that the government should take a more aggressive, government-wide approach to overhauling our procurement practices? If so, what would be your recommendations for the overhaul? Have those recommendations changed for all of those that you did provide to the committee back in 2022?

[Dr. Amanda Clarke]

I'll focus on the IT procurement piece specifically, because in the broader procurement reforms in the Government of Canada, there are a lot of different pieces there, from ships to procuring gardening services. In the IT space specifically, absolutely more aggressive action is needed.

It's funny; on the one hand, Mr. Boots and I have said several times that there are too many rules and that we like to add rules and burden public servants, but we also do a lot of soft rules as well—suggestions that don't really have much teeth. If we want to see behaviour change across the public service, not just in IT procurement but more broadly in how we conceptualize digital service projects, we need hard rules. We need to force change. The socialization to the status quo and the incentives to keep that status quo as is, because of the lucrative potential future consulting opportunities, are just too high.

There are some things that could be done that would give more teeth to the kind of suggestions we have right now. The digital standards, which Mr. Boots would know about better than I, because he was working on those when they were developed, come out of Treasury Board. They say all the right things. These are talking about keeping projects small and working in the open and using open source. But they are suggestions. I would guess that most senior leaders have no idea that those exist. Those are things that live on the Treasury Board website.

Make them mandatory. Make it that you can't get money for a project unless you demonstrate how you're adhering to the digital standards. They include things like doing early user research and getting software code in your hands early. This will affect internal development of software, but it will also affect how you procure, because those partners will know that they need to show that they're adhering to these modern practices.

I think that's one area. We talk about spend controls in the paper. This has not been every government's approach. It's worked well in the U.K. I think our situation is much like how the U.K. looked in 2010, before a real revolution. The conversations you're having here now at the parliamentary level were happening at the parliamentary level in 2010 in the U.K. That's why they bounded ahead as a digital leader. It was because of the kinds of things that resulted from that parliamentary inquiry. One of them was spend controls. Basically, with very few exceptions, there was a cap on how big any given IT contract could be. This is a hard rule that will force public servants into good behaviour. Over time, there might be room to soften these rules if needed, because there are some jurisdictions that talk about wanting to have more flexibility, and spend controls can be rigid. I think right now we need to force good behaviour really hard.

The other thing would be in management accountability frameworks, to actually hold senior leaders to account for how they manage IT projects and get them focusing on this as the KPIs they really care about. That's another way to try to force some change. What we're seeing now are soft and largely unread Treasury Board guidelines. The handbook on contracting that was released in the last year or so, largely in response to the work you're doing, is similar. Probably no one has read it. There's nothing in it that changes how you actually have to manage a project.

We say the right things in Canada, but then we don't actually force public servants to do those things. That's kind of the problem.

[Rachel Blaney, NDP, North Island—Powell River, BC]

In your response to me, you talked about some rules, and then you're also talking about letting go of some of the rules because they are so heavy.

My question to you is this: How do we analyze that and how do we bring the expertise in? It sounds like doing it in-house would be the best way to do that and to actually analyze what is helpful and what is not helpful so that we can make that process more affordable with less taking of taxpayer money and really looking at having that information available in a way that's accessible for all sides of organizations.

[Dr. Amanda Clarke]

I'm glad you put it that way, because there are some rules that need to be streamlined and removed, and then there are others that need to be added. It's a complicated process.

What should be streamlined and removed? There has already been quite a lot of work done on this by public servants. Internally, there was a red-tape reduction report, which you can find online and to which I'll make sure the committee gets the link via the clerk. These were public servants' testimonies about the ways they need to see procurement rules and HR rules. I'm trying to think of the other one. Maybe there was something around communications. Basically, it was where they saw significant barriers to their ability to be efficient and innovative that are imposed on them by rules that don't add any value and distract them from doing the good work they want to do.

That would be a great place to start to streamline these rules: taking a hard look at the Treasury Board policy suite, which is largely incomprehensible. There is nothing more disabling to your action than following those rules or trying to understand those rules. It's years of drift of adding new bullet points. You can be in section 10.1.2.3.4 and you're reading to try to understand whether or not you can adopt open source or something. These things are not enabling. That has never been their objective. Their objective—and I'm going to use a rude word here, but it comes out regularly in interviews with public servants—is that internal rules are meant to cover your ass; they are not meant to lead to good outcomes. I hear this constantly from public servants. That exact line, when I did my Ph.D research, came up so many times that I had to note as a remarkable finding the amount of times that particular phrase was used.

This is like shifting the accountability culture to one where the focus is on accountability for results and accountability for learning and iteration versus accountability by following all these rules, doing all the documentation and producing something that didn't work, but at least Treasury Board is happy. That's obviously what no one wants, including public servants, because that is deeply demotivating as an accountability model.

Those are some places to start, I think. Mr. Boots probably has lots of thoughts on that as someone who's lived that experience in Treasury Board.

[The Chair, Conservative, Kelly McCauley]

We're about two minutes past our time on that, Mr. Boots. I'm afraid we'll have to get back to you.

Colleagues, we've run quite a bit over on the opening round, which I'm frankly happy with because the answers have been incredible. Going forward, can we please leave a lot of space? If you have an open question to Professor Clarke or Mr. Boots, leave enough time for them to respond.

Mr. Barrett, the floor is yours for five minutes, please.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Your study outlines a concerning picture of IT procurement practices within the federal government. You've mentioned that nearly a quarter of the $20 billion spent on IT contracts has gone to just three firms.

Can you elaborate on how the government's failure to diversify its suppliers has lead to higher costs and less innovation in the IT systems?

[Dr. Amanda Clarke]

The connection there is that for a whole bunch of reasons, certain firms have an incumbent advantage. Often, because of the processes from the perspective of those bidding for contracts and because there are so many hoops to jump through, it can be difficult for smaller firms to bid. You end up in a case where you set up the big firms to continue to get contracts.

Why does that lead to lower quality outcomes? Is that the idea? Part of it is just the basics of not being able to force competitive pressure against these vendors, because they're going to keep winning these contracts whatever the outcomes, really.

It is remarkable how often, despite project failures or underperformance, these contracts might still be issued to those vendors. Part of that is we don't have a clear way of assessing what project success looks like. We don't have strong and proactively disclosed data on whether or not a project led to a good outcome. That's something that we couldn't determine from our data. We can see how much we spent on contracts. We don't even know what was produced from that.

This is a really common phenomenon. In interviews I've done with U.S. public servants, the same conversation comes up that there's a small cluster of three to five big firms at any given time. Sometimes it switches who's in the lead, but roughly there are three to five different firms. They'll move from jurisdiction to jurisdiction delivering bad projects, and they keep getting hired in part because no one's talking about it and no one's disclosing it in ways that make sense.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

I pick up on two things here. The first is that you talked about how larger companies seem to just perform better or succeed in achieving contracts, but we heard that a company like KPMG, which is massive, was instructed by the public service to be a subcontractor to a firm that is objectively tiny, GC Strategies—two people. How is that possible when, for all of the reasons that you said, it's true that larger firms perform better? How do we end up in a situation in which we're using a firm that doesn't add any value? Its supposed value is to source expertise and resources, but instead it costs the taxpayers up to 30% more. KPMG is a known commodity and the heavy hitter in that scenario.

[Dr. Amanda Clarke]

I should clarify that I think those big firms perform better in winning contracts, but they don't perform better in producing good services.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Yes—100%.

[Dr. Amanda Clarke]

That's key to clarify. I know you know that, but I just want to make sure I am being clear.

How can something like GC Strategies...? I agree that, with all the information we've learned, it's surprising...well, not surprising, but it's shocking and concerning. I think part of it is just that we don't have that strong culture internally of scrutinizing value for money when it comes to these contracts, and we're habituated to simply trust that the firms winning the contracts are going to deliver.

The Auditor General, in the case of ArriveCAN in particular, also just highlighted basic breaches of responsible public service. Is that not right? I think there's also that piece. I will say that, in interviews that I've done across a whole range of countries that are really leading in digital transformation, they are not worried about their relationship with vendors. They always say, “We manage that because we have good internal rules, good organizational hygiene and sufficient IT expertise to hold them to account,” so they would never fall for a GC Strategies-type scam because they put those conditions in place. They also, really, always emphasize that these things happen in a culture of strong ethics and values.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Very quickly, would you say that there is a correlation between the lack of accountability that we see and the diminishing role that ministerial accountability plays? The ministers are supposed to be responsible for their departments, but that seems less true all the time.

[Dr. Amanda Clarke]

Oh, this is, I mean—

[The Chair, Conservative, Kelly McCauley]

There's time for yes or no answer only, I'm afraid.

[Dr. Amanda Clarke]

Okay. It's complicated, but I love discussing ministerial accountability, so we should do this more.

[Voices]

Oh, oh.

[The Chair, Conservative, Kelly McCauley]

Thanks.

Mr. Naqvi, welcome back to OGGO as well. The floor is yours for five minutes, please, sir.