Government Operations Committee on Nov. 9th, 2023

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

Yes, that's correct.

[Anita Chan]

I did not, to my knowledge. The Botler TA would be the first instance.

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

I'm not talking about Botler's task authorization, I'm talking about the ArriveCAN application, GC Strategies, Dalian Enterprises and Coradix Technology Consulting.

Did any of those companies' subcontractors contact you or any of your team members to say that it wasn't working, that they weren't receiving their payments?

[Anita Chan]

Personally, I can't—

I can only speak for myself in this case. I do not have visibility on all the contracts that have been issued for the work on ArriveCAN.

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

Is it possible to check with the people who were managing the ArriveCAN contracts to find out whether there were complaints about not being paid?

Mr. Mills, can you answer the question?

[Michael Mills]

Mr. Chair, we'd be happy to undertake—with CBSA's chief financial officer, who is responsible for paying invoices—seeing whether they've had complaints of non-payment from subcontractors.

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

Thank you.

Mr. Mills, to your knowledge, did the officials in charge of liaising between the department and the companies have to intervene to get the three companies to pay their subcontractors?

[Michael Mills]

Mr. Chair, it's not our normal process to verify with subcontractors, after payments have been paid out, whether primes paid their subs.

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

Thank you, Mr. Mills.

Were the criminal records of the professionals and the security clearances of the subcontractors and the resources imposed on these subcontractors by GC Strategies, Dalian Enterprises and Coradix Technology Consulting checked as part of the contracts for the ArriveCAN application?

[Michael Mills]

To the best of my knowledge, the security requirements for subcontractors were verified by CBSA.

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

Were any red flags raised with you by government officials who may have felt the need to revise the statement of work and procurement process? The reason they might have contacted you had to do with the possibility that the statement and process may have contained irregularities, leading to concerns about the GC Strategies, Dalian Enterprises and Coradix Technology Consulting contracts for the ArriveCAN application.

[Michael Mills]

I did not personally receive any complaints about anyone having concerns with the statements of work with respect to those contracts. I don't know if anyone else among our team received any complaints.

[Angela Durigan]

I did not.

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

Did you check whether CVs had been altered to meet the requirements of contracts related to the ArriveCAN application, specifically in the case of GC Strategies, Dalian Enterprises and Coradix Technology Consulting?

[Michael Mills]

When the contracts or task authorizations are let, it is actually the responsibility of the department—the technical authority, CBSA—to verify that the resources put forward have the credentials required to carry out the work. In terms of reviewing the résumés and the qualifications of the subcontractors and their resources, that work would have been conducted by CBSA. You would have to ask the CBSA what work they did to validate and review.

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

In terms of deliverables and delivery milestones, did you make sure those three companies followed the usual processes for supply contracts?

[Michael Mills]

Again, we're talking about the division of responsibility with respect to contracts. It is the responsibility of the contracting department, the CBSA, to verify the receipt of deliverables and make the payments based on the receipt and the acceptance of the deliverables under those contracts.

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

Is it customary for one recruiting company to hire another recruiting company to hire resources for a contract?

[Michael Mills]

I don't know if it's typical to have multiple layers of recruitment companies, but in very complex IT projects, it is typical that there will be a number of subcontractors. Many of those subcontractors will actually be individuals, and those individuals will be incorporated individually. It may look like there are layers of subcontracts when the subcontracting entity is actually an individual in that contract as a corporation.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Mills.

Thank you, Mrs. Vignola.

Next we have Mr. Johns, please.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Before I jump into my questioning, I want to ask you, Mr. Mills, what the typical threshold is of commissions on contracts. You have a contractor who can take 15%-30% commission; they can subcontract down to a subcontractor, and they can take 15%-30%. What is the limit on how far down the line you can go, and how much can the commissions actual be in total? What is the absolute total with all the ghost contractors, subcontractors, etc.? How much commission can be paid out?

[Michael Mills]

To begin, I would note that most of these instruments...The TBIPS is a competitive instrument, so when we put out a requirement, it is actually a requirement to compete for that among many firms. It is typical that we may have many respondents, and much of the selection and winning is based on the price of each of the resources at the different levels.

You may have a requirement that says we need a web developer, we need a security specialist, we need senior—

[Gord Johns, NDP, Courtenay—Alberni, BC]

I'm actually looking for an answer.

Is there a set maximum amount allowed to be paid in commissions through this chain of contractors, subcontractors, ghost contractors and everybody taking a cut? Is there a max cut that can be taken? That's all I'm asking.

Is there a threshold? Are there any regulations in there to make sure there's a set maximum amount that can only be paid out on a project?

[Michael Mills]

There is no set of regulations that bars it. These contracts are awarded under competition, so the prevailing market rates limit how much firms can ultimately charge.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Well, it's no surprise why outsourcing has gone up fourfold under this government and double under the previous government. This is out of control.

Ms. Durigan, with regard to the task authorizations that GC Strategies provided to this committee last year, you signed for two task authorizations, 2022000080 and 2022016142, which were for a total of $10.2 million. However, the prime contract that was issued was for an estimated cost of only $2.35 million.

My first problem is that the task authorizations can't exceed the value of a prime contract, yet these tasks are more than four times the value of their contract. The second problem is that the contract they were issued under does not exist. GC Strategies didn't provide it to this committee, and it doesn't exist on the CanadaBuys database. There's no record of it existing.

How were task authorizations that were more than four times the value of their contract even permitted to be issued?