Government Operations Committee on Nov. 9th, 2023

[The Chair, Conservative, Kelly McCauley]

Thank you for that, Mr. Sousa.

We'll go to Ms. Vignola for two and a half minutes, please.

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

Thank you very much.

Mr. Mills, I'll come back to my previous question.

Why does a recruitment company that lands a contract have to subcontract it to another recruitment company, which will then recruit staff, whether they are individuals who form a company or any other company? Why hire the initial company in the first place if it can't do the job and muster the resources to fulfill the contract? I honestly can't understand that.

We saw it in the Botler AI case, but I'm also thinking of what happened with the ArriveCAN application and all the other situations where someone was able to subcontract to another recruitment company. I find this abhorrent. Why don't we go straight to the company with the required resources?

[Michael Mills]

Thank you, Mr. Chair, for the question.

In certain cases, as in this one, there are two types of task-based contracts—deliverables-based and individual-based.

In the case of a deliverables-based contract, it is a requirement of the company to figure out how best to bring the resources to meet the requirement that the government puts forward. Sometimes in those cases, you have a recruitment company, as you call them, that has access to a wide variety of resources, but there may be some specific technical resource that they don't have relationships with. In this industry they may partner with another company which itself has access to other resources to bring those people in to deliver a deliverable such as this.

In most cases, at the beginning, if we're looking at the task base in terms of professionals, the professionals and the skill sets are identified, and we are picking firms that already have relationships, have subcontractors and employees who have those skill sets.

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

In short, in the case of Botler AI, Dalian Entreprises and Coradix Technology Consulting, they didn't have the resources and they knew it, but GC Strategies had either found some or suggested some, all of which was a bit complex.

Ultimately, those companies went through GC Strategies, but they were still awarded the contract in the first place, even though they knew they didn't have the proper resources. That's quite a feat.

[Michael Mills]

Initially with Coradix and Dalian, it was for a wide range of IT services. Not all of the services under the contract were identified at the beginning, as I think testimony has shown before on this. There was a requirement to design something to aid the department in terms of their approach to addressing sexual harassment, and that's why they brought in GC Strategies and Botler.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We have Mr. Johns, please.

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

PSPC is also responsible for ensuring that contractors qualify for task authorization. Ms. Dutt and Mr. Morv each had seven years of relevant experience. They needed 10 years to qualify for the work, and fraudulent qualifications were submitted for them without their knowledge, which you heard about in previous testimony at this committee.

Have you figured out how this happened, who is responsible, and how we can make sure it doesn't happen again? Are you going to check GC Strategies' previous submissions to find out if this was done for other contracts?

[Michael Mills]

Thank you for the question.

I think it has been indicated before that there's an RCMP investigation. There's also an investigation within CBSA to look at this specific instance to see how this took place.

I will say we are very concerned and very interested in ensuring the integrity of the procurement system. We are looking at these instruments. We're looking at all of our professional services contracting mechanisms to see how we can ensure that they are above reproach, that they are effective and that they don't allow these kinds of things to happen in the future.

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

I'll go back to the fact that I cited, which is that there's no limit on commissions, and you've confirmed that. We could see half of the contract going out to commissions.

Why is it that PSPC has not been able to hire or recruit a human resource recruitment specialist for IT and pay them a good wage? GC Strategies has made upwards of 15% to 30% on their over $50 million in government contracts. Let's call it $10 million. That was made between two people who aren't even specialists in IT.

This is a problem. Is PSPC looking at how they're going to change this model? I actually can see why they can't find anyone. It's because it's way better and more lucrative to be doing what GC Strategies is doing. This has to be fixed.

[Michael Mills]

Mr. Chair, I do take umbrage with the fact that there's no limit. As we mentioned before, this is a competitive environment. The ultimate IT experts, who are doing the work with the necessary experience and skills, will not work for zero. They actually demand a wage. It's a—

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

But the recruitment specialists are the ones who are taking the cut. I'm not talking about the workers; they're being exploited, clearly. The subcontractors are being exploited by these recruitment companies.

Are you going to fix this recruitment process so it's in-house instead of using these headhunters who are milking the Canadian taxpayer?

[The Chair, Conservative, Kelly McCauley]

That is our time. Perhaps you can get back to us on Mr. Johns' next round.

We have Mr. Barrett, please.

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

I'd like to start with Mr. Mills.

Were any contracting rules broken on the ArriveCAN app? Give me a yes or no.

[Michael Mills]

No.

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

Were the contracts given to GC Strategies good value? Give me a yes or no.

[Michael Mills]

Mr. Chair, I'm not in a position to assess the value for money of those contracts.

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

The Government of Canada briefed you for this committee. The documents on your website say the following:

...on the fees charged by GC Strategies for managing these contracts

The rates were reviewed by PSPC officials and were deemed fair and reasonable, based on knowledge of the commodity.

Do you or don't you agree with your department's briefing materials, as provided for you in advance of meetings here at the government operations committee for the House of Commons?

[Michael Mills]

Mr. Chair, I would agree that the fees charged were reasonable.

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

Thank you very much.

To be clear, PSPC thinks that it's fair value to pay GC Strategies, a two-person IT staffing company, $11 million to use the advanced tools of LinkedIn direct message and Google searches for the ArriveCAN app. Do you think that's good value? It's a yes-or-no answer, sir.

[Michael Mills]

Mr. Chair, $11 million went to pay for IT specialists as well as the people who worked for GC Strategies.

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

We're going to circle back to your briefing materials that said you believe it's good value, so we'll take that as a yes.

They got paid millions and millions of dollars for this boondoggle, and the position of PSPC is that this is good value. The previous member asking questions wondered why you wouldn't just hire someone to do this in-house. I have full confidence in the calibre of people working in Canada's public service, and they are able to use much more advanced tools than the ones the principals at this organization said they used to earn their millions off struggling taxpayers.

Did anyone from your department who worked on ArriveCAN receive bonuses? Give me a yes or no.

[Michael Mills]

Did they receive bonuses? Yes. During the period of this time, there would have been executives who received bonuses.

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

The government is of the position that this is fair value. It was $11 million to a two-person staffing firm that did no work on this app, and we're to be told that the contracting system is fair.

A previous member said, “They can't inflate the price”. Obviously, the price is inflated when there's the ability for ghost contractors and middlemen to make millions of dollars by subbing out the work and never doing a keystroke themselves.

The relationship between this Liberal government, senior government officials and insiders, consultants and lobbyists is.... It's incredibly frustrating for me, but the message I'm hearing from Canadians is that they find it disgusting.

We have Canadians who are struggling. Over the last eight years, rents have doubled. Mortgage payments are up by 151%. There are more than two million monthly users of food banks, and a third of those are children. Everything that has happened with the ArriveCAN app and the responses that we're getting that this is fair value for Canadians' money is why Canadians have lost faith in the head of government, the Prime Minister. This is why they are losing faith in their institutions.

I don't find it reasonable or credible that we hear, “It's fair value. There's no room for the contractors to bid up higher commissions.” The project shouldn't have cost $54 million when a couple of yo-yos in a basement using Google are able to collect $11 million.

If you need specialists on how to find some savings, I'm sure there are people who are a lot smarter than I am who can find ways other than that big red circle I just drew around the $11 million.

I don't have any more questions.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Barrett.

Go ahead, Mr. Powlowski, please.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

I have a lot of questions.

I have to admit that I came into this book at chapter 12, so I'm still trying to figure this out.

There's been the allegation that the résumés of a couple of Botler employees were doctored to make them look better than they were, to make it appear that they had 10 years of experience when they didn't have that experience.

Am I right, Mr. Mills? You said that the departments, not PSPC, have the task of ensuring that subcontractors have the ability to do the tasks they're entrusted with. In this case, would CBSA be the one responsible for looking at the résumés, or would it be you?