Public Accounts Committee on Feb. 21st, 2024

[Dominic Laporte]

As Mr. Mills pointed out, our role is to provide advice. We trust the client to make the right decision in light of specific challenges and circumstances that they are facing. We can provide advice, but ultimately it rests with the client to decide whether it's an urgent requirement, from their perspective, that would justify a non-competitive approach.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Auditor General, an observation in your report indicated that PSPC challenged the CBSA and encouraged the agency to run a competition—even a short one of 10 days. The CBSA didn't follow that advice, which was one of the main problems here. However, it wasn't recommended in your report that PSPC have more authority to compel departments and agencies when it comes to contracting. Why is that?

[Karen Hogan]

I think it comes down to the accountability of the party actually entering into the contractual obligation. In this case, it would have been the Canada Border Services Agency. They ultimately are accountable for the decisions that they made.

I think the more you funnel everything through one department, the more you will slow down procurement. PSPC's role is to encourage competition and to follow the many rules that exist in procurement. The ultimate decision rests with the department that makes the final call. In this case, it would have been CBSA.

[The Chair, Conservative, John Williamson]

Thank you.

That is your time, Ms. Yip.

Ms. Sinclair-Desgagné, you have the floor for six minutes.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you. Let me say to begin that during my career I have audited procurement systems for multilateral banks and governments.

To sum it up in one sentence—since my time is limited—I would say that the role of a department such as yours is to have processes in place and to provide oversight of those processes to ensure that they are at least followed. Without oversight, the first part of the role, that of having practices in place, is absolutely useless.

What the Auditor General's report shows is that Public Services and Procurement Canada failed to deliver on its mandate in various respects: the advice it provided and the co-signing of contracts that did not necessarily comply with the appropriate processes.

I would like to come back to a very important issue: the questioning of the CBSA's decision to award non-competitive contracts. I would like more information about that. In particular, I would like to know who issued those warnings, and their level in the hierarchy. I would also like to know who were the recipients, as well as their level in the hierarchy. Finally, I would like to know what the emails said.

If you can't give me specific answers now, I would like to see those emails.

[Dominic Laporte]

Unfortunately, I don't have that information at hand. I understand that a director general had, for example, been copied on the emails, but someone would have to provide the information to the committee to have—

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Can you send all this information to the committee?

[Dominic Laporte]

I take due note of the request.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Perfect, noted. Thank you very much.

To continue in the same vein, we learned in the report that PSPC co-signed several of the contracts. As the Auditor General just said, the decision to award a contract ultimately rests with the client department. On the other hand, as we all know, signing imposes responsibilities. So, by co-signing, you shared the responsibility of awarding contracts in a non-competitive manner to a certain company. If you look at their website for two minutes, you'll understand that the company is made up of two people who take a market share as well as a commission and who deliver no service. Do you find that normal?

[Dominic Laporte]

As mentioned, our department really played its role with respect to the Canada Border Services Agency. The department warned the agency that there were risks and advocated a competitive approach. However, as the Auditor General mentioned, the decision ultimately rests with the client and I think it's important to put that in context.

That said, with regard to task authorizations, shortcomings have indeed been observed which we are taking good note of. I think we always need to reinforce the training of our staff and keep them informed, but there are certainly lessons to be learned from the shortcomings and what has been observed with regard to task authorizations.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

With all due respect, it's the same refrain we hear from all departments regarding this calamitous report.

Learn from your mistakes, that's fine, except that this isn't a small mistake, but one that has been repeated over several years. We even learned that GC Strategies had contracts with many other government departments and pocketed nearly $250 million in contracts. We learned that these people had previously won contracts for a company called Coredal Systems Consulting, whose name they changed in 2015.

Mistakes happen, but this is no mistake. Within PSPC, one or more people turned a blind eye and let inappropriate processes go forward. It's one or the other: either they turned a blind eye carelessly, or they turned a blind eye maliciously. In both cases, the eyes were closed. Which of the two situations occurred?

[Dominic Laporte]

I would say that the department does administer a very high volume of contracts per year: $26 billion. A lot of task authorizations are signed. That's not at all an excuse—

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Indeed.

[Dominic Laporte]

—but do we need to strengthen our mechanisms or procedures to see why these task authorizations were co-signed? There are lessons to be learned.

As the deputy minister mentioned, we sent out very clear instructions to our employees on December 4 and asked them to make sure that things were clearly defined when task authorizations were in play. I believe that the measures we have put in place will prevent such a situation from recurring.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

You're telling me that in future you won't be using task authorizations that are far too flexible and allow you to pay far too much for what taxpayers receive in return. You're telling me that there will be no more biased selection processes in which the proposal has very little financial value and the resources, that is the technical capacity, have more value. Yet, as the ombudsman's report revealed, in 76% of contracts, the resources mentioned in the proposal are not the ones used. You're telling me that all this won't happen again, suddenly, miraculously.

[Dominic Laporte]

The measures that have been taken by our department since November 28 are very serious. A lot of improvements have been made. There has been awareness-raising among clients. We work with our clients and our employees. I'd be very surprised if in the future we see task authorizations that are poorly defined and very vague, even in terms of the evaluation criteria and procedures, to which Deputy Minister Mills was referring.

We're going to put a lot less emphasis on evaluating résumés. We're going to make sure that the company doing the bidding has the capability. Certainly, we're learning a tremendous amount from the Auditor General's report and the ombudsman's office.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mr. Desjarlais, you have the floor for six minutes, please.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I want to thank the witnesses for their attendance here today.

We are, again, looking at and reviewing the Auditor General's report in regard to ArriveCAN. We've heard previous testimony from the CBSA and from the Public Health Agency of Canada. Both, of course, have submitted information to this committee about their narrative on how this was able to take place. We have heard continuously that at several moments there were checks and balances that failed, including a challenge from the PSPC, which amounted to CBSA actually not undertaking that work. In addition to that, we've seen CBSA also participate by signing the contractual obligation by way of the executive director of the business applications services directorate.

Although I feel that at times PSPC may not be giving this issue as much attention as it deserves, I think it is actually central and core to the rot at the root of what the problem really is.

I want to preface this by stating my position. I've been very clear in my review of this information that there is, one, a failure in good management. This is a credible issue that has been established within this report. Two, it did not deliver the best value for the taxpayer dollar. We know that very clearly. We know that taxpayers feel as though.... Particularly, the Auditor General's credible evidence here suggests that this is not good for taxpayers, the way we were able to rely, for example, on external, very expensive contracts versus upscaling the public service over a period of time. That was very possible to be done over the course of eight years, and even previous to that.

We, of course, have another failure, which is to support the public service writ large. We know that when austerity takes place in Canada, when we see our public services take a hit for this work, we see a vulnerability begin to build. This vulnerability is largely, in today's 21st century reality, in IT contracts. IT contracts are very difficult for the Government of Canada to obtain. That's something we've heard very clearly from the CBSA. They felt that they must rely on external contractors.

I will point to the evidence submitted by the Auditor General. On page 7, under “Findings”, paragraphs 1.28 and 1.29 in the report say:

The Canada Border Services Agency determined that it would need to rely on external resources to develop the web-based and mobile application because it did not have sufficient internal capacity with the skills needed.

We found that as time went on, the agency continued to rely heavily on external resources (Exhibit 1.2). Reduced reliance on external resources would have decreased the total cost of the application and enhanced value for money.

To Mr. Mills, knowing that our public service, particularly in this instance at CBSA, was unable to secure the necessary labour to do this work internally.... This is something that was well known and well established by Public Services and Procurement Canada. Even previous to this audit, we have heard several times that this is a vulnerability. Why is it that it takes an egregious affront to Canadian taxpayers to have this issue taken seriously? At what point do you, Mr. Mills, raise the alarm to the deputy minister and to the minister responsible to say that we have a credible vulnerability to the public service?

This credible vulnerability is leading to a situation where outside private contractors are not only abusing their ability to secure government contracts, but at times are actually, as one of my colleagues mentioned, baiting and switching these assignments. They are then allowing themselves not only to absorb the contract, but, in addition to that, to change the rules of those contracts to absorb more resources, at times for a skill that can be replaced by the public service.

There should have been a reduction of that reliance. I point to exhibit 1.2, where that reliance actually increases since the outset of the project. This, Mr. Mills, is very disappointing to taxpayers when they know that these efficiencies are not being met.

When will you speak about the urgency of the critical underfunding of our public service, the creation of the vulnerability that we have in IT services internally and the dramatic external threat that is present to the Government of Canada without these skills? It puts us in this position, in my mind.

What are your thoughts on that, Mr. Mills?

[Michael Mills]

I have two thoughts.

The first one is that last fall, the Treasury Board Secretariat did issue new guidance to all departments to actually think and do more analysis on the requirements to contract out, as opposed to using internal resources, and to make a harder case for why they need to go out.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

What did they say at that time? What was the response?

[Michael Mills]

I'm sorry. Whose response, the departments'?

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

The departments' response to that statement, when it was known—

[Michael Mills]

You have to understand that we followed up in terms of our guidance to departments in late November, to say that before we actually do a contract we want to see that analysis. We want to see a copy of that analysis documented so that we can understand why a department can't use its own internal resources.

The second thing, which I think has been discussed around this report—and it is a very valid point—is that, as we're looking at transformation contracts and a lot of these IT contracts, we need to build in a formal mechanism that has training, off-boarding and whatnot, so that while there's maybe engagement of external resources to build new platforms and whatnot, we actually build up the internal capacity to maintain them and to adapt those systems.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Why was that practice not met in this contract? For example, the press said there was over $250 million in contracts that were awarded to GC Strategies. Instead of this instance, or any of the instances over the prior eight years, for the incredible amount of over $250 million, why did this not become a standardized practice?

[Michael Mills]

I can't speak to why, and the vast number of IT projects for which the Government of Canada said it hasn't been there, but I can assure you that as we go forward this is something we're taking on in terms of better practice and best practices for managing IT projects in the future.