Public Accounts Committee on Feb. 27th, 2024

[Shaun Chen, Liberal, Scarborough North, ON]

Did you find any evidence that resources or subcontractors who were paid for the work were not performing the work?

[Alexander Jeglic]

That is something I want to clarify, and I did clarify that at the OGGO committee. That is not what I'm saying in the report. It's not that the work was not performed; it's that 76% of the time some or all of the workers who were identified in the proposal did not perform the work. I think the troubling component is that those were the predominant selection criteria for identifying who the preferred proponent should be.

[Shaun Chen, Liberal, Scarborough North, ON]

We are aware that PSPC is tightening the rules, as you recommended in your report.

Regarding the roles you examined, when a substitution is made, the incoming resource has to have the same or similar qualifications as the one originally listed. Is that correct?

[Alexander Jeglic]

That's what should happen in practice, but that's not what we saw. We saw no correlation between the resource in the bid and the resources provided in the task authorization. Had that happened, I think it would have given us comfort that we were getting the same or better value. We never saw the replacement link the resources provided to the qualifications of the resource that was not delivering on any service. That's where I think there was a disconnect.

[Shaun Chen, Liberal, Scarborough North, ON]

You're saying they might have been as qualified but that was not clearly documented, and you don't have proof for that.

[Alexander Jeglic]

That wasn't the metric against which they were tested. They were tested based on the mandatory criteria and the minimum point rating. There was no testing against the criteria of the individuals who bid on the proposal.

[Shaun Chen, Liberal, Scarborough North, ON]

In terms of controls around these types of swaps, what are they? Do they exist? Are there situations where they can be justified?

I hear your point that if a bid is being evaluated on certain criteria that are specific to who is performing that work and ultimately they don't perform it, that raises issues. There must be controls through which these processes can unfold or not. Can you elaborate on that?

[Alexander Jeglic]

What Public Services and Procurement said in their response is that perhaps they should look at evaluating other criteria. Instead of evaluating the resource that ultimately isn't performing the service, there are other criteria that should be looked at to determine who the preferred proponent should be. That's one issue.

The second issue is that if we know this is a practice, then perhaps de-emphasizing the price is not the right approach, because if in the end you get a resource that's closer to the mandatory or the minimum rating, I think price should matter much more.

[Shaun Chen, Liberal, Scarborough North, ON]

That's fair.

[The Chair, Conservative, John Williamson]

Very quickly, Mr. Chen, go ahead if you have a last question.

[Shaun Chen, Liberal, Scarborough North, ON]

There is a saying that the outcome is most important. Would you say that in this situation, there was not the best value for money?

[Alexander Jeglic]

We didn't do a value-for-money analysis, but we did say that there was value lost with the way the procurement was structured, so it wasn't the best value.

[The Chair, Conservative, John Williamson]

Thank you very much.

Ms. Sinclair‑Desgagné now has the floor for six minutes.

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

Thank you, Mr. Chair.

I want to thank the witnesses for being here.

Welcome to the committee, Mr. Jeglic.

I just want you to confirm or deny my statements about the role of Public Services and Procurement Canada. First, its role is to establish procurement processes for the various departments and Crown corporations. Second, it must follow up with client departments to ensure that these processes are used and monitored. Is that right?

[Alexander Jeglic]

Exactly. In these 41 cases, they were the contracting authority in 30 instances.

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

Okay.

The report describes the ArriveCAN case and notes a number of issues. We now realize that these types of issues, such as poor documentation, as you confirmed earlier, aren't limited to the Canada Border Services Agency. The contracts awarded to Amazon Web Services and Microsoft Canada revealed the same shortcomings in the monitoring of procurement processes at Shared Services Canada. Is that right?

[Alexander Jeglic]

Yes.

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

If ArriveCAN is just a sample of the situation in the federal government, does this mean that the ArriveCAN case is just the tip of the iceberg, and that the issue is more widespread in a number of departments?

[Alexander Jeglic]

Documentation is certainly an issue that's prevalent. The point I would like to make is this: At what point can you start making negative inferences associated with the lack of documentation? Is there a lack of documentation because of poor record-keeping practices, or is there something else going on? I can't answer that question because I don't know, but it is frustrating in my role to come to a finding that I don't have the necessary information to make that determination.

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

In your role, you must also determine whether there have been any email exchanges. For example, in the case of ArriveCAN, you had to determine whether a specific person appeared to have stepped in to show preference to a consulting firm or, at the very least, to a certain company. We certainly couldn't call GC Strategies or Dalian a consulting firm. If a public service employee showed preference to these companies and if this affected the documentation, you would repeat this. As an ombudsman, your job is also to understand the reasons for the lack of documentation.

Is it possible to go further than simply noting a lack of documentation?

[Alexander Jeglic]

That's the comment I made about negative inferences. Where there's a gap in documentation at a critical moment in time, yes, of course I can say there's a lack of documentation and leave it there. However, what I'm suggesting is that at some point, negative inferences need to be taken.

The way we've written our report is that we try to draw some of these negative inferences in. Where there's a dispute between PSPC and CBSA about the applicability of one of the government contracting regulations exceptions, there's a back-and-forth happening, and at that critical moment when they're coming to some type of agreement as to whether it should or shouldn't apply, there's a lack of documentation. What ultimately led one organization to see the situation from the same eyes or the same lens as CBSA? That's where the documentation is lacking.

We wrote that section specifically with the negative inference in mind that something clearly happened. I cannot infer too strongly because I don't know, but we certainly allege the facts in a way that leads the reader to believe clearly something happened that we can't identify.

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

That's fine, thank you.

In your report, you referred to a number of companies. The Auditor General's report also talks a great deal about GC Strategies, of course. That said, other companies saw a significant increase in the number of contracts awarded, such as Dalian, and received several million dollars in the case of ArriveCAN.

Have you noticed any behaviour at Dalian similar to the behaviour that you saw at GC Strategies?

[Alexander Jeglic]

We did not. We mention certain suppliers by name because those were specific contracts that caught our attention. We named the supplier by name and included the value of the contract just to give a quantum for the reader to understand the implicated parties. For GC Strategies, there was a higher incidence of issues in those contracts. That's why they were identified in the report.

Specific to Dalian, the notation made in our report does not align necessarily with some of the other witness testimony they provided at the OGGO committee. The notation we make about Dalian is that they were a participant in a process where perhaps participating suppliers were made to believe that potentially two contracts would be issued, but in that instance only one contract was issued. It's a question of transparency to the supplier community to make sure people aren't wasting their time.

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

In your opinion, apart from Dalian, could other companies, in specific cases as you noted, interfere in the procurement process and participate in the drafting of calls for bids that ultimately benefit the companies in question? Would other companies like GC Strategies behave in the same way?

[Alexander Jeglic]

I just want to be clear that we were made aware of this additional fact through the OAG report. That was concerning to us.

Your question is whether it's possible for someone else to embed themselves in the federal government in such a way that they influence the outcome. Absolutely it's possible. Every supplier that's embedded within a government department will have access to certain documentation, but to see it done in the manner that was found in our report and found in the OAG's report is particularly troubling.

For the supplier community it causes concerns, because if there was any belief this was happening, the fact that you now see in two reports that this, in fact, did happen is discouraging from a supplier community standpoint.