Public Accounts Committee on March 6th, 2024

[The Chair, Conservative, John Williamson]

I call the meeting to order.

Good morning, everyone, and welcome to meeting number 106 of the House of Commons Standing Committee on Public Accounts.

Today’s meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending in person in the room and remotely using the Zoom application.

I will remind you that all comments should be addressed through the chair.

Pursuant to Standing Order 108(3)g), the committee is resuming consideration of “Report 1: ArriveCAN”, referred to the committee on February 12, 2024.

I would now like to welcome our witnesses. We have a full house. Thank you all for appearing in person.

From the Office of the Auditor General, we have Karen Hogan, Auditor General of Canada; Andrew Hayes, deputy auditor general; and Sami Hannoush, principal.

It's nice to see you all again.

From the Treasury Board Secretariat, we have Roch Huppé, comptroller general of Canada; Samantha Tattersall, assistant comptroller general, acquired services and assets sector; Dominic Rochon, chief information officer of Canada; Karen Cahill, assistant secretary and chief financial officer; and Emilio Franco, executive director, procurement, materiel and communities directorate.

Ms. Hogan and Mr. Huppé, you will each be given a maximum of five minutes for your remarks, after which we will proceed to rounds of questioning. As is traditional, I'm going to give Ms. Hogan the opening five-minute statement.

It's nice to see you again. I'll turn the floor over to you.

[Karen Hogan, Auditor General of Canada, Office of the Auditor General]

Mr. Chair, thank you for again inviting us to discuss our report on ArriveCAN. I would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinabe people.

This audit examined whether the Canada Border Services Agency, the Public Health Agency of Canada and Public Services and Procurement Canada managed all aspects of the ArriveCAN application in a way that delivered value for money.

I would like to note that the Treasury Board of Canada Secretariat was not examined as part of our audit. The secretariat is responsible for ensuring that tax dollars are spent wisely and effectively for Canadians. The Treasury Board of Canada has issued policies and directives on program management and contracting to departments and agencies. When it comes to contracting and procurement, Public Services and Procurement Canada has also developed the supply manual.

As we indicated in our report, while the secretariat introduced some flexibilities into the procurement and contract processes during the pandemic to achieve results quickly, it still insisted that government organizations demonstrate due diligence and controls around expenditures and document their decisions for accountability purposes.

During our previous appearances before this committee, we said that, in the case of ArriveCAN, we didn't find records to clearly show how much was spent on what, who did the work, or how and why contracting decisions were made. And that paper trail should have existed.

This concludes my opening statement. We will be pleased to answer any questions from committee members.

[The Chair, Conservative, John Williamson]

We thank you again.

Mr. Huppé, you now have the floor for up to five minutes, please.

[Roch Huppé, Comptroller General of Canada, Treasury Board Secretariat]

Thank you, Mr. Chair.

I also thank the committee members for inviting me to appear to discuss the Auditor General's report on ArriveCAN.

Before I start, I would also like to acknowledge that I am speaking to you from the traditional unceded territory of the Anishinabe Algonquin people.

I was going to introduce my colleagues, but you did a great job of that, Mr. Chair, so I'm going to skip that.

Canadians expect the Government of Canada to be well managed. They also expect their government to have the rules and controls in place for the sound management of their tax dollars. Audits like the one performed by the Auditor General of Canada on ArriveCAN are important instruments to ensure that those expectations continue to be met.

The findings of the Auditor General are clear and sobering. Requirements and good management practices were not followed. As the Auditor General has noted several times, the rules were there, but compliance was not.

The Government of Canada has set up strict procurement controls for government contracting, at various levels. These rules are enshrined in laws such as the Financial Administration Act and in the mandatory policies of the Treasury Board. Together they establish clear requirements for government administration that deputy ministers must follow, including those related to financial management and procurement. Departments and agencies also have available an audit function for pinpointing and remedying any internal shortcomings in the existing controls.

We encourage compliance with these requirements through training and direction for all government employees so that they know their obligations and act accordingly.

Given all of this, I am deeply concerned by the findings of the Auditor General’s report.

We have taken note of the CBSA's response to the recommendations and will be closely monitoring its actions to ensure that identified issues and deficiencies are addressed.

Again, as the Auditor General has noted, we do not believe that more rules are the answer. Procurement is already complex enough. Rather, this issue serves as a clear reminder that departments and agencies need to ensure that they are placing the utmost importance on ensuring that procurements are fair, open and transparent and withstand the closest public scrutiny.

Speaking of transparency, Canadians must be able to count on open and reliable information concerning procurement activities.

Unfortunately, recent reports from the media and the Office of the Procurement Ombud have highlighted issues related to the proactive publication of contracts.

That is why I have asked all institutions to confirm the number and value of all contracts they have issued to GC Strategies, Dalian, Coradix, and joint ventures between Dalian and Coradix. All institutions must verify that the information about these contracts posted on the Open Government portal is complete and accurate.

Mr. Chair, information regarding GC Strategies and its previous corporate entity—Coredal Systems—has already been received, and I can confirm that between January 1, 2011, and February 16, 2024, departments reported that there were 118 contracts with that supplier, totalling $107.7 million.

Providing accurate and open information about our contracts is essential to safeguarding the trust that Canadians put in their institutions. We are committed to working with all government organizations to fully meet our transparency obligations.

This concludes my remarks. My colleagues and I would be pleased to answer your questions now.

[The Chair, Conservative, John Williamson]

Thank you.

Leading our first round is Mrs. Kusie, who is joining us virtually.

You have the floor for six minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Mr. Chair.

Thank you, again, to all of our witnesses for being here today. It's very much appreciated.

Auditor General, again, we thank you very much for this incredible report.

Let's review. ArriveCAN is an application that was supposed to cost $80,000, according to a group of individuals who were able to put this application together over a weekend. The number we were working with for a long time was $54 million, not a small sum. However, as a result of this report by the Auditor General, we have determined that ArriveCAN cost a minimum of $59.5 million, $60 million of Canadians' hard-earned taxpayer dollars. In fact, in her report, as you know, the Auditor General stated that this number might, in fact, even be larger as a result of poor and missing documentation. Therefore, Canadians may very well be on the hook, for ArriveCAN, for more than $60 million.

I have a simple question for the comptroller general of Canada, Mr. Huppé. It is a straight question—a yes or no for Canadians, please: Do you believe that Canadians received value for money with ArriveCAN, yes or no?

[Roch Huppé]

Based on the Auditor General's findings, value for money was not.... There was no documentation to support the different spends on this, so it was very difficult to understand exactly the value for money at the end of this.

I have to say that I did not audit these contracts. I did not audit the work, but I rely on the work of our Auditor General, who pointed out that it was extremely difficult to—I don't want to put words in her mouth here—follow the trail. There were poor financial records, so the value for money right now is extremely difficult to assess, I would say.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

You're relying on her words, Mr. Huppé. She, in fact, did state that she did not believe that Canadians received value for money, and it sounds from your comments as though you are in alignment with her.

Mr. Rochon, we know the unfortunate fate of your predecessor. That still hangs over this committee and this investigation today.

I will ask you the same question on behalf of Canadians: Do you believe that Canadians, for $60-plus million, received value for money with ArriveCAN, yes or no?

[Dominic Rochon, Chief Information Officer of Canada, Treasury Board Secretariat]

I'm not going to contradict what Roch Huppé just said. I think the comptroller general's answer is the same one that I would give, with the qualification, of course, that it was a complex system that was produced on an emergency basis. We're talking not just about the development costs but about the operational costs, the maintenance costs and the upgrade costs, not exactly easy things to determine with regard to value for money. However, what the OAG found with regard to the lack of documentation is very troubling. As a result, I would agree with both the AG's report and Mr. Huppé in saying that there were some shortcomings with regard to value for money.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

I very much appreciate that response.

To add to your responses, I will also indicate that the AG did say repeatedly—as she is in the room today, I am not afraid to say this—that she also believed that the pandemic, the crisis situation, was not an excuse for Canadians to not receive value for money. I think that this is a very important lesson going forward.

You also mentioned the testing. It was also determined in the Auditor General's report that many of these tests were not even completed. Of course, when we look back again at the value for money and think about the testing and the outcomes, we see that this app sent 10,000 Canadians needlessly into quarantine. However, as for value for money, it seems as though we have definitely come to the consensus today that there was not value for money.

I will press forward, then.

The Treasury Board mandate is to provide “oversight of the government's financial management and spending, as well as oversight on human resources issues and digital transformation initiatives”.

Again, Mr. Huppé, I would like to know, please, whether the Treasury Board was involved in reviewing the contracts approved for ArriveCAN for both the CBSA and PSPC.

[Roch Huppé]

No. In this particular case it was not, because they were done within the authorities of either CBSA or Public Services and Procurement in this case.

As you can understand, there's a delegation of authority. Departments act within their own authorities. If it had gone above these authorities, then the contract would have had to come to Treasury Board ministers, but in this case it was delivered within the existing authorities of those two departments.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

I appreciate your response, but that response is very difficult to believe, in the total sum of the $60 million and the uncertainty, potentially, even as the Auditor General said, as where up to $12 million of it went.... Perhaps I would encourage the President of the Treasury Board to evaluate these principles in an effort to determine where this funding really went.

Section 4.17 of the directive on the management of procurement states that both business owners and contracting authorities are responsible for “protecting [taxpayer dollars] from fraud, corruption, unethical business practices and collusive behaviour,” as well as “sharing information on...wrongdoing”, ensuring individuals do not accrue direct benefits, and requiring contractors and subcontractors to be “ethical” throughout their supply chains.

From the Auditor General's report, it's obvious that almost all of these requirements were repeatedly violated—

[The Chair, Conservative, John Williamson]

Mrs. Kusie, you have time for a brief question.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Okay. Thank you.

Has the Treasury Board followed up with the three departments at all in order to restore the compliance and investigate the systemic nature of this issue? I will direct that to Monsieur Franco, director of the procurement, materiel and communities directorate.

Thank you.

[Emilio Franco, Executive Director, Procurement, Materiel and Communities Directorate, Treasury Board Secretariat]

I think the committee is aware that there are various investigations under way with regard to the actions that have been identified both in the Auditor General's report and in the ombudsman's report, and there's a management action plan that has been put in place by those departments.

[The Chair, Conservative, John Williamson]

Thank you very much.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Mr. Chair.

Thank you to the witnesses.

[The Chair, Conservative, John Williamson]

We'll turn now to Ms. Bradford.

You have the floor for six minutes, please.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for coming in today. I know that the Auditor General's department has been before numerous committees and at numerous meetings on this issue, and it is taking up an inordinate amount of your valuable time. I do appreciate your coming back again.

For the Treasury Board, we are most anxious to hear from you today.

I will be directing my questions to the Treasury Board, because we've had the AG's office here, as I said, multiple times. I'm not sure which of you will have the answers to these questions. I would just encourage the most appropriate staff member to respond with the answer.

Can you describe what procurement measures were brought in during the pandemic? Did these changes have an impact on the issue we are discussing today?

[Roch Huppé]

Correct me if I don't understand your question correctly, but during the pandemic, obviously, and I think a previous member said it, and it was clear in the Auditor General's report.... The pandemic was not an excuse to do things frivolously, I would say. During the pandemic, there was an understanding that departments and people would need to react quickly, and that most likely, in some cases, in order to deliver in this quick fashion, it may be that the control frameworks that would usually be followed would not be followed as usual.

The direction that was provided to departments in many instances was that although we recognized that—I had a chat with the then interim Auditor General about it—in light of that, the importance became the documentation: making sure that, if you are going to make a decision and some controls will be forgone, to document the rationale for your decision and to document any compensating controls that you would have put in place. For example, if normally you would have a front-end control that your activity would go through, maybe, in light of the time and the speed of action that you need to take, you're going to build in a back-end control to make sure that you have the controls in place to at least validate the accuracy of what you're doing.

Again, during the pandemic, there was a recognition that we would have to operate in some instances outside of those controls, thus the importance of documenting the decisions and the controls to compensate for the controls that we would normally have in place.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Clearly, one of the problems was that documentation was not done and those records don't exist, and that's why the AG has a lot of difficulty even determining how much this application cost at the end of the day. It's her best guess, because of the poor record-keeping.

While the Treasury Board has measures in place for procurement, it's clear they weren't followed. What is being done to ensure compliance at the CBSA, for example, and across the government more broadly?

[Roch Huppé]

What I can say is the Auditor General's report is being taken extremely seriously. We're looking at all options right now.

There are the CBSA issues that we know of right now. We know it's been audited by different parties, and it has an action plan to deal with this.

As you noted, my worry as the comptroller general is that I need to provide myself some assurance that the weaknesses that were noted, for example, in this audit, are something that could be viewed as mainly isolated.

We're looking at different options right now and trying to prepare a plan to see what we will be doing to ensure compliance with the procurement policies and rules that should be respected.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

What role do ministers play in contracting and procurement? Did any minister sign off on any of these contracts?

[Roch Huppé]

I haven't been privy to.... As I said, I didn't audit the contracts. I don't believe that in these particular cases—I see the Auditor General nodding, so she's agreeing with what I'm going to say—these particular contracts were signed by the minister.

The departments operate within a set of authorities that are mostly delegated to them through the minister, then subdelegated to the deputy minister, and then to assistant deputy ministers and on to managers, for example. When you sign something, it comes with accountability. These authorities are delegated within an organization when someone signs, for example, section 34, which is there to certify that work has been done and it's been done in line with the contract and in line with the price of the contract.

That's your accountability, and you need to take that very seriously. These accountabilities are delegated throughout an organization. Like I said, people have to be conscious of their responsibilities in discharging these authorities.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you for that.

What role did the Treasury Board play in the creation of the ArriveCAN app?