Public Accounts Committee on Feb. 12th, 2024

[The Chair, Conservative, John Williamson]

I call the meeting to order.

Welcome to meeting number 98 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 possibly over the Zoom application.

Pursuant to Standing Order 108(2), the committee is meeting today as part of our study of the first report of the Auditor General of Canada on ArriveCAN.

I'd now like to welcome our witnesses. From the Office of the Auditor General, we have Karen Hogan, Auditor General; Andrew Hayes, deputy auditor general; and Sami Hannoush, principal.

It's nice to see all of you.

Ms. Hogan, you have the floor now for your opening comments, and then we'll turn to questions from members.

Thank you.

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

Mr. Chair, I am pleased to be here today to discuss our audit report of the ArriveCAN application, which was just tabled in the House of Commons.

I wish to acknowledge that the lands on which we are gathered are part of the traditional, unceded territory of the Algonquin Anishinabe people.

Our audit of the ArriveCAN application looked at how the Canada Border Services Agency, the Public Health Agency of Canada and Public Services and Procurement Canada managed the procurement and development of the application and whether they spent public funds in a way that delivered value for money.

I will discuss our findings, but first I have to say that I am deeply concerned by what this audit didn't find. We didn't find records to accurately show how much was spent on what, who did the work or how and why contracting decisions were made. That paper trail should have existed.

Overall, this audit shows a glaring disregard for basic management and contracting practices throughout ArriveCAN's development and implementation.

Government organizations needed to be flexible and fast in responding to the COVID-19 pandemic, but they still needed to document their decisions and demonstrate the prudent use of public funds. In this audit, we found disappointing failures and omissions everywhere we looked.

The fact that the Canada Border Services Agency did not have complete and accurate financial records was the most concerning of our findings. Because of this, we were unable to calculate the exact cost of the ArriveCAN application. By matching the little information available, we estimated that ArriveCAN cost approximately $59.5 million.

There was confusion right from the beginning. From April 2020 to July 2021, we found that the Public Health Agency of Canada and the Canada Border Services Agency did not work together to establish each agency's responsibilities for ArriveCAN. In this accountability void, neither organization developed and implemented good project management practices to develop objectives and budgets and cost estimates, for example.

In the course of our examination of contracting practices, we saw little documentation to support how and why the Canada Border Services Agency initially awarded GC Strategies the ArriveCAN contract through a non-competitive process. Only one potential contractor submitted a proposal, and that proposal did not come from GC Strategies.

Also concerning is that we found evidence that GC Strategies was involved in the development of requirements that were used when the agency later moved to a competitive process to award a $25-million contract for work on the ArriveCAN app. The requirements were very specific and narrow. This gave GC Strategies an advantage that other potential bidders did not have.

We also found that the Canada Border Services Agency's overall management of contracts was very poor. Essential information was missing from awarded contracts, such as clear deliverables and the qualifications required of workers. When we looked at invoices approved by the agency, details about the work performed and who did the work were often missing. This greatly contributed to our conclusion that the best value for money was not achieved.

Finally, we found no evidence that Canada Border Services Agency employees disclosed invitations to private functions they received from contractors, which is mandatory under the agency's code of values and ethics. This created a significant risk or perception of a conflict of interest or bias around procurement decisions.

Public servants must always be transparent and accountable to Canadians for their use of public funds. An emergency does not mean that all the rules go out the window and that departments and agencies are no longer required to document their decisions and keep complete and accurate records.

As I said earlier, I believe that this audit of ArriveCAN shows a glaring disregard for basic management practices. As a result, many questions that Parliamentarians and Canadians are asking cannot be answered. The lack of information to support ArriveCAN spending and decisions has compromised accountability.

Mr. Chair, this concludes my opening statement. We will be pleased to answer any questions the committee may have. Thank you.

[The Chair, Conservative, John Williamson]

Thank you.

We'll turn now to our first round of questions. Each member will have six minutes, beginning with the official opposition.

Mr. Barrett, you have the floor for six minutes. I understand you wish to split your time. It's over to you.

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

Auditor General, thank you very much for being here today.

Did Canadian taxpayers get value for money from Prime Minister Justin Trudeau's government on the $60-million ArriveCAN app?

[Karen Hogan]

We concluded that the public service did not ensure that Canada received the best value for money. I would tell you that we paid too much for this application.

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

You described it as the Trudeau government having a “glaring disregard” for management practices, poor record-keeping and a lack of basic due diligence, and that you were “unable to determine a precise cost for the ArriveCAN application”.

That $60 million is an estimate. Is that correct?

[Karen Hogan]

Yes. We estimated that it cost around $59.5 million. There could be amounts that should not be linked to ArriveCAN, but there could also be amounts that are linked to ArriveCAN that were not flagged in the books and linked to that project.

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

It's reasonable to say that it could be more than $60 million.

[Karen Hogan]

It's reasonable to say that we've put together the best estimate, but it took a lot of effort. We had to go through many journal entries, all the way back down to task authorizations, to see whether or not items were linked to ArriveCAN. Professional judgment was needed, yes.

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

To quote the key facts from your report, this made it “impossible” to accurately attribute costs to projects with respect to the poor record-keeping.

You've investigated billions of dollars in government spending over your tenure as Auditor General. Would you say that the Trudeau government's ArriveCAN is the worst you've seen?

[Karen Hogan]

I looked at a lot of contracting that happened during the pandemic when the public service was asked to act quickly and serve the public. This would probably be the first example that I've seen where there is such a glaring disregard for some of the most basic and fundamental policies and rules and controls.

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

Okay. I'll turn it over to Mr. Berthold, please.

[The Chair, Conservative, John Williamson]

Mr. Berthold, the floor is yours for three and a half minutes.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Thank you, Mr. Chair.

Thank you for your report, Ms. Hogan.

First, let me tell you that I am shocked, not to say scandalized, by the way the government of Prime Minister Trudeau has fallen down on the job. I am going to quote what you said in your news release: "Glaring disregard for basic management and contracting principles surrounds the government's ArriveCAN application."

I would then like to point out that had it not been for a motion introduced by the Conservatives, we would not be here today to see the extent of the corruption and the disrespect for taxpayers shown by the government. I would remind you that the Liberal members all voted against this investigation, which today is revealing disturbing facts.

Ms. Hogan, my question is the same as the one my colleague asked: did Canadians get value for money in the case of the ArriveCAN app?

[Karen Hogan]

We have concluded that the value received did not correspond to the funds spent. The government spent too much money for the app. There are several reasons for stating that finding: the ongoing dependancy on external suppliers; the absence of reasons to justify choosing certain contractors, and always requiring ten or more years' experience. There is no documentation showing that the right decision was made.

Our conclusion is that despite the lack of competition in certain processes, the government did not receive value that corresponded to the money spent.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Ms. Hogan, you also said, regarding the ArriveCAN app: ... the exact cost was impossible to calculate because of the Canada Border Services Agency’s poor financial record keeping.

So it is possible, in your opinion, that the Prime Minister's app, ArriveCAN, cost much more than $60 million.

[Karen Hogan]

It is also possible that it cost less.

The record keeping is among the worst I have seen in several years. We are talking about a lack of information to support the work performed and determine whether it was linked to ArriveCan. The fact that we are unable to tell you an exact cost perplexes me. I do not know why we have got to this point. The documentation should have existed. The public service has done much better than that in the past.

[The Chair, Conservative, John Williamson]

You have one minute left, Mr. Berthold.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Ms. Hogan, given all your experience and all the cases you and your team have worked on, would you have imagined that you would one day find, in the federal public service, and more specifically this government, a worse example than this when it comes to violations of basic accountability principles?

[Karen Hogan]

It is really surprising to see the extent to which basic policies were not followed in the case of the management of the ArriveCan application.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Do you think that you might someday be able to identify the person who awarded a contract to an outside firm with a total value of $19 million?

[Karen Hogan]

We do not have evidence to show who made this decision. However, we have found a job description, or a contract. At Public Works and Government Services Canada, the request for the contract to be issued came from a director in the department. In my opinion, when a public servant exercises their delegated authority by signing that kind of request, it comes with a responsibility. I would have expected, if the public servant was not comfortable signing the document or did not want to do it, they would have consulted their supervisor or explained their reasons in the files.

The files are very thin, however. The important decisions, the basic decisions, were not well documented in the contracting file.

[The Chair, Conservative, John Williamson]

Right. Thank you, Mr. Berthold.

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

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

Thank you very much, Mr. Chair.

Thank you again for your presentation, your work and your contribution in trying to determine how best to proceed as we go forward.

Notwithstanding the deficiencies that you've encountered, we're more concerned about the pervasive nature of what can take place. Certainly, CBSA and the internal review that's being done.... They've agreed with your recommendations. I believe they've had ongoing discussions with you to try to find appropriate measures to go forward, but I have a couple of questions as it relates to this particular instance at this point in time.

Did resources exist in government to turn around the ArriveCAN application at the time under the time constraints that were evident?

[Karen Hogan]

We found that the agency's head made an assessment that they did not have the skills or the capacity to deliver the ArriveCAN app, when we were going back to the early parts of the pandemic. In my view, it's a reasonable decision to use an external party, given all that was going on at that time. I would have, however, expected to see less of a long-term dependency on external resources as time went on.

We didn't see that transition, whether it be that the public service takes over some of the operations of the application or that there be a transfer of some knowledge or skill, so that the public service could be in a place down the line to take care of the application. It's also a demonstration that the agency is approaching this with due regard for value for money. That transition just didn't happen.