Public Services and Procurement Minister Filomena Tassi is facing calls from Conservative MP Kelly McCauley to put an IT contract on pause until Parliament receives an explanation as to why its growing cost was not publicly disclosed.Adrian Wyld/The Canadian Press
Internal government documents show that the value of a contract to build a new software tool for managing IT services across the federal government has grown by nearly 70 per cent, to $55-million – an increase Shared Services Canada has not publicly revealed.
The documents also show that while the original contract required all work to be conducted on-site for security purposes, the department later allowed several people to work on the project from home in the United States during the COVID-19 pandemic – provided they took precautions such as keeping their computer screens away from windows so that no one could see what they were doing.
In Aug. 2019, Shared Services Canada (SSC) awarded the contract, initially valued at $32.4-million, to the Canadian arm of BMC Software Inc., a multinational IT firm based in Houston.
Documents released in response to access to information requests and later confirmed by SSC show the value of that contract increased to $52.4-million in February, 2020. Another document shows the contract was amended again on Dec. 31, 2021, increasing the total value to $55-million.
And yet, as of this month, neither revised amount had been revealed on either of the two federal government websites that provide information on government contracts.
The federal government’s guidelines on the disclosure of contracts say any contract or amendment worth more than $10,000 should be disclosed quarterly, within 30 days after the end of any of the first three quarters of a fiscal year, or within 60 days after the end of the fourth quarter.
The hundreds of pages of contract information were obtained by Ottawa researcher Ken Rubin and reviewed by The Globe and Mail.
According to a detailed statement SSC provided to The Globe, the new software tool the department will obtain through the contract could be used for things such as managing requests for IT services across all departments that opt to use the product. The contract involves buying the software itself, as well as support and maintenance from BMC until 2030.
The statement said this will lead to a reduction in the number of similar software tools in use across the government and will increase efficiency “by creating a single self-service entry point for departments to access SSC services.”
The department said that while the value of the contract was increased by $20-million in February, 2020, to allow other departments in addition to SSC to participate, “the eventual, actual value of the contract” will depend on what options are used by SSC and “the extent of adoption of the tool” by other departments.
When asked why this $20-million increase has yet to be disclosed two years later, SSC said the change will be disclosed eventually.
“The contract value was increased on Feb. 21, 2020, to reflect anticipated expenditures. This additional value has been consumed over time and will be published in an upcoming proactive disclosure report,” the department said.
Wesley Wark, a senior fellow with the Centre for International Governance Innovation who has served on federal advisory panels related to national security, laughed out loud upon learning that the contractors are required to keep their screens away from windows. He said the advice is old-fashioned.
After reviewing the main documents and the government’s explanation, Mr. Wark said the purpose of the contract is unclear and the security risk mitigation rules are meaningless, because there is no apparent oversight to ensure they are followed by the U.S.-based contractors.
Mr. Wark also said large IT contracts related to critical government digital infrastructure should not be awarded to foreign firms.
“I think this is a source of great frustration for the many cybersecurity firms, many good ones in Canada, who find it just so extremely difficult and frustrating to work with the federal government through its procurement and often find themselves essentially thrust to the edges by American bidders,” he said. “That just strikes me as wrong, and what’s wrong about it is every one of these contracts, particularly ones of a sizable nature, should be considered in the light of growing a Canadian capacity, not feeding the bankroll of an American company.”
The Globe reported in January that federal government spending on outsourcing contracts had increased by 41.8 per cent since the Liberals came to power in 2015, even though the Liberal Party promised that year to cut back on the use of consultants.
The increase brought federal spending on contracts to $11.8-billion in the 2020-21 fiscal year, up from $8.4-billion in 2015-16.
Critics of the outsourcing trend see the BMC contract as a further example of this spending growth. They say the government should be far more transparent.
“Fundamentally what is needed is more transparency and timely release of data. The amount of sleuthing required to simply find out how government funds are being spent is absurd,” said Jennifer Carr, president of the Professional Institute of the Public Service of Canada, a union that primarily represents scientists and professionals in the federal public service. The organization has been attempting to track contract amendments.
“From what we see here, it appears to be another example of ballooning outsourced costs that lack a transparent examination of how this work could have been done in-house by public service employees. Canadians should be aware of how their money is being spent and the true costs of such shortsightedness.”
Conservative MP and Treasury Board critic Kelly McCauley also said large IT contracts should be going to Canadian workers. He criticized the lack of transparency regarding the growing cost of the contract and dismissed the government’s assurances that the remote work can be done securely in the United States.
“As for the security, it’s an absolute disgrace in this day and age with bad actors, whether it’s communist China or Russia … and yet we have this keystone cop level of security,” he said.
Mr. McCauley said Canadian IT companies have long expressed frustration at being shut out of federal IT contracts.
“Here we have a chance to grow our own IT. We’ve seen from Blackberry and other companies, we can do security here in Canada. And we overlook it to send it off to an American company and then use backdoor procedures to increase the value of the contract,” he said.
Mr. McCauley said he would like Public Services and Procurement Minister Filomena Tassi to put the work on pause until MPs receive answers as to the status of the contract and why its growing cost was not publicly disclosed.
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Bill Curry