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Ritika Dutt and Amir Morv, co-founders of Botler, take part in a committee meeting on Parliament Hill on Oct. 26.Ashley Fraser/The Globe and Mail

Two software entrepreneurs warned MPs Thursday of potential corruption and extortion in the federal government’s contracting practices, as they described working with outsourcing firms and the public servants who sign off on millions of dollars in federal IT spending.

Botler co-founders Ritika Dutt and Amir Morv recalled private conversations they’ve had with Kristian Firth, managing partner of two-person staffing company GCStrategies, after the Canada Border Services Agency urged them to work with him on a pilot project.

Mr. Morv testified to a House of Commons committee Thursday that Mr. Firth boasted to them that he had “dirt” on various senior federal public servants who are responsible for awarding government contracts.

“An act of misconduct rarely happens in isolation. It is almost always symptomatic of a larger existence and tolerance of misconduct. Individuals engaged in such conduct are also prime targets of exploitation and extortion,” Mr. Morv told MPs in his opening remarks.

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“In our interactions with GCStrategies, Mr. Firth routinely boasted that he and his friends, senior government officials with contracting authorities, have ‘dirt’ on each other. Essentially guaranteeing silence through mutually assured destruction.”

The government operations committee, known as OGGO, has extended its study into the cost of the ArriveCan app to include a review of Botler’s allegations. The company has raised concerns about layers of subcontracting that hid key details about who was getting paid for what and cozy ties between private staffing firms and public servants. The RCMP is also investigating Botler’s allegations.

Mr. Firth arranged meetings for Botler with senior contracting officials throughout the public service in an effort to have Botler’s software procured as a government-wide service. Botler’s product is a software tool that assists victims of sexual harassment and the CBSA approved a pilot project in 2020.

GCStrategies has received $59-million in federal funding since 2017 and the company consists of Mr. Firth and his business partner Darren Anthony. The company does not have a stand-alone office and the two men have said they do not perform IT work themselves. They subcontract work to others and charge a commission of between 15 per cent and 30 per cent.

They have said they’ve worked with more than 20 federal departments. The company received more than $11-million to work on the ArriveCan app, more than any other contractor.

Ms. Dutt and Mr. Morv have said that Mr. Firth set up meetings for them with senior officials at the Canada Revenue Agency, Correctional Service Canada, Global Affairs, Shared Services Canada, Transport Canada, Treasury Board and other departments.

They said then-CBSA director-general Cameron MacDonald urged them to work with GCStrategies, but they later discovered that the contract for their work was run through another IT staffing company called Dalian without their knowledge. Each layer of subcontracting was proposing to collect substantial commissions and it was unclear how federal funds were being distributed, they said.

Another company called Coradix, which shares an office with Dalian, was also involved.

None of the three IT staffing companies have responded to questions from The Globe and Mail about Botler’s allegations of contracting misconduct. All three have been invited to appear before the Commons government operations committee at a later date.

Mr. MacDonald, who has since been promoted to assistant deputy minister at Health Canada’s COVID and pandemic response secretariat, has previously told The Globe in an e-mail that he did not engage in any wrongdoing, was not aware of any misconduct and followed federal ethics rules for public servants.

Mr. Firth told a Commons committee last year that he provides federal departments with “a very strong network of best-in-class talent.” He also said his commissions are in line with industry standards.

In his comments to MPs Thursday, Mr. Morv described the use of subcontracting as “ghost contracting,” given that the identities and roles of subcontractors are not pro-actively disclosed by government departments.

“As these ghost contractors are not subject to direct government purview, there is no way for the public to validate that the named individuals actually performed the work, or are even aware that they have been named,” Mr. Morv said. “This is assuming that these are real individuals, with valid security clearances, and not fake profiles.”

The three IT staffing firms were also among the top recipients of outsourcing work related to ArriveCan, but the Botler team did not work on that app. Both projects were overseen by some of the same senior public servants and both share layers of subcontracting that keep key details from being disclosed to the public.

Ms. Dutt told MPs that they raised their concerns through the appropriate channels but their initial complaints were ignored.

“The concern that we’ve brought to the government at every level is about systemic corruption,” she said. “We watched and waited patiently, in silence, for someone to do the right thing and act on our reports. But instead we were heartbroken as they lied. They lied to us. They lied to you at OGGO, they lied to Parliament and they lied to Canadian taxpayers.”

Botler alerted the CBSA to its concerns in September, 2021, and again in a more detailed report sent to more senior officials in November, 2022.

The agency responded to Botler’s second report by launching internal investigations and referring the matter to the RCMP. But the current and former CBSA presidents were unable Tuesday to explain why no similar steps were taken after Botler raised concerns in 2021.

The Globe reported Thursday that the CBSA paid more than $17-million last year to the three IT staffing companies after the agency received allegations accusing the businesses of contracting misconduct.

The flow of tax dollars to the three companies combined from all government departments has increased steadily each year, growing from $32.6-million in 2016-17 to $84.2-million in 2022-23, the most recent year for which figures are available.

Government officials have said staffing firms are used to fill short-term needs. The CBSA said this week that it is working to decrease its use of private contractors.

During Thursday’s committee meeting, Mr. Morv was asked to expand on his comment that Mr. Firth and government contracting officials had dirt on each other.

“We don’t know exactly what kind of compromising material they have,” Mr. Morv replied, but pointed to the fact that in their case, the private companies involved in their pilot project submitted résumés that inflated their work experience without their knowledge.

“That’s something that the contracting authority could use for extortion,” he said.

Conservative MP Michael Barrett said such a situation could create national security risks.

“Obviously the prospect of individuals collecting kompromat about people who presumably all have government security clearances is concerning,” he said.

Members of all parties thanked Ms. Dutt and Mr. Morv during the meeting for speaking out about their experiences, even though it came at a personal cost. Ms. Dutt and Mr. Morv said their pilot project was cancelled by the CBSA after they raised concerns. They said they received about $112,000 of what they expected would be a $350,000 project.

Bloc Québécois MP Julie Vignola said their experience sounds like something that would happen “in a less democratic country.”

“I would like to congratulate you for your determination,” she said. “And this is what every public servant should demonstrate. Every single tax dollar should be paid out in a responsible manner.”

CBSA spokesperson Maria Ladouceur provided a statement Thursday after the hearing.

“We have heard additional allegations during the testimony today that are concerning,” she said. “Our internal investigation continues, as does the RCMP’s. We are cooperating fully with the RCMP and defer to them in the conduct of their independent investigation. We will act on the outcomes of both.”

Justice Minister Arif Virani said earlier in the day during Question Period the government cannot respond in detail owing to the police investigation.

“Misconduct of any kind in the procurement process is never acceptable,” he said.

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