RCMP probes alleged misconduct in outsourced CBSA contract

Open this photo in gallery:

The RCMP is investigating allegations of misconduct involving an outsourced IT project at the Canada Border Services Agency after two tech entrepreneurs who performed work for the agency warned senior officials about improper contracting practices and cozy relationships between the public service and private firms.

The allegations stem from a relatively small contract – valued at less than $500,000 – but the money flowed from a larger $21.2-million contract for general services that was also used by the agency to fund outsourcing work related to the ArriveCan app.

The $54-million cost of the tool for travellers during the pandemic generated months of controversy and committee hearings after the spending details were first revealed by The Globe and Mail late last year.

The pilot project and ArriveCan involve the same three technology companies and were overseen by some of the same senior public servants. They also both share layers of subcontracting that keep key details – such as what the work involved and who received payments – from being disclosed to the public.

The founders of a small Montreal-based software company called Botler, Ritika Dutt and Amir Morv, alerted the CBSA to their concerns in September, 2021, and again in a more detailed report in November, 2022. In response to questions from The Globe, the agency has revealed for the first time that after receiving that second report, it launched an internal review and referred the matter to the RCMP.

RCMP Sergeant Kim Chamberland told The Globe in a statement that the force’s Sensitive and International Investigations Unit is investigating the matter.

“RCMP O Division can confirm that we are investigating a file referred from the CBSA that is based on allegations brought to their attention by Botler,” she said. “To protect the integrity of the investigation, we will not be providing any further updates.”

The border agency says it has also launched an internal audit of contracting in addition to its own internal review. It has also increased oversight over the granting of contracts, and is requiring employees with contracting authority to retake procurement certification courses by the end of the fall.

Ms. Dutt and Mr. Morv told The Globe about their experiences because of what they view as questionable contracting practices in federal government procurement and provided rare insight into how federal officials interacted with private sector firms that receive millions of dollars in outsourcing contracts.

The Globe and Mail has investigated their allegations, analyzing thousands of pages of documents released through access to information requests. The Globe has also reviewed extensive documentation compiled by the entrepreneurs, including contracting records and audio recordings of their conversations with IT consultants and public servants.

Their allegations centre on a network of three Ottawa-based companies – GCStrategies, Dalian Enterprises and Coradix – and cozy ties with senior government bureaucrats.

GCStrategies was embroiled in a political storm after The Globe reported in October, 2022, that it received more than $9-million – more than any other contractor – to work on the ArriveCan app. The agency has since released updated figures showing GCStrategies received $11.2-million, and Coradix and Dalian received a combined $4.3-million.

Since 2017, GCStrategies has received $46-million in federal funding. And over the past 10 years, Coradix and Dalian – which share the same office and often operate as a joint venture – have received a combined $362-million.

The flow of tax dollars to the three companies combined has increased steadily each year, growing from $32.6-million in 2016-17 to $80.3-million in 2021-22, the most recent year for which figures are available.

The growth in spending with the three companies is part of a larger trend. Federal spending on outsourcing increased to $14.6-billion last year, 74 per cent higher than when the Liberals promised in 2015 to cut back on the use of external consultants.

Ms. Dutt and Mr. Morv say they believe the issues they experienced with the IT companies and the border agency should trigger a broader review of how contracts are awarded by the federal government.

In response to questions from The Globe, CBSA spokesperson Guillaume Bérubé said in a statement that the agency is taking action based on allegations it received from Botler. “The CBSA will act on any investigation findings and will ensure strengthened controls, oversight, and stewardship over contracting,” he said.

Public Services and Procurement Canada has shared responsibility for the CBSA’s contracts. Spokesperson Stefanie Hamel said PSPC reviewed the contract involving Botler “and determined that Dalian Enterprises and Coradix Technologies Consulting had not breached the terms of their contract.” The response is similar to how PSPC responded to complaints it received from Botler.

Open this photo in gallery:

In a June 5, 2023, e-mail, PSPC supply specialist Anita Chan told Ms. Dutt that “in light of the facts presented to us, Canada has determined that this matter is an issue between the three parties, yourself, the Contractor Dalian Enterprises and Coradix Technology Consulting in joint venture, and the third party GCStrategies.”

Botler chief executive officer Ms. Dutt and Mr. Morv, the chief technology officer, created a chatbot that allows users who may have experienced sexual harassment to better understand whether their situation breached any employment policies or criminal laws. It also refers them to available sources of help based on the situation. The chatbot has since been expanded to include other forms of wrongdoing.

The developers said they were first approached by GCStrategies’s managing partner, Kristian Firth, via LinkedIn in late 2019. Mr. Firth said he was reaching out on behalf of his “client,” who he later said was the CBSA’s then-director general, Cameron MacDonald.

Ms. Dutt and Mr. Morv say they were shocked to discover that after interacting with GCStrategies and Mr. MacDonald for months, the funding for their software was approved through an agency contract with another company – Dalian – without their knowledge. They say they had never heard of Dalian at the time and never worked with any Dalian employees.

They said they later discovered that Coradix had submitted forms to the agency about their work experience without their knowledge or permission. For instance, Ms. Dutt said a two-month summer internship at Deloitte on her résumé was inflated in an invoicing points form to say she had 51 months of experience working for the accounting firm. Years of experience is used in federal contracting to determine whether a contractor qualifies for the position. It is also used to calculate per diem rates.

Mr. Firth, GCStrategies, Coradix and Dalian did not respond to multiple requests for comment.

In an e-mail, Mr. MacDonald said he did not engage in any wrongdoing, was not aware of any misconduct and followed federal ethics rules for public servants.

In retrospect, Ms. Dutt and Mr. Morv said they were naive during their initial months of interactions with Mr. Firth and the agency given their limited history with federal contracting. That Mr. MacDonald from the border agency was encouraging them to work with Mr. Firth persuaded them to continue with the process.

“It really gives us hope that the CBSA has taken our reports seriously and are now taking clear and defined steps to ensure that they are addressing the problem,” Ms. Dutt told The Globe.

However, she also questioned why the agency did not appear to take action in response to their first warnings – delivered in September, 2021 – and only moved after receiving their second report once ArriveCan had become a major public controversy in the fall of 2022.

Open this photo in gallery:

Open this photo in gallery:

Ms. Dutt and Mr. Morv interacted with Mr. Firth for about a two-year period as GCStrategies was receiving millions of dollars in federal contracts from more than 20 federal departments. In addition to ArriveCan, GCStrategies also worked on the COVID Alert app, a contact tracing program that was promoted during the early days of the pandemic.

Before they met Mr. Firth, they were finalizing what would become a five-year funding agreement through the Department of Justice worth nearly $1.3-million, in partnership with legal aid organizations across the country. Botler obtained the Justice funding by applying to a public tender without the support of any lobbyists or consultants.

“Good Evening Ratika,” Mr. Firth wrote in a Nov. 4, 2019, LinkedIn message, misspelling her first name. “A client of mine has asked that I reach out to you to look into starting a proof of concept project for their Government department. Are you free for a quick call this week to discuss further? Cheers, Kristian.”

During a call a few days later, they say Mr. Firth explained that his client was the director-general at the agency. He later confirmed it was Mr. MacDonald.

Mr. Firth told them he could act as a broker to secure a contract with the agency. He also promised he could open doors for them to land contracts with other departments or have Botler’s software approved for use across the entire public service, which would be a substantial contract. He explained that he would do this for a fee that is contingent on successfully landing government contracts.

“We don’t get paid unless you do,” he told them over the phone. “We typically demand 20 per cent.”

The fact that the agency reached out through Mr. Firth rather than directly raised some initial suspicions, which Ms. Dutt and Mr. Morv say is why they decided to record their conversations with Mr. Firth and others.

Those recorded conversations show Mr. MacDonald directed Botler in February, 2020, to “please work with Kristian” and “let Kristian work his magic.” The conversations also reveal that Mr. Firth described Mr. MacDonald in November, 2019, as a friend and said, “I’ve been with him his whole career in the government.” Mr. Firth referred to various senior public servants as friends.

Mr. Firth also urged the two Botler entrepreneurs to single out Mr. MacDonald for praise when meeting with other senior government officials.

“I just want to make sure that he gets taken care of, right?” Mr. Firth told Ms. Dutt and Mr. Morv on Dec. 11, 2019. Ms. Dutt and Mr. Morv would later include Mr. Firth’s comments in their 2022 misconduct report to the agency leadership.

A month after his initial outreach on LinkedIn, Mr. Firth was setting up meetings for Botler with officials at the border agency.

In a Dec. 13, 2019, phone call with Ms. Dutt and Mr. Morv, Mr. Firth stressed that Mr. MacDonald should receive special recognition as the “brainchild” who created the relationship between the agency and Botler.

Mr. Firth was discussing a potential meeting that would have involved Mr. MacDonald, Public Services and Procurement Canada and Marc Brouillard, who was then the chief technology officer for the federal government. E-mails from 2018 released through access to information show Mr. Firth and Mr. Brouillard met regularly.

Mr. Firth told Ms. Dutt and Mr. Morv that he had recently told Mr. MacDonald: “We can give you kudos in the meeting in front of Marc and PSPC that this was, you know, this is your brainchild, right, to engage with you guys to help solve a problem in the federal government,” he said.

Mr. Brouillard is now chief digital officer at Fisheries & Oceans. His department referred questions to his former department, where Treasury Board spokesperson Martin Potvin provided a comment. He said that as the chief technology officer, part of Mr. Brouillard’s responsibilities included meeting with the vendor community to understand the latest developments in technology.

“At the time, Mr. Firth was a vendor who reached out occasionally to the CTO, Marc Brouillard, to introduce him to technology partners that he thought might be of interest. The CTO at the time occasionally attended these meetings, and sometimes he delegated them,” Mr. Potvin said.

Mr. Firth helped arrange for the Botler founders to meet Mr. MacDonald over drinks at the Marriott Spin Café in Ottawa on Jan. 22, 2020. They said Mr. Firth did not attend that meeting. He also arranged for them to meet with Mr. MacDonald and other officials at the agency offices on Feb. 6.

Open this photo in gallery:

In a follow-up call on Feb. 19, Mr. MacDonald provided Ms. Dutt and Mr. Morv with advice on how to pitch their product to the then-CBSA president John Ossowski and urged them to work with GCStrategies.

Because of the onset of the pandemic, the meeting with the president was postponed until September of that year and took place virtually on Microsoft Teams. Mr. Firth and Mr. MacDonald were both part of the video meeting as the two entrepreneurs – Ms. Dutt and Mr. Morv – made their pitch.

During the meeting, they said Mr. MacDonald was providing real-time coaching to Mr. Firth on how they should be pitching the agency president.

“Cam is texting me,” Mr. Firth wrote to Ms. Dutt in a text message while she was presenting Botler to Mr. Ossowski. “We have to let the pres as his questions. ASAP pls.”

Ms. Dutt and Mr. Morv said the meeting ended with Mr. Ossowski giving his verbal approval to implement Botler and delegated the procurement contracting to Mr. MacDonald.

They said they were asked by Mr. Firth to start working on the project even though they had yet to see or sign a contract. For months, Ms. Dutt and Mr. Morv said they were repeatedly denied answers when they asked Mr. Firth for a contract so their legal team could review it.

The Botler project was ultimately accounted for through a contract with Coradix and Dalian numbered 4741-206529. It was first awarded in August, 2019, for “informatics professional services” and had a total value of $21.2-millon. A review by The Globe found that same contract appears in the disclosure of billings related to ArriveCan.

The Globe and Mail asked Mr. MacDonald for comment on Botler’s allegations and to explain his relationship and interactions with Mr. Firth. Mr. MacDonald, who has since been promoted to assistant deputy minister at Health Canada’s COVID and pandemic response secretariat, provided a brief e-mailed statement in response.

“I wholly refute any inferences of wrong doing,” he wrote. “I was not aware of any fraudulent activity as laid out below, nor have I entered into any actions that would go against the code of values and ethics.”

Open this photo in gallery:

GCStrategies had virtually no public profile when the company first reached out to Botler. But after The Globe reported on Oct. 6, 2022, that the cost of the ArriveCan app was on pace to exceed $54-million, tech executives and opposition MPs ridiculed the price, and GCStrategies was asked to submit extensive contracting details to Parliament.

When called to appear last year before MPs to answer questions related to ArriveCan, Mr. Firth said his company had invoiced $44-million in federal contract work with more than 20 departments over the past two years. He said his company has no stand-alone office and just two employees – himself and Darren Anthony. Neither of them perform IT work themselves. Instead, they hire subcontractors to do the work in exchange for a fee of between 15 per cent and 30 per cent of contract values.

The figures raised concerns about how the government issues contracts, given that the use of subcontractors keeps the flow of tax dollars out of public view. Prime Minister Justin Trudeau said in January that the contracting patterns related to ArriveCan warranted a policy review. “Obviously, this is a practice that seems highly illogical and inefficient,” he said.

Behind the scenes at the CBSA during the height of public attention on ArriveCan, Mr. MacDonald sent an e-mail to his superiors as they were preparing for hearings in Parliament.

“You asked me for advice on the key question of ‘why GC Strategies’ but I also think we are all grappling with ‘who selected GC Strategies,’” he wrote in an Oct. 29, 2022, e-mail obtained by The Globe via access to information.

Mr. MacDonald’s e-mail comments on suggested answers for the executives. The draft answers appeared aimed at convincing MPs that no one person was responsible for selecting the company.

“I will start by saying that I was not personally familiar with GC Strategies during the time in question,” the document states, though it is unclear which executive would be expected to deliver that line. The e-mail also predicts some of the questions they will be asked.

“If pressed: Come on, we want some accountability here. Who decided? How did this company get a contract for almost 9 Million dollars. Who made money off of this? Who is getting rich off of tax payer dollars,” the document states, followed by a recommended response.

“Mr. Chair, I stand by my statement that I don’t believe there was a single person, and I’m not actually aware of any rules being broken or wrongdoing. That is not how we operate at the CBSA,” it states.

Two weeks after the e-mail was sent, CBSA president Erin O’Gorman appeared as a witness before the government operations committee to answer questions about ArriveCan. She made no reference to wrongdoing.

Mr. MacDonald’s e-mail was sent to Minh Doan, the then-vice-president and chief information officer of the agency. Mr. Doan has since been promoted to chief technology officer for the Government of Canada. Four other senior agency officials were copied on the e-mail.

The recipients included Antonio Utano, who was the main recipient of Ms. Dutt and Mr. Morv’s first wrongdoing report in September, 2021, more than a year earlier.

Mr. MacDonald’s comment that “we are all grappling with ‘who selected GC Strategies,’” appears at odds with the fact that he and Mr. Utano were directly involved in the agency’s contract work with GCStrategies on ArriveCan.

Mr. Utano is listed as the technical authority on GCStrategies’s first ArriveCan contract – dated April 8, 2020 – and Mr. MacDonald is listed as the alternate. The two men’s names frequently appear in similar roles on agency contracts involving GCStrategies, Dalian and Coradix. They are both listed on contracting documents related to the Botler project.

In a written statement to MPs dated Oct. 20, 2022, Mr. Firth said he had conversations with Mr. MacDonald and Mr. Utano, among others at the agency, “in early 2019 to discuss capabilities of our team and past engagements that leveraged them.” Mr. Utano, who is now a director-general at the Canada Revenue Agency, declined to comment citing the fact that he no longer works for the CBSA.

Open this photo in gallery:

Throughout 2019 and 2020, Mr. Firth of GCStrategies pushed to expand adoption of Botler’s software across other government departments.

He set up meetings for Botler with the Canada Revenue Agency, Correctional Service Canada, Global Affairs, Shared Services Canada, Transport Canada, Treasury Board and others in an effort to have the software approved as a government-wide project available to all public servants.

During this outreach, Mr. Firth introduced them to another consultant named Vaughn Brennan, who Mr. Firth said had extensive government connections in Ottawa. Mr. Brennan recommended that they send an e-mail to Deputy Prime Minister Chrystia Freeland from Ms. Dutt’s e-mail account.

E-mails show Mr. Brennan sent the draft letter to Mr. Firth, who then sent it to Ms. Dutt.

The letter pitched Botler’s product as an option for the federal government to use in implementing its response to C-65, a recently passed government bill that included labour code changes related to sexual harassment.

After some back and forth on wording, Mr. Brennan and Ms. Dutt agreed a copy should also be sent to Jeremy Broadhurst, Ms. Freeland’s chief of staff.

Ms. Dutt’s e-mail to Ms. Freeland and Mr. Broadhurst was sent on Jan. 27, 2021.

The next day, Ms. Dutt received a text message from Mr. Brennan in which he gave the impression that he had insight as to how the e-mail was received inside the Liberal government.

“They are trying to find a ‘home’ for this opportunity and there is internal negotiations as to how best to position,” he wrote.

Ms. Dutt said she never received an e-mail response from Ms. Freeland or Mr. Broadhurst.

Then in a Feb. 1, 2021, text to Ms. Dutt and Mr. Firth, Mr. Brennan wrote: “DPMO’s reached out to Justice & CBSA. Contact was not able to offer context but be ready for questions if asked …”

Ms. Dutt said Mr. Brennan never told her with whom he was interacting in government.

Reached for comment, Mr. Brennan said his references to having inside knowledge were a fabrication. He said he “fibbed” in an effort to put pressure on Ms. Dutt to take more action on the file.

“I did not and do not have any contacts within the Liberal government nor in the PCO,” he said in an e-mail, which he repeated in a follow-up phone call.

While this outreach to Ms. Freeland was taking place, Ms. Dutt and Mr. Morv learned new details from Mr. Firth about their contracting arrangement.

“Hey Guys, I was not going to mention this but as you requested the contract, you will be able to see the amounts,” he wrote in an e-mail on Jan. 26, 2021.

The contract for Botler to provide its services was not a direct contract between Botler and the border services agency. In fact, Botler’s company name was not mentioned at all, nor was GCStrategies. Instead, the agency relied on a contract with Dalian and Coradix.

In a separate subcontracting document between Dalian and GCStrategies, which is not a direct contract with the government, GCStrategies is listed as a subcontractor to Dalian. Ms. Dutt and Mr. Morv – along with an independent contractor named Patrick van Abbema – are listed as consultants.

The subcontracting document laid out a timeline of six “deliverable” items between February and June, 2021, each with a value of about $56,000, for a total of $336,000.

In his e-mail, Mr. Firth described how the federal funding was supposed to have been divided between him, Botler, Dalian and Coradix. The e-mail offers contradictory information and indicates he had pulled himself out of the deal so as to not compromise his efforts to secure a larger government-wide contract for Botler.

“Unannounced to you as Corradix/Dalian were brought in as a pass through and they demanded 15 % for doing so, CBSA were pissed at the overall pricing and threatened to pull the contract,” Mr. Firth wrote in an e-mail. “Your cost, plus 15% for me and 20% for Corradix etc, it rose to close to $500k!! . I was not prepared to slow the process down and stop our first client from purchasing so I removed myself from the equation completely and gave them a 15% discount.

“Attached is the contract that shows $336k to GCS from Corradix and how they broke out deliverables. What has made the situation worse (for me) is they even screwed up the total amount and made it $336k not $350k. I hope you are ok with $336k? I didn’t mention this as I hoped that you would be none the wiser and receive your cash and never know I removed myself from the deal to get our GoC pathfinder. But now they have screwed up the amount I need direction from you on what you would like me to do? Recover from Corradix as CBSA will not budge or let it slide and look out to the next one and recover (CRA etc.).”

Mr. Firth appeared to be suggesting that Botler could pay him for his work on the CBSA project out of a future contract with the Canada Revenue Agency. The federal public works department website lists invoicing on one project for work done on other projects as an example of contract performance fraud.

Ms. Dutt and Mr. Morv said they had never discussed or approved this arrangement with Dalian, nor any of the deadlines they were supposed to hit. They had never heard of the deliverables listed in the documents.

“We didn’t know about Dalian. That was the first time in my life that I saw their logo. I didn’t know who they were,” Mr. Morv said.

They said they’ve received a total of about $112,000 through this contract but do not know how much money went to others, such as GCStrategies, Dalian or Coradix. They said Mr. Firth gave conflicting information as to whether he was paid through this contract.

Ms. Dutt said they had signed some security forms with Coradix, but were under the impression that the company was simply handling their security clearance to work for the government.

“When we received the contract, that was very obviously a huge shock to us, because we had no knowledge of this,” she said.

Ms. Dutt said they raised informal concerns with the border services agency, but continued to work on the project without payment into the summer because government officials assured them the contract would be revised.

By September, 2021, Ms. Dutt and Mr. Morv had had enough and filed a formal misconduct complaint via the Sept. 27, 2021, e-mail to Mr. Utano and another agency official they had been dealing with.

“Given that this is a project aimed at combating misconduct, and already has so many eyes on it, it just does not make sense to move forward with the current structure and red flags, or risk jeopardizing this project in any capacity,” they wrote, saying they could no longer work with Mr. Firth, Coradix or Dalian.

From then on, they started an investigation into their situation by filing numerous access to information requests to obtain contracting details.

They learned that the original contract through which their services were obtained was through an existing contract for IT services.

Like with ArriveCan, the border agency had turned to a general standing offer contract for IT services and added a specific request – formally known as a task authorization – to obtain what they needed. By going this route, the agency can avoid a new public competition. It also means that the public disclosure of government contracts do not tell the full story as to what is being purchased or who is being paid to perform the work.

Through their research, Ms. Dutt and Mr. Morv found that Dalian was submitting invoices and receiving payments based on what they allege are false claims.

“They used a contract that had nothing to do with our software. They used our name without our permission,” Mr. Morv said. “They forged our work experiences.”

The Dalian website describes the company as “Aboriginally Owned – Veteran Operated.” The website does not provide further detail on its ownership structure.

A corporate records search shows the company has two directors – David Yeo, of Carleton Place, Ont., and Anthony Carmanico, of Ottawa.

Mr. Carmanico is also listed as CEO of Coradix on LinkedIn. His profile says Coradix has a team of more than 30 employees who are responsible for 250 consultants in the Ottawa area.

Mr. Yeo ran as a candidate for the People’s Party of Canada during the 2021 federal election campaign. In his LinkedIn profile, he is described as the president and founder of DALIAN Enterprises Inc. On the profile he states: “I am an Entrepreneur, War Veteran and direct descendant of our Treaty Signing First Nations Chiefs. (Alderville FN).”

Dalian, Coradix, Mr. Yeo and Mr. Carmanico did not respond to requests for comment from The Globe.

Botler’s Ms. Dutt and Mr. Morv said the border agency should have launched an investigation in response to their first warnings of misconduct in September, 2021, but did not act, as far as they are aware. The agency was more responsive to their report in the fall of 2022, just as The Globe was publishing details on ArriveCan and the related contracting arrangements.

“The only thing that changed was ArriveCan,” Mr. Morv said.

Ms. Dutt said they understand that speaking out could mean their federal funding will dry up and they are taking a big risk without knowing how it will turn out. But she said the issue is wider than Botler.

“This is about something that affects every single Canadian, every single taxpayer dollar that is taken from very hardworking Canadians who are already struggling financially, that is given and spent through contractors through improper means. And I think that Canadians have a right to know what’s going on with their hard-earned money.”

With data analysis by Mahima Singh and research by Rick Cash