Prime Minister Justin Trudeau says the government’s approach to building and maintaining the ArriveCan app through contracts and subcontracts tied to a two-person staffing company is “highly illogical” and he has asked for a review by the Privy Council Clerk.
The Globe and Mail reported Monday that GCstrategies – the two person Ottawa-area staffing company that has received millions of dollars in federal commissions on IT projects – subcontracted its work on the ArriveCan app to six other companies, including multinationals such as BDO and KPMG.
At a news conference in Toronto, Mr. Trudeau was asked why the federal government can’t hire these companies directly or perform IT work in-house, rather than paying millions in commissions to the small staffing company.
“That’s exactly the question that I just asked of the public service,” Mr. Trudeau replied. “Obviously, this is a practice that seems highly illogical and inefficient. And I have made sure that the Clerk of the Privy Council is looking into procurement practices to make sure that we’re getting value for money and that we’re doing things in a smart and logical way.
“Of course, during the pandemic, speed was at an essence, helping people quickly was at an essence. But there are principles that we should make sure are sound moving forward.”
Janice Charette is the Clerk of the Privy Council, a position that involves acting as the head of the federal public service and providing regular briefings to Mr. Trudeau and the federal cabinet.
The ArriveCan app was initially created in early 2020 as a way for travellers to upload mandatory health information related to COVID-19 to present when crossing the border. It is no longer mandatory, but it continues as a voluntary option.
Conservative MP and government operations committee member Stephanie Kusie said Mr. Trudeau’s comments Monday are similar to his reaction earlier this month to media reports about the growth of outsourcing contracts with the McKinsey & Company consulting firm. At that time, he asked for two of his ministers to look into the issue.
“The Liberal government needs to ensure value for money before our tax dollars go out the door, not just after the media start reporting on it,” she said.
The Globe first reported in October that federal spending on the app is on track to exceed $54-million this fiscal year and that the small company that received the most federal work on the app – GCstrategies – relies on a network of subcontractors to deliver on its federal contracts.
However, neither the company nor the Canada Border Services Agency (CBSA), which led the project, would reveal the identity of the subcontractors who worked on the ArriveCan app, saying it is confidential third-party information.
The identity of some of the subcontractors has come to light via new documents GCstrategies provided to the government operations committee in response to a production order.
The new documents include written agreements between GCstrategies and six other companies to perform the ArriveCan work. They include BDO Canada LLP; Optiv Security Inc./Optiv Canada Inc.; KPMG LLP; Macadamian Technologies Inc.; Level Access and Distill Mobile Inc.
One document describes $8.3-million in payments to the six subcontractor companies from GCstrategies covering the period of June, 2020, to July, 2022.
The chart says Distill Mobile Inc. received $5.1-million of that amount, followed by $1.8-million for Macadamian Technologies Inc. Payments to the four other companies were all under $1-million.
The Canadian Press
The documents also show the pay rates that GCstrategies billed the government, which are often in the range of $1,000 to $1,500 per day, per worker.
Kristian Firth, one of the two partners of GCstrategies, said in a statement Friday that he and his company have always been clear about their confidentiality obligations as it relates to subcontractors.
He said the decision to use independent subcontractors, another company or a mix of the two depends on the needs of each client.
During a committee appearance in October, Mr. Firth told MPs that his company has received about $9-million over two years as of March 31, 2022, to work on the ArriveCan project. He also said the company has invoiced a total of $44-million in federal contract work with more than 20 departments over the past two years and the company charges a commission of between 15 and 30 per cent of the contract value.
Amanda Clarke, a Carleton University associate professor of public administration and digital governance, said the ArriveCan case shows how Canada is behind other countries when it comes to buying IT services and equipment.
She points to Britain, where a damning 2011 committee report called “Government and IT – a recipe for rip-offs,” led to major procurement reforms.
While it is not reasonable to expect that public servants can perform all tech tasks without outside help, she said, the federal government needs to follow the lead of Britain, the U.S. and others to build up tech expertise among management decision-makers.
“You need to have a core capacity in-house in order that you can be a smart shopper,” she said. “That’s what all the leading jurisdictions in this space are recognizing now and investing in heavily.”
Dr. Clarke, who leads a research team that analyzes federal contract spending trends, said the committee studying ArriveCan is discovering how much spending is not normally disclosed.
“There’s still a lot that’s hidden within any one of these given contracts,” she said. “I think what the committee is finding is that it’s very difficult to hold the government to account for the kind of contracting that it pays for, because we’re sloppy in the data that we collect.”
With a report from Temur Durrani in Toronto.