Standing Committee on Public Accounts: November 6, 2024

Auditor General’s Report 1, ArriveCAN
Date: November 6, 2024
Location: In person

On this page

• Opening remarks
• Changes in procurement services in response to the Procurement Ombud’s and Auditor General’s reports
• Public Services and Procurement Canada contracts with GC Strategies
• Office of Supplier Integrity and Compliance
• Office of the Auditor General’s audit of ArriveCAN
• Inquiry of ministry

Opening remarks

Arianne Reza, Deputy Minister
Public Services and Procurement Canada

Standing Committee on Public Accounts
ArriveCAN

November 6, 2024

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761 words

Opening statement

Mr. Chair, thank you for inviting us here today to discuss procurement processes related to the ArriveCAN application.

Let me begin by acknowledging that we are gathered on the unceded territory of the Algonquin Anishinaabeg peoples.

Joining me today are:

• Dominic Laporte, Senior Assistant Deputy Minister for procurement, and
• Catherine Poulin, Assistant Deputy Minister for departmental oversight

Mr. Chair, in addition to the measures I will describe momentarily, I want to acknowledge how frustrating it is for Canadians and parliamentarians alike not to hear simple and clear answers as it relates to ArriveCAN.

On behalf of PSPC, we remain focused on reinforcing the integrity of the procurement process and what we need to do regain the trust of Canadians. To do so, we need to demonstrate the system is fair, open and transparent.

The first contract associated with ArriveCAN was awarded in April 2020 in a period of great uncertainty and risk. Four and a half years later, we are still working with various independent reviewers and oversight bodies to understand the gaps that allowed this situation to occur and to put in measures to prevent this from happening again.

Actions taken to date

In this vein, PSPC has implemented a series of oversight measures, particularly when it comes to documenting requirements and decision making during the procurement process.

Late last year, PSPC took the unprecedented step of suspending all departments and agencies’ delegated authorities to procure professional services until they formally agreed to a new set of more rigorous terms and conditions, and were able to demonstrate adherence to PSPC.

To date, 99 departments and agencies, including the Canada Border Services Agency, have now signed on to these agreements that require them to include provisions in their solicitations which will result in increased transparency from suppliers on their pricing and their use of subcontractors.

Some of the other changes that we have made to address recommendations from the Procurement Ombud and the Auditor General include:

• First, improving evaluation requirements to more effectively validate that suppliers have the necessary qualifications and proven work experience
• Second, improving documentation requirements to enhance the tracking of work progress and delivery timelines
• Third, requiring clients to review invoices in greater detail
• And finally, PSPC is improving training and assistance for contracting authorities, within both PSPC and client departments

In addition, we have created the Contract Quality Assurance and Records Compliance Office to review the completeness and accuracy of files as a proactive measure to address documentation shortcomings.

Task-based informatics professional services method of supply

Mr. Chair, I would like to say a few words regarding one of the methods of supply for professional services that has been the subject of much discussion in committee.

The Task-based Informatics Professional Services method of supply—or TBIPS, as it is commonly known—enables the government to pre-qualify suppliers and categorize their services into specific streams allowing us to efficiently match the Government’s needs with service providers.

Through TBIPS, the government buys IT services such as software development, project management, cybersecurity, network support, database management, business analysis, quality assurance, and technical support for government departments.

TBIPS supports the participation of small and medium enterprises because it breaks down projects into smaller, task-based components, which provides more opportunities to compete for government contracts, which in turn is a key enabler of economic growth.

Addressing Fraud and Wrongdoing

Let me now move to our efforts to prevent and detect fraud, and address wrongdoing.

As you know, PSPC has been using data analytics to uncover a number of instances of individual subcontractors fraudulently billing the Government of Canada, and we are currently in the process of seeking restitution to the Crown in these cases.

In this regard, PSPC has taken steps to further strengthen oversight of federal procurement with the establishment of Office of Supplier Integrity and Compliance. In addition to expanding our data analytics capacity, the new Office has enabled us to better identify and mitigate the risk associated with suppliers of concern.

The Office promotes fair competition and upholds public trust in federal procurement by boosting our capacity to better know with whom we are doing business.

Closing

My department is responsible for managing procurements and establishing contracts, on behalf of departments and agencies, which are collectively worth approximately $27 billion each year.

We take this responsibility seriously, and I know that our procurement officers work diligently every day to fulfill these important responsibilities.

PSPC remains committed to working to continue to improve and safeguard the integrity of the Government of Canada’s procurement system.

Thank you.

Changes in procurement services in response to the Procurement Ombud’s and Auditor General’s reports

Issue

On November 2, 2022, a motion was passed by the House of Commons that called on the Office of the Auditor General of Canada to conduct a performance audit on ArriveCAN, including on contracts and subcontracts, as well as payments under those contracts.

Reports resulting from a review carried out by the Office of the Procurement Ombud (OPO) and an audit conducted by the Office of the Auditor General (OAG) were tabled on January 29, 2024, and February 12, 2024, respectively. The reports highlight serious concerns regarding project management and offer recommendations pertaining to procurement, specifically with regard to professional services.

Key facts

• The Procurement Ombud report made 14 recommendations based on the analysis of information and documentation provided to OPO by the Canada Border Services Agency (CBSA), Public Services and Procurement Canada (PSPC) and Shared Services Canada (SSC) during the course of the review; PSPC responded to 8 recommendations
• The Auditor General (AG) report made 8 recommendations, 1 of which relates to PSPC (jointly with CBSA)

Key messages

• PSPC takes the conclusions of the AG and of the OPO very seriously and continues to act on the recommendations, in line with our commitment to open, fair and transparent procurement processes, while obtaining value for Canadian taxpayers
• Over the past year, PSPC has taken concrete actions to strengthen oversight on all professional services contracts falling under PSPC authority
• In light of the OPO and AG reports, PSPC instituted measures and controls on new and existing professional services contracts to strengthen contract management practices and actively engages with client departments and agencies to ensure that these new measures are implemented quickly and efficiently
• Collectively, these measures will help us continue to strengthen and enhance federal procurement processes to promote greater competition, particularly in the field of Information Technology (IT) consulting services

If pressed on immediate actions that PSPC is taking to strengthen existing controls and oversight for professional services contracting:

• We require increased clarity from business owners on the scope, tasks and deliverables of new professional services contracts and task authorizations
• We have improved evaluation requirements to more effectively validate that all resources have the required work experience and valid security clearances
• We have improved documentation requirements at the time of contract award and when Task Authorizations are issued
• The department actively engages with client departments and agencies to ensure that these new measures are implemented quickly and efficiently

If pressed on the actions being taken in response to the Auditor General report:

• PSPC accepts recommendation 73, and has already taken action
• We provided direction to procurement staff to ensure that Task Authorizations include clear tasks and deliverables, in addition to identifying the specific project(s) or initiative(s) that are included in the scope of contracts
• We sent a directive to client departments, via their Senior Designated Official for the Management of Procurement, indicating that this change was brought into effect for professional services contracts as of November 28, 2023
• We updated the Guide to Preparing and Administering Task Authorizations, as well as the Record of Agreement template for clients

If pressed on the actions being taken in response to the Procurement Ombud’s review:

• The Procurement Ombud’s report made 13 recommendations, 8 of which were assigned to PSPC
• PSPC took immediate action in response to the recommendations to strengthen existing controls around the administration of professional services contracts:
• We implemented a new checklist for Task Authorizations to ensure that contracts include specific criteria for Technical Authorities to assess resource qualifications and criteria
• We ensure that Task Authorizations include clear tasks and deliverables and identify the specific project or initiative on which a resource will be working
• We ensure more robust procurement files, by, for example, obtaining security clearance confirmation, copies of résumés and evaluation grids that demonstrate that resources meet qualification and experience requirements, and copies of invoices accompanied by time sheets
• PSPC reviewed the “Substantiation of Professional Services Rates” clause that permits Canada to require bidders to substantiate proposed rates and it was determined that no changes to this clause were necessary

If pressed on Indigenous contracting:

• The Government of Canada is committed to economic Reconciliation with Indigenous Peoples. As part of this commitment, we will promote socio-economic outcomes by increasing economic opportunities for First Nations, Inuit and Métis businesses through the federal procurement process
• Indigenous Services Canada (ISC) administers the Procurement Strategy for Indigenous Businesses and is responsible for assessing suppliers' eligibility for the program and for maintaining the Indigenous Business Directory
• When awarding contracts under the Procurement Strategy for Indigenous Businesses program, PSPC relies on pre-award audits performed by ISC to verify if the Indigenous business meets the ownership and control criteria
• Post-award audits are optional under the program. These audits re-examine ownership and control criteria and Indigenous content criteria, including the requirement that 33% of the work be performed by the Indigenous partner in a joint venture

Background

Under its authorities, PSPC awarded contracts in support of ArriveCAN and was responsible for providing procurement guidance to the client department. The CBSA was responsible for developing and managing the ArriveCAN tool based on the Public Health Agency of Canada’s health requirements enforced by the Quarantine Act.

A total of 46 different contracts were used in support of ArriveCAN. Of these 46 contracts, 31 were awarded by PSPC under its authorities:

• 19 contracts were competitive under normal contracting authorities, including 6 that were set-aside for Indigenous businesses under the Procurement Strategy for Indigenous Business program
• 12 contracts were non-competitive, including 8 contracts to procure software licenses that were sole sourced due to intellectual property rights or urgent need
• Of the 12 non-competitive contracts, 4 used COVID-19 emergency contracting authorities for the contracting of IT consultants
• 11 of the 31 competitive and non-competitive contracts that PSPC issued were awarded before the COVID-19 pandemic and were leveraged by the CBSA to bring in resources to work on ArriveCAN

On November 14, 2022, the House of Commons Standing Committee on Government Operations and Estimates (OGGO) adopted a motion recommending that the Procurement Ombud conduct a review of contracts awarded in relation to the ArriveCAN application.

On January 13, 2023, the Office of the Procurement Ombud determined that there were reasonable grounds to launch a review of procurement activities associated with the creation, implementation and maintenance of ArriveCAN.

In light of the findings of the review and audit, PSPC took immediate action to strengthen existing controls around the administration of professional services contracts. On November 28, 2023, other government departments and agencies were informed of new measures, introducing a common set of principles and mandatory procedures that clients must abide by to use PSPC’s professional services contracting instruments.

These changes closely align with the recommendations in the OAG and the OPO reports and are echoed in the resultant management action plans to which PSPC has committed.

Public Services and Procurement Canada contracts with GC Strategies

Issue

On October 21, 2024, the AG wrote to the Speaker of the House of Commons to inform the House that her office will conduct a performance audit on all payments and government contracts awarded to GC Strategies.

Key facts

• Since January 1, 2011, PSPC has awarded 7 contracts to GC Strategies for a total value of $59.9 million
• Between January 1, 2011 and February 16, 2024, the Government of Canada as a whole awarded 120 contracts to GC Strategies and its predecessor Coredal for a total value of $107.8 million
• On November 3, 2023, at the request of the Canada Border Services Agency (CBSA), PSPC issued stop work orders, suspending work under contracts between CBSA and GC Strategies
• On March 15, 2024, Public Services and Procurement Canada terminated all contracts and supply arrangements awarded to GC Strategies, and suspended its security clearances, rendering GC Strategies ineligible to participate in PSPC and Government of Canada tenders

Key messages

• Public Services and Procurement Canada is committed to open, fair and transparent procurement processes, while obtaining the best possible value for Canadian taxpayers
• The Department is prepared to cooperate with and will support the Office of the Auditor General in its audit on all payments to GC Strategies, and other companies incorporated by the cofounders, and on all contracts with the Government of Canada
• We are focused on strengthening all aspects of contract management as part of the federal procurement process, which includes ensuring that all procurement files are well managed and documented

If pressed on how GC Strategies was qualified under TBIPS:

• GC Strategies provided a submission in response to the Request for Supply Arrangement (RFSA) posted on Canada’s electronic tendering system. The submission was evaluated against the criteria in the RFSA and was deemed compliant

If pressed on subcontracting:

• Within the Information Technology (IT) industry, it is common for firms to subcontract or collaborate with other suppliers or individuals to address particular IT challenges and solutions
• Canada does not have a contractual relationship with any subcontractors. The main contractor is responsible for the performance and the contractual obligations of subcontractors

Background

The AG is in the process of gathering information and determining the scope of the audit. She has noted in her letter to the House Speaker that she will keep the House informed on the timing of the audit once the scope has been determined.

Within the broader federal procurement environment, PSPC undertook an in-depth review of the security verifications of the existing contracts with the supplier, and took appropriate action following the results of its assessment, cancelling the five ongoing supply arrangements with the company on February 14, 2024, as they no longer met the requirements of these methods of supply, and terminating its remaining contract with the supplier on March 15, 2024.

Office of Supplier Integrity and Compliance

Issue

The recent establishment of the Office of Supplier Integrity and Compliance supports the Government of Canada’s ability to identify suppliers of concern, take appropriate action to mitigate the risk they pose, and promote ethical business practices in an evolving marketplace.

Key messages

• The Government of Canada is committed to taking action against improper and unethical business practices, and to holding companies accountable for their misconduct while safeguarding federal expenditures
• On May 31, 2024, the Government of Canada established the new Office of Supplier Integrity and Compliance within PSPC and a revised Ineligibility and Suspension Policy came into effect
• The new Office improves the government’s ability to respond to emerging risks of misconduct and fraud while protecting the integrity of the federal procurement and real property systems
• The Office provides new tools to address corporate misconduct on a government-wide basis, and supports federal efforts to eradicate forced labour
• The Office also further strengthens the department data analytics capacity to help detect fraudulent schemes
• My department continues to engage with key stakeholder groups, and we are working with them to ensure that industry partners understand the program changes and requirements

Background

The Office of Supplier Integrity and Compliance replaces the Government of Canada’s Integrity Regime which was in place since 2015 as a government-wide policy-based debarment system designed to further protect the integrity of federal contracts and real property transactions.

The new office will continue to play a significant role in safeguarding the federal procurement and real property systems, which encompasses approximately $20 billion annually for procurement contracts, real property agreements, the management of Crown-owned properties, and rental payments on 1,690 lease contracts across Canada.

The new office provides an opportunity to modernize the Government of Canada’s debarment and suspension program and further strengthen its use of data analytics to identify potential instances of fraud and wrongdoing and better leverage intelligence relevant to assessing the integrity of vendors within government contracts and real property agreements.

Additional information about the new office and the revised Ineligibility and Suspension Policy is available on the Office of Supplier Integrity and Compliance website.

Office of the Auditor General’s audit of ArriveCAN

Table 1: Public Services and procurement Canada’s Management Action Plan (January 2024)

Number	Recommendation	Response / Action plan	Timeline for implementation
1	Recommendation 73. Public Services and Procurement Canada and the Canada Border Services Agency should ensure that tasks and deliverables are clearly defined in contracts and its related task authorizations.	PSPC accepts this recommendation, and has already taken action: PSPC has provided direction, in a December 4, 2023 communiqué, to procurement staff to ensure that TAs include clear tasks and deliverables, in addition to identifying the specific project(s) or initiative(s) that are included in the scope of contracts. Additionally, PSPC sent a directive to its client departments, via their senior designated official for procurement, indicating this change was immediately being brought into effect for professional services contracts, as of November 28, 2023. PSPC will also update the Guide to Preparing and Administering Task Authorizations as well as the Record of Agreement template for clients.	Communiqué to procurement officers: December 4th, 2023. (completed) Guidance document update: April 2024

Inquiry of ministry

Question number: Q-2056
By: Mr. Albas (Central Okanagan-Similkameen Nicola)
Date: December 5, 2023

Question

With regard to the awarding of the $8.9 million ArriveCAN sole-sourced contract to GC Strategies: who (i) signed, (ii) authorized, the contract?

Reply

Based on information provided by Canada Border Services Agency (CBSA), three sole-sourced contracts awarded to GC Strategies included work related to ArriveCAN. These contracts include:

• 47419-212524/001/EL for the development of a mobile application in response to the COVID-19 global pandemic
• 47419-202719/001/EL for developing critical solutions pertaining to Advanced AI-driven tools for CBSA’s frontline officers, remote border crossing capabilities, touchless services leveraging biometrics and cloud, and an e-commerce solution to facilitate increased shipments crossing the border, and
• 47419-215022/001/EL for professional resource services to support the incorporation of accessibility into ArriveCAN web and mobile applications in order to comply with Bill C-65

None of these contracts was worth $8.9 million. The requested information for these contracts is as follows:

Table 2: Contracts awarded to GC Strategies related to ArriveCAN^{note 1 du tableau 1}

Contract number	Signed by	Authorized by
47419-212524/001/EL	Manager, Informatics Professional Services Division Team	Assistant Deputy Minister, Procurement Branch
47419-202719/001/EL	Manager, Informatics Professional Services Division Team	Assistant Deputy Minister, Procurement Branch
47419-215022/001/EL	Manager, Informatics Professional Services Division Team	Senior Director, Professional Services Procurement Directorate
Notes du tableau 1 Note 1 du tableau 1 The contracts listed were not exclusively for work on the ArriveCAN application, and included other deliverables as well. Retour au renvoi de la note 1 du tableau 1