IT firms face procurement review after misconduct allegations

The department responsible for federal procurement has launched an in-depth review of three IT staffing firms facing contracting misconduct allegations, but is not imposing a government-wide suspension.

Public Services and Procurement Canada told The Globe and Mail it is taking a closer look at GCStrategies, Coradix and Dalian and will take“appropriate actions” once there view is complete.

It’s the latest probe of the three companies, which have received nearly half a billion dollars in federal outsourcing work over the past decade. They are the subject of two internal reviews by the Canada Border Services Agency, a police investigation by the RCMP and a probe by Canada’s AuditorGeneral. As well, the House of Commons government operations committee is looking into how they operate.

Since 2017, GCStrategies has received $59-million in federal funding. And over the past 10 years, Coradix and Dalian – which frequently work together – have received a combined$411-million. Both GCStrategies and Dalian have said they each have just two employees. Coradix has more than 40 employees.

Earlier this week, Public Services and Procurement Canada and the Canada Border Services Agency jointly announced that the agency was temporarily suspending all contracts with the three IT staffing firms.

The PSPC provided an e-mailed statement indicating that the three companies can continue working with other departments while the review is under way.

“PS PC has suspended contracts at the request of the Canada Border Services Agency, while CBSA conducts an ongoing investigation. Within the broader federal procurement environment, PSPC is undertaking an in-depth review of the security verifications of the existing contracts with the three suppliers, and will take appropriate actions once assessments are complete. PSPC officials have engaged with the other departments and agencies ,” said spokesperson Alexandre Baillairgé-Charbonneau.

The Globe first reported on Oct. 4 that the CBSA launched internal investigations and referred allegations to the RCMP after receiving detailed allegations of wrongdoing last November from Montreal software company Botler, which performed contract work for the agency. Botler’s complaints named the three IT staffing companies. The RCMP has said it is investigating Botler’s allegations.

The government operations committee is currently studying how the cost to build and maintain the ArriveCan app for international travellers grew to in excess of $54-million. The committee expanded their study to include Botler’s allegations.

While Botler’s work did not involve ArriveCan, the three companies worked on both the Botler project and ArriveCan and some CBSA officials worked on both projects.

During a hearing Thursday, Conservative MP Larry Brock asked Michael Mills, an assistant deputy minister with the procurement department, why GCStrategies was among 14 companies recently invited to bid on a new federal contract for temporary help services. Mr. Mills said GCStrategies remains on an approved list of vendors.

“GCStrategies is under investigation, but they are still a member of these instruments,” he said.

Botler’s 2022 allegations included a claim that Coradix submitted forms to the CBSA that included inflated work experience.

Coradix Technology Consulting president Colin Wood told the government operations committee last month that his company accepts responsibility, but said they did not know the documents they received from GCStrategies and submitted to the government contained errors.

GCStrategies managing partner Kristian Firth told MPs he made a mistake in submitting inflated work experience records to the government, but played down the significance of the decision.

Botler had also raised concerns about cozy ties between Mr. Firth and government officials, including Cameron MacDonald, who was a CBSA director-general and is currently an assistant deputy minister at Health Canada.

Mr. MacDonald worked on the Botler project and ArriveCan during his time at the CBSA.

He provided dramatic testimony to MPs earlier this week, in which he denied engaging in any wrongdoing and said his relationship with Mr. Firth was limited and professional. He also said he was threatened by Minh Do an, the current chief technology officer of the federal government. He said this occurred during an October, 2022, phone call over what officials should tell MPs about who selected GCStrategies to build the app. GCStrategies received $11million to work on the ArriveCan app, more than any other company. Mr. Firth has said his two-person company does not perform IT work themselves, but subcontracts the work and charges a commission of between 15 and 30 per cent.

Mr. Doan works in the Treasury Board Secretariat. He has not responded to Mr. MacDonald’s allegations.

When asked about Mr. MacDonald’s comments Thursday, Treasury Board president Anita Anand said she has told all public servants to co-operate with the committee’s review.

“I have a strong view that we need to have discipline in our system relating to outsourcing,” she said in an interview.

Speaking more generally, Ms. Anand said she is working to reduce federal use of contracting out. “My view is that we really do need to be as lean as possible. And that means we should be reducing the extent to which we rely on external consultants,” she said.

Conservative MP and committee member Stephanie Kusie expressed concern that the government hasn’t imposed a government-wide suspension of the three IT staffing companies.

“This raises even more red flags about this government’s obsession with GCStrategies,” she said. “The question remains as to why this government as a whole continues to use this company. This only emboldens our investigation to get to the bottom and get the truth for Canadians.”