CBSA paid IT firms millions after claims of misconduct

Agency sent more than $17-million in payments to three companies in fiscal year that ended in March

The Canada Border Services Agency paid more than $17-million last year to three IT staffing companies after the agency received allegations accusing the businesses of contracting misconduct.

Newly released spending details for the fiscal year that ended in March show the CBSA paid more than $9.4-million last year to GCStrategies, a two-person IT staffing company. It also paid $7.7-million to Dalian and $293,097 to Coradix, two IT staffing companies that share an Ottawa office and often work together.

The Globe and Mail reported earlier this month that a Montreal-based software company called Botler submitted warnings of misconduct to the agency in September, 2021, and November, 2022, that specifically named GCStrategies, Dalian and Coradix.

Botler’s reporting included 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.

In response to the second report, agency president Erin O’Gorman launched internal audits and investigations and also referred Botler’s allegations to the RCMP. The RCMP has confirmed it is investigating the matter.

Ms. O’Gorman, along with former agency president John Ossowski and former agency vicepresident Minh Doan, answered questions on the Botler allegations Tuesday before the House of Commons government operations committee.

None of them could explain why Botler’s initial Sept. 27, 2021, e-mail to agency director-general Antonio Utano was not brought to their attention.

Botler co-founders Ritika Dutt and Amir Morv are scheduled to appear before the committee Thursday.

They have compiled e-mails showing their initial complaint, which included the assertion that they had not yet been paid for months of work on a pilot project related to supporting victims of sexual harassment, was circulated widely.

Then-agency procurement manager Diane Daly sent a strongly worded e-mail on Sept. 28, 2021, to GCStratagies, Coradix and a group e-mail account for the agency’s procurement team.

“This must be rectified IMMEDIATELY. Dalian has been paid. Dalian to confirm within the next hour that Botler is to be paid,” she wrote. “I am not happy with this. It is completely unacceptable.”

Ms. Dutt and Mr. Morv said they eventually received a total of about $112,000 through the project, but had been expecting about $350,000.

The three IT staffing firms they were involved with 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.

The figures released this week are included in the public accounts, which record the amounts departments transfer to third parties such as contractors during a fiscal year. The amounts are not broken down by specific contract, meaning the public accounts figures could overlap with previously disclosed contract total estimates. The timing also means the payments could relate to contracts that were awarded by the agency prior to having received Botler’s misconduct complaint in September, 2021.

Agency spokesperson Guillaume Bérubé said the agency is committed to rebalancing its use of internal and external IT work.

“The direction is clear and we are decreasing the use of contractors in a responsible way by making sure we don’t open up a gap in the technical knowledge required to service our systems,” he said, in response to a request for comment on the spending figures released this week.

Government-wide, federal departments spent a total of $84.2million with the three companies in the 2022-23 fiscal year, up from $80.3-million the previous year. The latest figures show Coradix received $44.9-million, Dalian received $26.6-million and GCStrategies received $12.7-million, meaning about three-quarters of GCStrategies’ government funding last year came from the CBSA.

Since 2017, GCStrategies has received $59-million in federal funding. And over the past 10 years, Coradix and Dalian have received a combined $411-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 $84.2-million in 202223, the most recent year for which figures are available.

MPs on the government operations committee have extended their study of the cost of the ArriveCan app to include Botler’s allegations.

The Globe reported in October, 2022, that the cost of the ArriveCan app was on pace to exceed $54-million. The Globe also reported that GCStrategies received more than $9-million – the highest amount awarded to a contractor – to work on the app. The agency has since released updated figures showing GCStrategies received $11.2-million and Coradix and Dalian received a combined $4.3-million.

GCStrategies managing partner Kristian Firth told MPs last year that he and his partner, Darren Anthony, are the company’s only two employees. He said neither of them perform IT work themselves. Instead they build teams of subcontractors to deliver the work requested by departments and collect a commission of between 15 and 30 per cent. Mr. Firth also said GCStrategies does not have a stand-alone office.

He said last year that the company was created in 2015 and has since worked with more than 20 departments.

“We have built a very strong network of best-in-class talent, which allows us to help our clients find the team they want and have the ability to scale up and down as necessary,” he said.

GCStrategies, Dalian and Coradix have not responded to requests for comment from The Globe regarding Botler’s allegations. The three companies have been invited to appear before the government operations committee at a later date.

Conservative MP Garnett Genuis pressed Ms. O’Gorman and Mr. Doan Tuesday to explain why GCStrategies was selected to work on ArriveCan.

“This scandal is really simple for the public to understand. You’ve got two people who run a company with zero other employees. They get hired by the government. They do no IT work. They subcontract the work and they get a big cut for themselves,” he said. “Why did they think it was a good idea to give over $11-million to these two guys who did no IT work in exchange for their subcontracting services?”

Ms. O’Gorman replied that GCStrategies had a standing supply arrangement through another department, Public Services and Procurement.

Mr. Genuis dismissed the responses from Ms. O’Gorman and Mr. Doan as “process mumbo jumbo,” and asked to know who at the agency hired GCStrategies.

“I can say, based on memory, that my team made the decision,” said Mr. Doan, who is now Chief Technology Officer for the Government of Canada.

“But who?” Mr. Genuis asked. “At this time, and to my knowledge, I do not know and it’s part of the investigation that’s currently under way,” Mr. Doan replied.

“Okay, so two guys got over $11million from the Government of Canada to do no work and none of you know who made the decision to give them that contract but you’re currently investigating,” Mr. Genuis replied. “I’m glad the RCMP and not just you are investigating.”