ANALYSIS: Federal Procurement Issues Go Much Deeper Than ArriveCan

The HMCS Athabaskan is towed from the harbour in Halifax on March 29, 2018. The destroyer was recyled, to be replaced by Canadian Surface Combatant warships being built by Irving Shipbuilding. The Canadian Press/Andrew Vaughan

While the ArriveCan scandal and other procurement debacles have raised serious concerns around ethics and potential conflicts of interest, an expert says government purchasing practices are plagued with broader issues going back decades.

According to Alan Williams, a former assistant deputy minister (ADM) at three federal departments including Public Services and Procurement Canada (PSPC), when it was known as Public Works and Government Services Canada, this includes PSPC having overly strict procurement practices in some cases and overly lax approaches in others.

“Everybody is sort of risk-averse on the one hand, and you paralyze everything, or you go to the other extreme and you willy-nilly just let things slide,” he told The Epoch Times.

“There’s no risk management [in PSPC]. There’s no strategically looking at each situation and evaluating each case on its own.”

The PSPC has come under fire for its management and contracting practices related to the ArriveCan app, which was used to check the COVID-19 vaccination status of travellers entering Canada. The application wound up costing an estimated $59.5 million, but Auditor General Karen Hogan said in a Feb. 12 report that record-keeping was so poor it was not possible to calculate the app’s cost with absolute certainty.

The Canada Border Services Agency (CBSA) relied heavily on third-party contractors to develop ArriveCan, which the auditor general’s report said contributed to the high costs. CBSA and Health Canada officials have justified the decision by saying the pandemic necessitated quick development of an application.

The RCMP says the national police force is investigating allegations by another IT company called Botler AI that worked with the CBSA. It says it’s also “currently assessing” the available information around ArriveCan in order to “take appropriate action.”

‘Totally Botched’

Mr. Williams, now president of the Williams Group, says PSPC “totally botched” the contracting process for ArriveCan by failing to keep track of the roles of the companies involved, which resulted in costs skyrocketing. He also criticized the department for not conducting due diligence when awarding the initial sole-source $2.3 million contract to GC Strategies.

When it came to developing the app, Mr. Williams said the public service lacked the personnel required to do in-house development, and this led to a “convoluted” way of hiring various outside contractors without proper oversight of their roles.

A Jan. 28 report by the procurement ombudsman found that over 75 percent of the contractors hired to work on ArriveCan didn’t do any work on the app. The auditor general’s Feb. 12 report said there weren’t records to accurately show exactly who worked on the app.

To have averted this, Mr. Williams said PSPC could have hired an individual company to develop the app through an open competitive process and not paid until it was delivered.

“We‘d have no trouble telling Parliament that we’re getting good value. ... We’d have a time frame, we'd have penalties if they don’t deliver, and everything would be nice and clean. So why wasn’t that done that way? That’s the bigger problem,” he said.

Interference in Procurement Process

While the PSPC being too relaxed with its ArriveCan procurement partially led to its high costs, Mr. Williams said the department has previously contributed to high costs by interfering with the procurement process. An example was the National Shipbuilding Strategy, where the cost to build 15 warships for the Royal Canadian Navy ballooned from an initial $14 billion to an estimated $84 billion.

Mr. Williams said Ottawa interfered by running a competition to determine which shipyards would build the ships and then chose Irving Shipbuilding, which reduced competition. He said the government also offered preliminary specifications instead of finalized requirements, leading to less cost-effective options being selected.

“Procurement principles were violated. Independence of industry wasn’t preserved. There were no budgetary controls, and a lack of oversight by PSPC. When you don’t do any of these things, you’re in deep trouble, and that’s what’s happened to this one program,” he said.

Mr. Williams said the PSPC’s role of ensuring integrity in the procurement process is “clearly not well understood” by those within the department. He said although different reasons account for the various PSPC scandals, the common denominator with each one is a “lack of integrity of the process and a lack of proper oversight.”

“Where I stand, that’s their main role and mandate. They should be the ones ensuring the taxpayer’s money is well spent, and that clearly hasn’t been happening,” he said.

Balance

Pierre Martel, a political studies professor at the University of Ottawa, says it’s “not surprising” ArriveCan encountered problems given the circumstance surrounding its development. The government needed an application to be developed quickly while rules around COVID-19 were constantly changing, he said.

Mr. Martel is a former executive director at the Office of the Public Service Integrity Commissioner of Canada, which is responsible for reporting to Parliament instances of wrongdoing in the public service.

He said having an objective and fair procurement process typically takes a lot of time. With ArriveCan, the departments believed the quickest way would be the sole-source route, where procurement processes are done after negotiating with just one source.

While the loosely managed contracting of the ArriveCan app led to many issues, Mr. Martel said the opposite can also be true. He said being too strict can lead to companies bankrupting the government if unforeseen circumstances arise during projects, thus the procurement process requires a balance.

Mr. Martel added that he does not believe PSPC regulations and requirements for contracts need to be made more stringent, but that public servants involved with procurement need to be sure of the rules and regulations. He said it would be up to the procurement ombudsman and Treasury Board president to ensure a similar scandal does not happen in the future.

Mr. Martel also emphasized that since the public service has over 270,000 employees, some “rotten apples” are bound to be among them trying to game the system.

“I think the situation that we experienced [with the] COVID-19 pandemic, [was] where people thought they could get away with bending some of the rules and taking advantage of some gaps because the control mechanics were not being monitored effectively,” he said.