Compared to the C$496 billion the federal government spent last year, the sums are small. But this week’s revelations involving millions of dollars in potentially fraudulent invoices from subcontractors, along with the continuing ArriveCAN app scandal, show what a big mess software development can be for the government.
Even after a thorough investigation, said Karen Hogan, the auditor general he could not determined exactly how much it cost to create ArriveCAN, launched in 2020 to collect contact and health information from international travelers during the Covid-19 pandemic and to coordinate quarantine measures. Mrs. Hogan’s best guess That’s about $60 million for an app that has been widely derided as difficult to use. Its original budget was $2.3 million.
This week, as federal officials announced measures to strengthening control over public procurement, particularly for software services, said the government had asked the Royal Canadian Mounted Police to investigate $5 million in invoices from three software contractors as potential fraud. Officials did not name the companies but said the suspicious invoices were not related to ArriveCAN.
Citing the criminal investigation, Jean-Yves Duclos, minister of public services and procurement, declined to provide details about the potential fraud. But he suggested that contractors had taken advantage of the fact that government contracts were mostly in paper form to bill different government departments for the same work.
“When until recently everything was done on paper, it was difficult for departments to coordinate and share that information,” he said at a news conference. Duclos noted that 98% of contracts are now in electronic format, allowing officials to easily research any attempts at fraudulent duplication of billing.
The political debate around ArriveCAN and the general government auditors’ report has highlighted that within the procurement system, millions of dollars flow to companies that don’t actually create software. Those companies are instead middlemen who find software developers to do the work and then take away much of the contract value for their efforts.
In ArriveCAN’s case, the intermediary was a two-man company called GC Strategies. The auditor general estimates the company made $19 million from the project. One of the company’s owners, Darren Anthony, stated this in a parliamentary hearing the correct figure was approximately $11 million. You also stated that you had not read the Auditor General’s report and had no intention of doing so.
Whatever the amount, Mr. Anthony said he and his business partner were left with about $2.5 million over two years after paying the subcontractors who actually built the app. He said the company spent 30 to 40 hours a month on the project. Following the publication of the auditor general’s report, the government suspended all dealings with GC Strategies.
Teacher. Daniel Henstraa political scientist who studies public administration at the University of Waterloo, told me that the rise of companies like GC Strategies was a direct consequence of the government’s decades-long shift from software development by public employees to contracting out work.
When a project needs to be built under tight deadlines, as is the case with ArriveCAN, the usual procurement system is “almost impossible to follow,” he said. Even if government officials could identify all the necessary subcontractors – which Professor Henstra says is rare – certifying that they are up to the task and then contracting with each one would overwhelm the system.
For government officials, companies like GC Strategies are “like gold,” Professor Henstra said. “It is very appropriate for the government to pass money through one of these companies, which are basically just a coordination company, and ask them to find the actual contractors to get the job done.”
But, he said, at both the federal and provincial levels, the deal sometimes “blows up,” as with ArriveCAN, and raises uncomfortable questions about what exactly middlemen are doing in exchange for millions of dollars of public money.
Professor Henstra said he believes Canadian governments now generally contract out too much work, including the policy consultancy work he himself does for the federal government.
“If we had a strong policy analysis capacity in government, there would be no need for my services,” he said. “They would and should do it to the government.”
But the days when the government had an army of software programmers who spent their entire careers in public service likely will never return, he said.
Demand for experienced software developers continues to outstrip supply despite recent tech sector layoffs, Professor Henstra said, and no government is likely to want to take on the cost of outbidding companies like Google or Microsoft for their services .
“There should be more of this capacity within government,” he said. “The tradeoff is that when you do things within government, it’s expensive and probably takes longer.”
However, Professor Henstra said, despite the heated political debate currently underway, the rising cost of the ArriveCAN app and recent allegations of fraud are exceptions.
“The government gets things done and its relationship with contractors actually works quite well for the most part,” he said. “There is room for bad actors to break the law and, when they are caught, they are prosecuted. But in the meantime, most of these contracts are made in good faith, are growing and serve the public interest.”
Trans Canada
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A Canadian man living in China has been arrested after trying to sell secret battery-making technology belonging to Tesla, prosecutors say.
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In real estate, the What You Get feature looks at what $700,000 can buy in Quebec.
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After some behind-the-scenes negotiations leading to a series of amendments, the government supported a motion on Gaza and Israel from the New Democrats. The Conservative Party firmly rejected it.
Born in Windsor, Ontario, Ian Austen studied in Toronto, lives in Ottawa and has written about Canada for the New York Times for twenty years. Follow him on Bluesky: @ianausten.bsky.social
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