The amount is small compared to the C$496 billion the federal government spent last year. But this week's revelations about potentially millions of dollars in fraudulent claims by subcontractors and the ensuing ArriveCAN app scandal show how disruptive software development can be for governments.
Auditor General Karen Hogan said that despite extensive research, she could not determine exactly how much it cost to create ArriveCAN. ArriveCAN collects contact and health information from international travelers and coordinates quarantine measures during the COVID-19 pandemic. Hogan's best guess is that the app, which was widely derided as difficult to use, costs about $60 million. The original budget was $2.3 million.
This week, as federal authorities announced steps to tighten oversight of government procurement, particularly software services, the government notified the Royal Canadian Mounted Police of possible fraud over $5 million in invoices from three software contractors. They announced that they had requested an investigation. Officials did not name the company but said the suspicious charges were not related to ArriveCAN.
Public Services and Procurement Minister Jean-Yves Duclos declined to provide details of the potential fraud, citing a criminal investigation. But he suggested that contractors were taking advantage of the fact that most government contracts are done in paper format by billing multiple government departments for the same work.
“Until recently, when everything was done on paper, it was difficult for departments to coordinate and share information,” he said at a press conference. Duclos noted that 98 percent of contracts are now in electronic format, making it easier for authorities to search for fraudulent double-billing attempts.
The political debate surrounding ArriveCAN and the Auditor General's report has highlighted how millions of dollars flow within the government procurement system to companies that don't actually create the software. These companies are more like intermediaries, hiring software developers to do the work for them and then siphoning off a large portion of the contract value in return for their efforts.
In the case of ArriveCAN, the intermediary was a two-person company called GC Strategies. The auditor general estimates that the company earned $19 million from the project. At a Congressional hearing, one of the company's owners, Darren Anthony, claimed the correct figure was about $11 million. He also said he had not read the Auditor General's report and had no intention of reading it.
Regardless of the amount, Anthony said that after paying the subcontractors who actually created the app, he and his business partner were left with about $2.5 million over two years. He said the company was spending about 30 to 40 hours a month on the project. Following the release of the Auditor-General's report, the government suspended all business with GC Strategies.
Daniel Henstra, a political scientist who studies public administration at the University of Waterloo, said the rise of companies like GC Strategies is a direct result of a decades-long shift by government employees from software development to outsourcing. Told. .
When a project, like ArriveCAN, needs to be completed on a tight deadline, it's “nearly impossible” to follow normal procurement systems, he said. Even if government officials were able to identify all the necessary subcontractors, which Professor Henstra says is rare, it would be difficult to prove they were up to the task and award contracts to each one. It would overwhelm the system.
To government officials, companies like GC Strategies are “like gold,” Henstra said. “It's very convenient for the government to move the money through one of these companies, which is basically just a coordinating company, and have them find the actual contractors to do the work.”
But at both the federal and state levels, this arrangement sometimes “explodes” like ArriveCAN, raising uncomfortable questions about what exactly the intermediaries are doing in exchange for millions of dollars in public funds. He said that it can cause.
Professor Henstra said he believes the Canadian government in general currently outsources too much work, including the policy consulting work he does for the federal government.
“If the government had strong policy analysis capabilities, it wouldn't need my services,” he said. “They would and should be doing it within the government.”
But the days when governments had armies of software programmers who spent their entire careers in the civil service likely won't return, he said.
Professor Henstra said that despite recent layoffs in the high-tech industry, demand for experienced software developers continues to outstrip supply, and that no government will be able to incur costs that exceed the prices of their services for companies like Google and Microsoft. He said he didn't think he would want to.
“There should be more capacity like this within government,” he said. “The trade-off is that doing things within the government will be more expensive and probably more time-consuming.”
Still, Professor Henstra said that despite the heated political debate currently underway, the ArriveCAN app's inflated costs and recent fraud allegations are exceptions.
“The government is getting things done and the relationship with the contractors is actually working very well for the most part,” he said. “There is room for bad people to break the law, and they will be prosecuted if they are discovered. But in the meantime, most of these contracts are all done in good faith, and more and more, they are in the public interest. doing.”
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Originally from Windsor, Ontario, Ian Austin was educated in Toronto, lives in Ottawa, and has reported on Canada for the New York Times for 20 years. Follow him on Bluesky: @ianausten.bsky.social
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