Total cost of ArriveCan ‘impossible to determine’ due to poor record-keeping, AG report finds

The final cost of the controversial ArriveCan app is impossible to determine due to poor financial record-keeping, a new auditor general report has found.

It is just one of the findings that Canada's Auditor General Karen Hogan highlighted in a damning report about the pandemic-era tool.

Overall, Hogan found that the Canada Border Services Agency (CBSA), the Public Health Agency of Canada (PHAC) and Public Services and Procurement Canada "repeatedly failed to follow good management practices in the contracting, development and implementation of the ArriveCan application."

"This is probably the first example that I've seen such a glaring disregard for some of the most basic and fundamental policies and rules," Hogan told the House public accounts committee on Monday.

Hogan said she found "omissions everywhere" in the financial record-keeping.

"I have to say I am deeply concerned by what this audit didn't find," she told MPs on the committee.

"We didn't find records to accurately show how much was spent on what, who did the work, or how and why contracting decisions were made — and that paper trail should have existed."

CBSA said previously the development and operation of the app cost an estimated $54 million.

Hogan estimates the project cost was $59.5 million — but, as the report notes, she was only able to arrive at that figure based on the information available to her.

"We found that financial records were not well-maintained by the Canada Border Services Agency. We were unable to determine a precise cost for the ArriveCan application because of [the agency's] poor documentation and weak controls," the report says.

The report says that 18 per cent of invoices submitted by outside contractors that worked on the app didn't have "sufficient supporting documentation" to accurately determine the cost of the project.

Hogan told the committee that the government "paid too much" for the project and that poor record-keeping compromised accountability.

The report also notes that the CBSA has estimated that $12.2 million of the $59.5 million estimate could have been unrelated to ArriveCan.

Hogan said she was unable to determine what was included in spending on the app and what wasn't. She said that the actual cost of the app could be higher or lower than the $59.5 million estimate.

"There could be amounts there that should not be linked to ArriveCan, but there also could be amounts that are linked to ArriveCan that were not flagged in the books," she said.

Government relied heavily on outside contractors

CBSA depended heavily on third-party contractors to develop the app. The report cites that reliance as a major factor in its ballooning costs.

Hogan's report suggests that a reduction in the use of outside contractors could have lowered costs and "enhanced value for money."

As an example, the report estimates that the per diem costs for external ArriveCan contractors was $1,090, while the average daily cost of an equivalent internal position is $675.

The CBSA said in a statement Monday that it's implementing the recommendations Hogan made in her report. The agency also argued that the app needed to be rolled out quickly at the start of the pandemic.

"The CBSA was working as quickly as possible to replace a paper process that was not meeting public health needs and was also impacting the border with significant wait times that disrupted the essential flow of people and goods," the statement said.

Hogan told MPs on Monday that seeking outside help for the app at the start of the pandemic was "reasonable." But she said she would have expected less reliance on outside contractors as the project continued.

"We didn't see that transition, whether it be that the public service take over some of the operations of the application or that there be a transfer of some knowledge or skill," she said.

Conservative Leader Pierre Poilievre blasted the government over the app's costs and accused Prime Minister Justin Trudeau of "wasting [taxpayers'] money." He promised to cut back on third-party outsourcing if his party forms government after the next election.

"Public servants do the work more accountably and they do it more affordably," Poilievre told reporters outside the House of Commons on Monday.

"We're going to save money by reversing Trudeau's doubling of outsourcing."

Firm helped develop criteria

There is also little documentation to show why or how the biggest contractor — GC Strategies — was chosen for the project.

The company is a two-person consulting firm that advertises itself as being able to help companies navigate the government's procurement process.

GC Strategies was given a sole-source contract in April 2020 despite a lack of evidence that the firm provided a proposal document for the project, the report says.

Hogan notes that at least one other firm provided an initial proposal for the same contract.

The report indicates that the auditor general couldn't determine which government official made the final decision to select GC Strategies for the April 2020 contract.

And Hogan also found that GC Strategies was later involved in developing requirements that were later used for a competitive contract. That contract — valued at $25 million — was awarded to GC Strategies, the report says.

"In our view, flaws in the competitive processes to award further ArriveCan contracts raised significant concerns that the process did not result in the best value for money," the report reads.

A previous report by Alexander Jeglic, Canada's procurement ombudsman, found that the criteria used in awarding the $25-million contract were "overly restrictive" and "heavily favoured" GC Strategies.

Jeglic also found that GC Strategies "copied and pasted" government-listed requirements for subcontractors on numerous occasions when submitting proposals to CBSA officials.

CBSA officials invited to 'dinners and other activities'

Hogan's report also raised concerns about CBSA officials having a close relationship with certain contractors, noting that the officials in question were invited "to dinners and other activities."

Those officials did not disclose information about these invitations to their supervisors, which she said "created a significant risk or perception of a conflict of interest around procurement decisions."

The report notes that further investigation of these findings was not pursued because they are subject to ongoing investigations by the CBSA and the RCMP.

The CBSA has been conducting an internal investigation of the ArriveCan contracts. Agency president Erin O'Gorman told the House government operations committee last month that the investigation's preliminary findings caused her great concern.

O'Gorman said the investigation found "a pattern of persistent collaboration between certain officials and GC Strategies. They show efforts to circumvent or ignore established procurement processes and roles and responsibilities."

O'Gorman cautioned that the investigation is still ongoing, but a copy of the preliminary findings was provided to MPs on the committee last week.