(Ottawa) GC Strategies has just lost its federal government security clearance. This is a new tile for the company at the heart of the financial fiasco surrounding the application ArriveCAN. It thus finds itself completely excluded from the procurement process. The comptroller general also dispelled doubts on Wednesday about the total value of his federal contracts, which ultimately reached nearly 108 million since 2011.
It is the second consulting firm, after Dalian Enterprises Inc., to have its security clearance suspended by the Ministry of Public Services and Procurement (PSPC) in a few days.
The Ministry also announced that it is suspending the contracts of Coradix Technology Consulting. It will no longer be able to bid during calls for tenders until further notice. However, it maintains its security clearance and could therefore continue to obtain smaller contracts, for which departments or agencies do not need PSPC approval.
“The question remains: why didn’t PSPC act to protect Canadian taxpayers’ dollars when it was first alerted in May 2023? », Reacted the general director of the Montreal firm Botler AI, Ritika Dutt, who had raised irregularities. She believes that the government could have recovered part of the funds paid to these consulting firms.
Dalian and Coradix form a joint venture and are listed on the federal government’s Aboriginal Business Directory. Dalian President and Founder David Yeo is a member of Alderville First Nation, Ontario. He was suspended from his position as a civil servant at National Defense last week after the discovery of a conflict of interest since he was at the same time a consultant for the same ministry. The Press also revealed that he had held accounts in tax havens since 2011.
Ottawa has set itself the goal of annually awarding at least 5% of the total value of all government contracts to Indigenous businesses, the equivalent of the proportion of the country’s Indigenous population. This represents approximately 1 billion per year. This program is also the subject of a review by the Ministry of Indigenous Services in the wake of the scandal ArriveCAN.
“Protect Integrity”
In two brief press releases released Wednesday afternoon, the Ministry recalls that it can “prevent, detect and respond to situations of alleged wrongdoing” and “protect the integrity, fairness, openness and transparency of the system federal procurement.
The suspension of GC Strategies’ security clearance on Wednesday and that of Dalian on Friday mean that they will no longer be able to obtain any federal contracts until further notice.
GC Strategies’ contracts had already been suspended since November, but “around the same time the Auditor General started [son audit] », Said Minister Jean-Yves Duclos three weeks ago. This meant the company was excluded from future procurement processes and contracts, but could still secure small contracts that did not require PSPC approval. Losing your security clearance therefore constitutes an even more severe sanction.
A recent report from the Auditor General shows an explosion in the costs ofArriveCAN developed at the start of the pandemic. The first version of the app cost $80,000, but the bill eventually ballooned to nearly $60 million. GC Strategies was awarded $19 million in contracts, including three without competitive bidding. Dalian was the second firm that obtained the highest amount with 8 million.
These consulting firms do not carry out the work themselves, but take a commission on the contracts and subcontract it to expert IT consultants. One of the partners of GC Strategies, Krisitian Firth, had already indicated to the parliamentary committee that the commission fluctuated between 15% and 30%, according to industry standards.
108 million for GC Strategies
The Comptroller General of Canada, Roch Huppé, confirmed to the public accounts committee on Wednesday that GC Strategies and the company Coredal Systems Consulting, which belonged to the same two partners, had obtained a total of 118 federal contracts totaling nearly 107.7 million between 1er January 2011 and February 16, 2024.
Confusion has reigned over the value of these contracts for several weeks. A compilation of The Press carried out using open government data gave a total of 258 million, but the Ministry had indicated that its own data was incomplete and unreliable.
“Unfortunately, recent reports, including those from the media and the Office of the Procurement Ombudsman, have highlighted problems with the proactive publication of contracts,” noted Mr. Huppé. He asked all federal government institutions to confirm the value of all contracts awarded to GC Strategies, Dalian, Coradix and the joint venture formed by Dalian and Coradix, and then correct the database.
Irregularities before ArriveCAN
The alert had already been launched to the Canada Border Services Agency (CBSA) by Botler AI in 2021, which had business ties with GC Strategies, before the scandal surrounding the application broke out ArriveCAN.
Its leaders, Ritika Dutt and Amir Morv, described it as a “shadow company” and did not hesitate to speak of “systemic corruption” in the government apparatus, during their testimony in October before the Standing Committee on Operations government and budget forecasts of the House of Commons. GC Strategies, which then acted as a consultant for Dalian and Coradix, had approached Botler AI for a conversational robot project intended for the CBSA. GC Strategies, Dalian and Coradix have rejected the allegations.
The CBSA launched an internal investigation, and two officials were suspended. They believe they have been victims of reprisals. The Royal Canadian Mounted Police also opened an investigation.
The value of contracts obtained by Dalian since 2008 totals 149.5 million, including more than 3 million for contracts awarded by National Defense, according to data taken from public accounts.
With Vincent Larouche, Joël-Denis Bellavance and William Leclerc, The Press