Public Services and Procurement Canada has referred two new cases of suspected procurement fraud to the RCMP for criminal investigation. And in an unrelated case, the federal government is also turning to the courts to claw back funds paid to the contractor best known for its ties to the controversial ArriveCan App.

The two new referrals from this past spring bring the total number of suspected fraud cases reported to nine. The initial three were disclosed in March 2024, another one which resulted in charges was reported in July, and another three were disclosed last November.

Piper McWilliams, senior communications adviser for Public Services and Procurement Canada (PSPC), told The Hill Times in an email that “the department is actively pursuing the recovery of illegitimate amounts billed to the government and referring cases to the RCMP for criminal investigation.” 

PSPC is the central purchaser for the federal government managing approximately $37-billion every year on behalf of departments and agencies. Over the last couple of years, PSPC has faced increased criticism due to a series of contracting controversies, political scrutiny, committee showdowns, scathing watchdog reports, a historic admonishment of a contractor, and multiple RCMP investigations.

Feds recoup $3-million from contractors

McWilliams also noted that PSPC has reached agreements with the firms affected by the three cases disclosed in March 2024 to reimburse approximately $4-million, of which $3-million has already been repaid to the government. She said the remaining funds are expected to be repaid in line with the agreements between the firms and the government as recovery efforts are ongoing. 

“As these cases have now been referred to the RCMP, it is important that law enforcement be able to do their job. Therefore, we have nothing further to say on the matter at this time,” McWilliams said.  

The RCMP confirmed that the Central Region’s Sensitive and International Investigations branch received a total of nine cases of suspected fraudulent billing activity by PSPC, but said it “will not be providing any details on these matters at this time.”

The disclosure of the latest two cases came in response to The Hill Times’ questions following up on a June 16 interview with Government Transformation and Public Works and Procurement Minister Joël Lightbound (Louis-Hébert, Que.). The four-term MP was elevated to the front bench for the first time as part of Prime Minister Mark Carney’s (Nepean, Ont.) May 13 cabinet shuffle.

“There have been some instances where things didn’t go the way they should have. There is no denying that,” Lightbound told The Hill Times on June 16, speaking to the effect procurement controversies have had on public trust and supplier confidence. “But on the whole, our procurement system and its integrity is very good,” he said.

Lightbound did not respond questions about GC Strategies—the firm at the centre of the controversial procurement of the ArriveCan app—citing his early days in the role. But he has already been faced with the political heat it generates as he repeatedly responded to MPs questions in the House last week.

“We will never tolerate misconduct from our suppliers or their subcontractors. We have taken legal action against GC Strategies,” Lightbound said during Question Period on June 16.

GC Strategies refuses to pay back feds: court docs

Earlier this spring, the federal government launched a civil lawsuit against the company in Ontario Superior Court as part of a larger fraudulent billing case involving multiple firms.

The March 7 statement of claim names GC Strategies Inc., TRM Technologies Inc., and an Ottawa-based IT subcontractor seeking a total of $1.45-million in damages for allegedly overbilling for IT contracts with multiple federal departments. The Hill Times is not naming the subcontractor because a statement of defence has not yet been filed.

The government is seeking $198,000 from GC Strategies, $527,000 from TRM Technologies, and $725,000 from the individual subcontractor for breach of contract, negligent misrepresentation, and unjust enrichment. 

The government claims the subcontractor submitted inflated timesheets for 600 days in which his hours of work exceeded 24 hours per day on multiple contracts between 2018 and 2022.

According to the court filing, the government alleges the subcontractor also charged for standby time—during which no actual work was performed—despite the contract terms not allowing that, and that he was sometimes subcontracted by both GC Strategies and TRM at the same time. 

The claims alleges that neither company had systems in place to verify the accuracy of the independent subcontrator’s timesheets. It also states that the government made formal demands to both firms to restore the overpayments which the companies have refused, which is alleged to be a further breach of contract. None of the allegations have been tested in court.

There is no indication in the statement of claim that the overbilling case naming GC Strategies is related to the ArriveCan app. The investigations into the ballooning price tag of the application is what put GC Strategies in the middle of intense public scrutiny.

Auditor General Karen Hogan’s June 10 report found that GC Strategies received dozens of government contracts between 2015 and 2024 with a total value of $92.7-million. Of that total value, the government ultimately paid the company $64.5-million. Hogan said that federal organizations “frequently did not demonstrate value for money.”

The Office of Supplier Integrity and Compliance, created in May 2024 for increased oversight and prevention of fraud and misconduct in federal procurement, barred GC Strategies from federal contracting for seven years earlier this month.

Previous reports by Hogan had concluded that the firm received an estimated $19-million for its ArriveCan work, which did not involve the app’s actual development or maintenance. 

One of the managing partners, Kristian Firth, was admonished by the House Speaker in the spring of 2024 for refusing to respond to MPs’ questions during the parliamentary probes of the case. Firth and co-founder Darren Anthony repeatedly denied any wrongdoing. 

Procurement rules and roles needs to be ‘very clear’: Lightbound

As previously reported, Lightbound said PSPC has “done a lot” in terms of applying Hogan’s recommendations and educating departments to fix procurement woes, and properly apply the rules to avoid mistakes. Hogan highlighted the lack of information in contractor’s security clearances, payments for incomplete work, and poor documentation, to justify contract award in multiple reports looking into government procurement under the previous Liberal government.

Hogan’s June 10 report did not issue any new recommendations but underlined the PSPC’s need to enforce existing rules.

“The rules, the roles, and the responsibilities of everyone in the procurement process across departments need to be very clear,” Lightbound said.  

ikoca@hilltimes.com

The Hill Times

 

Irem Koca is a Turkish-Canadian journalist who joined The Hill Times in late 2023. She got her start in Canadian media in the Toronto Star's Ottawa bureau, covering federal politics and national stories under the paper's year-long fellowship. With a background in broadcast journalism, she spent several years as a world news reporter at CNN Turkey. Her freelance work on Turkish politics has been featured in The New York Times and Reuters. She is fluent in English and Turkish. See all stories BY IREM KOCA