Canada’s federal procurement watchdog is considering a wider probe into a contracting practice known as “bait and switch,” following its review of the ArriveCan contracts.
The scheme involves an unknown number of companies obtaining contracts based on proposed work from professionals who ultimately don’t actually work on the projects.
OPO director of communications Wafa Ibrahim told The Epoch Times the bait-and-switch practice is “very concerning.”
“But we do not have data to know how broadly this practice is occurring across departments and agencies,” Ms. Ibrahim said.
The OPO has now completed an assessment of the bait-and-switch scheme and believes there are “reasonable grounds” to conduct a probe, added Ms. Ibrahim. If the review goes forward, she said it would have a “wide focus” to determine how prevalent the practice is across federal departments.
What is stopping the OPO from going full throttle on a broad review of the practice is resources.
Ms. Ibrahim said the timing and scope of the review have not been established, however it appears in the office’s plan for 2024–2025, “contingent upon availability of resources.”
Regarding the scheme, Mr. Jeglic explained that the selection method when there are different suppliers bidding on contracts can be a 70:30 strategy—70 percent related to the technical capabilities and 30 percent on the price. This means the technical component, which is mostly resources, is “incredibly important.”
“When they are bidding, they provide for resources that ultimately are going to receive the highest technical score possible, so they might be awarded a contract based on technical resources that never perform any work,” he added.
If the professionals hired to do the work do not meet the criteria established in the bid, then there’s a “significant impact on fairness,” Mr. Jeglic said, adding there seems to be a “general lack of control around this swapping exercise.”
Committee chair and Conservative MP Kelly McCauley asked Mr. Jeglic whether the passage of a motion by the committee would help initiate a probe into the matter.
“Does this work on the bait and switch need to be done?” asked Mr. McCauley.
Probes
The OPO released its ArriveCan report in January, a few weeks before the Office of the Auditor General (OAG) made public the findings of its performance audit on the ArriveCan application. The app was initially used as a COVID-19 border measure for travellers to manage quarantine.The OPO and the OAG each launched probes in early 2023 following votes by MPs.
The OAG has estimated the cost of ArriveCan at $59.5 million, but said the actual cost is unknown due to poor accounting practices. The auditor general also said taxpayers had not obtained value for the money spent.
The probes by the two watchdogs have shed some light on what has turned into a multi-layered scandal which now involves investigations by the RCMP and the Public Sector Integrity Commissioner.
The RCMP started looking into misconduct allegations involving three firms linked to the ArriveCan’s development, but on separate issues, after a referral last fall from the Canada Border Services Agency (CBSA).
The RCMP recently said it was expanding its probe into GC Strategies, Dalian, and Coradix to include the ArriveCan pandemic contracts.
The auditor general and the procurement ombudsman reported that GC Strategies had established the criteria for a competitive $25 million contract with CBSA, which it won as the sole bidder. The two watchdogs said the eligibility criteria were very narrow.
Mr. Firth also told the committee he had not used the bait-and-switch tactic, though he was familiar with it. He said typically contractors use bait and switch to “get more money” by swapping for less costly resources, or sometimes the resources become unavailable because of a delay in bid evaluation.
“Every single person we put forward that was caught up in a task authorization worked,” he said.
The OPO report indicates three of the four contracts obtained by GC Strategies for ArriveCan work were awarded without competition. Resources for those hadn’t been identified, hence a bait-and-switch tactic wasn’t possible. However, for the fourth contract, the OPO says “a portion of the resources proposed in the successful supplier’s bid did not work on the contract.”
The office said in its report that when task authorizations were issued under 76 percent of ArriveCan contracts, “the supplier offered up other resources, but not the individuals that had been proposed in order to win the contract.”
GC Strategies obtained the lion’s share of ArriveCan contracts, with $19.1 million out of the $59.5 million reported by the auditor general.
The company won more than $96 million in contracts since being established in 2015, according to information tabled by federal departments in February.
Based on the 15–30 percent commission taken in by GC Strategies, the two-person company would have grossed between $14.4 million and $28.8 million in federal contracts over the period.
The Office of the Procurement Ombud and the Office of the Auditor General both told The Epoch Times they do not have data on how prevalent it is for companies like GC Strategies to act as middlemen between Ottawa and subcontractors. They are also unaware of how much this increases costs for taxpayers.
Public Services and Procurement Canada did not respond to a request for comment before deadline.
The issue of ballooning costs for consulting firms since the Liberals took power has been in the news since concerns were flagged about multi-national McKinsey more than a year ago.
McKinsey’s share was relatively small at $117 million over the period, compared to the $1.3 billion that Deloitte received, or the nearly $1 billion garnered by PricewaterhouseCoopers. Accenture received $388 million, and KPMG $326 million.
