'We paid too much': Canada's AG blasts CBSA over ArriveCan app

Canada's auditor general has found that those involved in the contracting, development and implementation of the controversial Arrivecan application showed a "glaring disregard" for basic management practices.

Ultimately, Canadians "paid too much for this application," according to Auditor General Karen Hogan.

In a new performance audit tabled on Monday, Auditor General Karen Hogan points to failures by the Canada Border Services Agency (CBSA), the Public Health Agency of Canada (PHAC), and Public Services and Procurement Canada (PSPC) in connection to their work on the COVID-19-era traveller contact application.

The report pegs the cost of the app at $59.5 million—more than the previously estimated $54 million—but cautions that the true cost was "impossible" to calculate because of CBSA's "poor financial record keeping."

Hogan told the House Public Accounts Committee that, while assessing the application, she came across the worst bookkeeping she's seen in years. This, after she's recently examined other pandemic-era spending such as the Canada Emergency Response Benefit (CERB) and federal wage subsidy that saw billions misallocated.

"I am deeply concerned by what this audit didn't find," Hogan testified. "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." 

Hogan issued eight overarching recommendations for reform, including one calling on implicated federal departments and agencies to improve their fiscal management, fully document interactions with contractors, and attach clear deliverables to contracts awarded.

"The lack of information to support ArriveCan spending and decisions has compromised accountability," Hogan said. "Public servants must always be transparent and accountable to Canadians for their use of public funds. … Many questions that parliamentarians and Canadians are asking cannot be answered."

The deep dive into the Canadian border application comes amid years of scrutiny by parliamentarians, and a series of news stories about the cost of the app, and the contracts awarded to build and maintain it.

"As a result of the many gaps and weaknesses we found in the project's design, oversight, and accountability, it did not deliver the best value for taxpayer dollars spent," reads the 30-page report.

Hogan's office confirmed it would be embarking on this audit last March, after opposition parties teamed up in late 2022 to pass a motion calling for a probe into all aspects of the app, including payments, contracts and sub-contracts.

In examining the paperwork connected to the border app, Hogan's team of investigators found that CBSA heavily relied on external help which increased cost far beyond the initial April 2020 contract which was valued at $2.35 million.

The agency also poorly managed contracts, and left "essential information," such as deliverables and qualifications, out of them. This extended to the border agency paying invoices that contained few, if any details about the work completed.

Further findings about the government's ill-managed border app, according to the auditor general, include:

• Of the contractors examined, 18 per cent of invoices submitted did not provide enough information to determine whether their expenses related to ArriveCan or another IT project
• Of the overall estimated cost, $53.3 million went towards the app's pandemic-response health component while $6.2 million went towards CBSA adding the digitized customs and immigration declaration form
• The average per diem cost for the app to be worked on by external contractors was $1,090, whereas the average daily cost for equivalent IT positions within the federal government was $675

"Practices to manage ArriveCan were missing at the most basic levels," reads the report.

Audit backs up other reports

In January, after Canada's procurement ombudsman Alexander Jeglic sifted through the ArriveCan contracts, he sounded the alarm about irregular contracting, including subcontractors who never actually did work on the app. 

Hogan's report backs this up, finding little documentation to support "how and why" the small consulting firm "GC Strategies" was awarded the initial ArriveCan contract. The audit also found evidence that the group "was involved in setting the requirements" that CBSA used, to tender a competitive contract.

The audit could not find any evidence that CBSA considered a proposal or any similar document from GC Strategies for its non-competitive contract and the agency's IT department "did support the selection of GC Strategies with a sound justification."

It has been reported that GC Strategies then went on to subcontract other companies to work on the app, while keeping a commission. According to Hogan's report, after reviewing all available records, her team could not determine which agency official made the final decision to select GC Strategies.

“We found that in May 2022, the agency replaced the three non competitive contracts held by GC Strategies, which had been issued quickly and urgently, with a competitive contract. This new contract, valued at $25 million, was also awarded to GC Strategies, as it was the only contractor to submit a proposal," reads the report.

"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."

Moreover, Hogan's report found "no evidence" to indicate CBSA employees complied with the agency's code of conduct, by "disclosing that they had been invited to dinners and other activities by contractors." 

COVID-era app evolved

Introduced during the COVID-19 pandemic, ArriveCan became mandatory as a way to screen inbound travellers to Canada for their travel and health-related information, including vaccination status.

After months of defending the at-times glitchy application, and insisting it was a "critical tool" despite pressure from the travel industry and opposition MPs to scrap it, the federal government made the use of ArriveCan optional when it lifted a range of COVID-19 restrictions in October 2022. 

Relatedly, the audit found that, between April 2020 and October 2022, CBSA released 177 versions of ArriveCan "with often little to no documentation of testing," including the June 2022 update that saw 10,000 travellers wrongly receive instructions to quarantine. 

Hogan's report notes that the government's decision to continue relying on external resources to keep the app alive beyond the initial pandemic period, "increased costs and brings into question the value achieved for money spent."

Other probes continue

Taking place parallel to Hogan's probe, is a study by the House of Commons Government Operations and Estimates Committee. That panel of MPs recently suspended its hearings into the app after reading a preliminary internal CBSA contracting conduct report.

Amid an uproar from the Conservatives who called it a cover-up, Liberal, Bloc, and NDP MPs said their pause was out of concern that further public disclosure related to the secret report's findings could compromise ongoing investigations.

A year ago, Prime Minister Justin Trudeau tasked Canada's clerk of the Privy Council with looking into what he's said appeared to be "highly illogical and inefficient" practices surrounding the app's contracting. 

Further, as it has previously been reported and Hogan's report confirms, matters related to "certain employees and contractors" have been referred to the RCMP.

According to the report, CBSA, PHAC, and PSPC have agreed with all of Hogan's calls for reform, and have put a series of timelines on fulfilling various action items.

Hogan held a press conference to further discuss her findings on Monday afternoon. Reporters asked her if she was considering a wider audit, and why she had not gone much deeper with her probe. She expressed doubt that, given the state of the file, much more could be revealed.

She also said she felt it was important to not double up on investigative work already being done by other offices examining ArriveCan.

"A lot of our recommendations here are what I would think are really obvious and basic recommendations and that's typically not where we want to go. We had to do it here because we felt some of the most basic elements were not done," Hogan said. 

Political reaction to report

In a separate scrum, Public Services and Procurement Minister Jean-Yves Duclos and Public Safety Minister Dominic LeBlanc agreed that the contracting practices demonstrated in the ArriveCan process were clearly "unacceptable," but pointed to the chaos of the early days of COVID-19 as context.

"I have full confidence in the agency's ability to take all of the appropriate corrective measures to ensure that public funds are obviously used with the utmost diligence," LeBlanc said.

"Already several measures have been adopted by the CBSA in advance of the auditor general's report, and all of her recommendations will of course be fully implemented."

Conservative Leader Pierre Poilievre blamed Trudeau for the mismanagement of Canadians' tax dollars.

"He's taken 60 million of your tax dollars and given it to a corrupt app, 'ArriveScam,' that doesn't work, that we didn't need, and that went 750 times over budget," Poilievre said.

NDP Leader Jagmeet Singh said this procurement "debacle" is just the latest example of Liberal mishandling.

"What is very clear is that at a time when Canadians are very squeezed in their budget, the Liberals are so out of touch that they think it's okay that $60 million went unaccounted for," Singh said. "Spent on an app that no one uses and still doesn't work."