Five federal procurement department employees forced to leave last year after undeclared conflict of interest

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OTTAWA – The federal procurement department says five employees who did not disclose conflicts of interest were fired or resigned in the past year as it grapples with questions about how a public servant’s company was able to win a nearly $8-million contract to work on the ArriveCan app.

Speaking to the House public accounts committee Thursday, Public Service and Procurement Canada Deputy Minister Arianne Reza also revealed that the department has referred allegations about ArriveCan contractor GC Strategies to the RCMP.

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“This current situation that we’re facing in procurement is shattering,” she told MPs who grilled her on PSPC’s procurement practices in light of a scathing auditor general report on ArriveCan.

Last month, the auditor general found the cost of the application ballooned from $80,000 to potentially over $60 million. Part of the issue was a “glaring disregard” for “basic” procurement principles.

GC Strategies received nearly $20 million of that amount, which Auditor General Karen Hogan said she could not confirm because the government’s bookkeeping for the project was the worst she’d ever seen.

Since then, it’s come to light that David Yeo, who was CEO of consulting firm Dalian when it was paid millions to work on ArriveCan, is an employee of the Department of National Defence. He was suspended late last week after CTV first reported on his job in the public service.

Thursday, Reza said what has come to light about Yeo and Dalian through media reporting last week is unacceptable.

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“The issue that has been uncovered in the last week on Dalian and their use of contracting, their employment, is egregious, is wrong, and it is a terrible situation. I myself have picked up the phone to speak to the RCMP commissioner,” Reza told MPs.

In an unsigned “backgrounder” issued Thursday afternoon, Dalian appeared to deny that Yeo was in a conflict of interest when his company worked on the ArriveCan app.

It also said that Yeo has had “no involvement” in Dalian’s management or operations since he signed a “Confidentiality, Non-Disclosure and No Access Agreement” with the company at an unspecified point in time after he became a DND employee.

“From 2002 until September 2023, Mr. Yeo was not an employee of the Government of Canada in any capacity, but only provided IT professional services on a contract basis through Dalian to the Department of National Defence,” reads the backgrounder.

“In late September 2023, long after completion of all work on the ArriveCan app by Dalian, Mr. Yeo’s professional relationship with the Department of National Defence changed from that of IT professional services consultant to employee.”

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Reza said Thursday every vendor must sign an attestation when bidding on a contract that they are not in any way putting themselves in conflict of interest with the public service. She also pointed out that public servants are obligated to declare any potential conflict of interest, including secondary sources of income, to their manager for vetting.

But public servants don’t always do that. Reza said that five PSPC employees were fired or had resigned in the last year after failing to disclose potential or real conflicts of interest to their employer.

According to the government’s database of wrongoing by public servants, in one case an employee interfered in multiple staffing processes to ensure their relatives were hired and failed to disclose outside employment.

In another case, a PSPC manager was fired after an investigation found a staggering 14 breaches of government policies.

The breaches included the manager leasing his tractor-trailer to a subcontractor working on a PSPC contract, using his role to “inappropriately obtain an advantage for himself,” favouring a supplier for a contract that employed a family member, storing his all-terrain vehicle on government property and using taxpayer funds to repair it, and failing to declare his secondary employment.

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Reza also told MPs that PSPC was “unaware” until the auditor general’s report that IT consulting firm GC Strategies had participated in composing a statement of work for a contract tender that it subsequently won. She said that was immediately referred to the RCMP for investigation.

“We take these matters very seriously. When bid material is being prepared… there’s an attestation that says, ‘Have you been involved in this?’ because it precludes you from bidding on the work,” she said.

Wednesday, the federal Comptroller General revealed that GC Strategies and its predecessor Coredal — both owned by Kristian Firth and Darren Anthony — had received over $107 million in government contracts since 2011.

Speaking to reporters Thursday, Prime Minister Justin Trudeau said that was “unacceptable” and that there would be consequences for anyone who “profiteered” from the COVID-19 pandemic.

“We have significant questions, as do all Canadians, for the public servant processes that allowed for this to go forward this way,” he said.

In November, PSPC suspended the company from participating in government tenders until further notice as well as ordered it to stop any work on ongoing contracts for at least 180 days.

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In the past week, it did the same for Dalian and Coradix, a third company that obtained contracts to work on ArriveCan.

Speaking to the same committee Wednesday, both the auditor general and Comptroller General Roch Huppé said the government needs to ensure its procurement rules are followed, not further bog down its complex processes with more red tape.

Reza told MPs Thursday it was too late for that.

“We’ve already started to put in new rules. And we’ve started to enforce and do what we can to increase our due diligence. So, it’s going to be a very difficult way forward,” she said.

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