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News » Canadian gov’t faces outsourcing software development woes

Canadian gov’t faces outsourcing software development woes

Canadian govt outsourcing woes
Photo from THE CANADIAN PRESS/Justin Tang

OTTAWA, CANADA — The Canadian government’s outsourcing of software development has come under scrutiny following the growing costs of the ArriveCAN app and new investigations into potential fraud. 

The ArriveCAN app is a digital platform operated by the Government of Canada that allows travelers to submit mandatory travel and health information before and after entering Canada.

The app, initially budgeted at CA$2.3 million ($1.70 million), ended up costing an estimated CA$60 million ($44 million), a figure that Auditor General Karen Hogan struggled to pinpoint due to poor financial record-keeping.

This week, the government announced tighter oversight on procurement, especially for software services, amid investigations into $5 million in invoices from three software contractors suspected of fraud.

Jean-Yves Duclos, the Minister of Public Services and Procurement, highlighted the challenges in tracking contracts that were previously managed on paper, making it difficult to prevent fraudulent billing. 

The transition to electronic contracts aims to mitigate such risks by facilitating the coordination and sharing of information across departments.

The controversy surrounding ArriveCAN sheds light on the role of middlemen in government procurement. Companies like GC Strategies, which managed the ArriveCAN project, are seen as facilitators that subcontract the actual software development work. 

However, questions arise about the value these middlemen provide in exchange for significant portions of public funds. 

GC Strategies, for instance, reportedly earned around CA$19 million ($14 million) from the ArriveCAN project, with the owners netting about CA$2.5 million ($1.84 million) after paying subcontractors.

Professor Daniel Henstra of the University of Waterloo attributes the reliance on such companies to the government’s shift from in-house software development to outsourcing. 

In an interview with The New York Times, Henstra explained that this approach, while expedient, can lead to complications and scrutiny over the allocation of public money. 

The professor suggests that while outsourcing is prevalent, stronger in-house capabilities are needed within the government to ensure efficiency and accountability.

Despite the current controversies, Henstra believes that the government’s relationship with contractors generally serves the public interest well, with most contracts being executed in good faith. However, the ArriveCAN debacle and fraud allegations highlight the need for improved oversight and management of outsourced projects.

Read more here.

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