A report by the Procurement Ombud’s office found that last year in 76 per cent of ArriveCan-related contracts reviewed, some or all of the individuals proposed to win the contract did not do any of the work.Laura Proctor/The Globe and Mail
A broad review by the federal Procurement Ombud has found numerous cases of “bait and switch” in government contracting, a practice in which companies land a contract based on their specific roster of skilled workers only to have less-qualified contractors perform the actual work.
The report by Alexander Jeglic also includes criticism of Public Services and Procurement Canada’s planned reforms to contracting, even though the department asked the Ombud not to publish those warnings.
Mr. Jeglic’s decision to look more deeply into the issue was inspired by concerns flagged in connection to contracts for the ArriveCan app for cross-border travellers, which relied heavily on outside IT contractors.
He reported last year that in 76 per cent of ArriveCan-related contracts that his office reviewed, some or all of the individuals proposed to win the contract did not do any of the work.
Mr. Jeglic’s office then decided to study whether the issue is widespread. The result of that work was published Thursday in a report called “Bait and Switch.”
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The study looked at 17 contracts across several departments. It found that in nine cases, or 53 per cent, some or all of the individuals put forward to win the contract were replaced.
In seven of those nine cases, or 41 per cent of the contracts, the review found the replacements were not evaluated to see whether they had met or exceeded the experience of the originally proposed workers, as required under the contracts.
In an interview, Mr. Jeglic said the study found that the practice takes place at a “high rate” and could have been avoided had officials simply enforced existing powers to ensure replacements are at least as qualified as the individuals who are originally proposed.
Procurement Ombudsman Alexander Jeglic says a study by his office found the practice of ‘bait and switch – where companies win bids by proposing skilled workers but use less-qualified contractors to do the work – takes place at a ‘high rate.’Justin Tang/The Canadian Press
The report says bait-and-switch tactics can be considered a violation of procurement rules, or possibly fraud, if the supplier never intended to use the resources they originally proposed.
Mr. Jeglic said his office does not have the mandate to say definitely whether cases it reviewed amount to fraud because it can only focus on the actions of government.
“That’s a limitation of our work,” he said. “We can’t opine as to why suppliers did what they did.”
To reduce cases of bait and switch, the report recommends that departments obtain signed proof of consent from individuals who are listed by a contractor as being available to work. It also recommends that departments ensure any replacement workers meet or exceed the requirements of the contract.
Public Services and Procurement Canada (PSPC), the main department responsible for federal contracting, is moving to a new system that does away with assessing the skills of individuals, focusing instead on the contractor’s corporate capacity and past performance.
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Thursday’s report said while the government’s new approach “eliminates the issue of bait and switch, it does so by ignoring it while doing little to achieve for the department the quality of product it bargained and paid for.”
The comment is in a section that warns of unintended consequences related to the government’s new approach.
The report published PSPC’s response to the Ombud, including a request that the office remove that sentence and other criticism from the final report.
“While PSPC will consider the concerns raised by OPO in the Unintended Consequences and Potential Solutions sections of the draft report as part of our professional services transformation action plan, PSPC does not support including these paragraphs in the report to be released as the assertions made in paragraph 95 to paragraph 110 are not supported by data and information contained in the documents reviewed by your office.
“Consequently, PSPC is of the view that these paragraphs are speculative and out of the review’s scope. As such, PSPC considers that these 2 sections should not be made public,” the department’s reply states.
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The report then adds a note from the Ombud’s office: “PSPC’s Organizational Response has been considered but OPO will retain Paragraph 95-110 as part of the report.”
The Procurement Ombud is not an officer of Parliament, meaning the office is not as independent as other watchdogs that report directly to Parliament, such as the Auditor-General or the Parliamentary Budget Officer.
Instead, the Ombud is appointed to a five-year term by cabinet and reports to the Minister of Public Works and Government Services.
Mr. Jeglic told The Globe he questions why departments are moving to a new system focused on evaluating companies, rather than the individuals who will be performing the work.
“I’m not sure that there was a need to kind of replace how the process works,” he said.
“What we were saying is: ‘Hey, you had all the tools. You just didn’t use them as effectively as you could have, and the solution was already there.’ But appreciating also that there was an inordinate amount of pressure, post-ArriveCan, to find solutions to these problems.”