Coradix and Dalian, the IT staffing companies that worked on the ArriveCan app, were suspended last year from the federal contracting process after a government review.Giordano Ciampini/The Canadian Press
A federal department has opted to release only limited details as to why two IT staffing companies that have received more than $900-million in government contracts and worked on the ArriveCan app project did not qualify as an Indigenous joint venture under a program meant to promote Indigenous businesses.
Through audits of 16 contracts, Indigenous Services Canada, the department responsible for auditing the program, found that the two companies – Coradix Technology Consulting Ltd. and Dalian Enterprises Inc. – had failed to meet the criteria necessary to qualify under the Procurement Strategy for Indigenous Business, which grants accredited businesses preferential access to certain government contracts. The work under audit was worth $99-million.
The two companies used the program for years to win contracts. The audits were launched after The Globe and Mail reported in 2023 that they had never been the subject of an after-the-fact compliance audit.
The department has declined to release the full audit reports, however, opting instead to release brief, one-page summaries of each audit finding – a decision one expert says is characteristic of transparency issues that have dogged the ArriveCan project since its inception.
The department told The Globe in February that Dalian and Coradix had failed 12 audits, that the reports were being reviewed and finalized, and that “an audit summary will be made available once completed.” The department then provided The Globe with 16 audit summaries on June 26, explaining that the government had conducted four additional audits.
The audits are “postaward” or after-the-fact audits, which The Globe has reported have rarely occurred during the program’s decades-long history, prompting calls for more oversight.
The department does conduct mandatory preaward audits on contracts greater than $2-million. These involve verifying that the business meets the requirement to be majority Indigenous owned and controlled.
Dalian, which was Indigenous-owned and had two full-time employees as of 2023, shared an Ottawa office with the much larger Coradix, which is not Indigenous, and employed about 40 people that same year.
The two companies often partnered in a joint venture, which is allowed under the program’s rules, so long as the Indigenous business retains majority ownership and control and provided that the Indigenous partners or Indigenous subcontractors are performing one-third of the work.
The one-page audit summaries state that the joint venture “failed to meet the Indigenous control, Indigenous ownership, or Indigenous content requirement criteria.”
Dalian and Coradix were awarded the audited contracts between 2018 and 2022 by several federal departments. The work runs the information-technology gamut, from database administration and data modelling to project management tasks.
Matt Malone, a law professor at the University of Ottawa and director of the university’s Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic, said the paucity of information in the post-award audit summaries released by the department are emblematic of the issues that led to the ArriveCan procurement affair in the first place.
In the case of ArriveCan, key financial details emerged only after parliamentary committees demanded the disclosure of contracting records and held months of hearings.
“Sunlight is the best disinfectant, and maximum sunlight will be the maximum disinfectant,” he said. “Summaries of audits are not approximating the level of transparency we need.”
When asked why more information wasn’t provided, department spokesperson Anis Piragasanathar said the Access to Information Act prevents the department from releasing some third-party information.
Livi McElrea, a spokesperson for new Indigenous Services Minister Mandy Gull-Masty, said in an e-mail that ensuring the integrity of the Indigenous Business Directory, which is a key component of the program, is “one of many key priorities” for the department.
“We continue to audit and improve its practices and processes to ensure the adequacy and transparency of the Procurement Strategy for Indigenous Businesses,” she said.
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The Dalian-Coradix joint venture was awarded contracts through the PSIB to work on the ArriveCan app for cross-border travellers. The app’s ballooning cost, tied in part to the extensive use of IT staffing companies, led to broader calls for Ottawa to spend less on outsourcing. The ArriveCan spending was the subject of two critical Auditor-General reports.
Federal records show that Dalian was dissolved as a corporation in December.
The Treasury Board released records last year showing that between Jan. 1, 2011, and Feb. 16, 2024, the two companies received more than $914-million combined over a mix of contracts to either company individually or as a joint venture.
The government suspended both companies last year from the federal contracting process after an internal review but provided few details as to why.
After the suspension, Coradix filed a lawsuit seeking $64-million in compensation, alleging in court documents that the government’s suspension was not based on a proper investigation and was driven by an effort “to distract from negative publicity” related to the ArriveCan app.
Coradix did not respond to a request for comment.
David Yeo, the founder and president of Dalian, said in a statement that Dalian regularly passed pre-award audits over its history.
“Dalian had 23 years of successful audits without issue. We were never out of compliance and provided the Crown with an excellent service during this time,” he said.