Public service ‘fell short’ due to procurement ethics breaches, says Privy Council Clerk in report to PM

The head of the federal public service, John Hannaford, acknowledged that the government fell short of expectations over the past year due to ethics breaches related to federal procurement. In his annual report to Prime Minister Justin Trudeau, released Thursday, Mr. Hannaford pledged to initiate a cultural shift within the federal government to address these issues.

The 55-page report begins with a letter to the Prime Minister, dated August 21, 2024, where Mr. Hannaford references recent media reports and parliamentary committee hearings that highlighted shortcomings in the federal oversight of Ottawa's multi-billion-dollar contracts.

"While I am continually impressed with the work of public servants, there were instances this year when we, as a public service, fell short. Whether it is our continued failure to fully resolve the Phoenix pay system or our procurement processes coming into question, we must face these challenges head-on and do better," Mr. Hannaford wrote.

Mr. Hannaford, who became Clerk of the Privy Council in June 2023 after serving in various senior roles within the federal public service, emphasized the need to foster a culture change regarding values and ethics in his report.

"Over the past year, media reports and parliamentary scrutiny have highlighted a lack of public trust in the government and the Public Service due to recent values and ethics breaches. These challenges reinforce the importance of our renewed focus on values and ethics in the federal public service," the report states.

Although Mr. Hannaford did not cite specific media reports or committee hearings, he referred to issues such as the government's handling of the ArriveCan app, which was scrutinized by the government operations committee and the public accounts committee. The Globe and Mail reported that the cost of the ArriveCan app, initially intended for cross-border travelers during the pandemic, had ballooned to at least $54 million, with the main contractor, GCStrategies, being a two-person firm that subcontracted all IT work while taking a commission of 15 to 30 percent of the contract value.

Prime Minister Trudeau has criticized the extensive subcontracting involved in ArriveCan as "illogical," and Auditor General Karen Hogan released a report in February estimating the project cost at $59.5 million, though poor federal record-keeping made it difficult to confirm a clear price tag.

In June, RCMP Commissioner Mike Duheme and Deputy Commissioner Mark Flynn informed MPs that the police force is conducting more than half a dozen criminal investigations into federal contracting, including one specifically focused on ArriveCan.

In March, federal officials disclosed an internal review that uncovered nearly $5 million in fraudulent billing by three private subcontractors. This was described as the first wave of updates related to fraudulent billing cases.

Public committee hearings into ArriveCan and other procurement issues over the past year have exposed significant public disagreements among senior public service members. The ongoing stream of accusations included testimony from a former Canada Border Services Agency official who handled ArriveCan contracts. She claimed she was suspended in retaliation for refusing to give false testimony during an internal probe into alleged contracting misconduct.

This week, Mr. Hannaford's report noted the creation of a deputy ministers' task team on values and ethics in September, which held 90 discussions across the public service within its first four months. The task team published a report identifying "a perceived lack of accountability or a ‘double standard’ between senior leadership and employees regarding compliance and enforcement" of ethics rules.

Mr. Hannaford's report emphasizes that the values and ethics dialogue is intended to be ongoing, aiming to bring these principles to life and create a lasting impact on day-to-day actions within the public service.