Taxpayers better brace for a 25-year tech boondoggle 

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Given its track record, taxpayers should be skeptical of the federal government trying to oversee the production of typewriters, let alone locking in a 25-year contract on an evolving technology.

But that’s what the government is gearing up to do.

Shared Services Canada is awarding contracts to companies to provide cloud computing services to the federal government for 25 years.

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Taxpayers don’t yet know how much this will cost. But given the government’s track record on tech, taxpayers should expect to lose their shirts, pants, watches and wallets for the next two-and-a-half decades.

To understand why Shared Services needs to back away from this plan, let’s look at the government’s failed history with new technologies.

The ArriveCan app was launched in April 2020 with an initial cost of $80,000. In 2022, taxpayers learned ArriveCan costs somehow ballooned to $25 million. Taxpayers then learned the actual cost of ArriveCan was $54 million —  more than double the price tag the government disclosed only months earlier.

The ArriveCan costs were so out of control the auditor general had to step in.

The auditor general estimated the cost of ArriveCan was around $60 million, but the exact bill couldn’t be determined because “documentation, financial records and controls were so poor.”

The government took a simple $80,000 app and ballooned the bill to $60 million. That’s nearly a 75,000 per cent increase.

How did the government hold itself accountable?

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Government executives working on the failed app gave themselves more than $340,000 in bonuses.

The ArriveCan debacle infuriated Canada’s tech industry, motivating two independent tech companies to recreate the app over a single weekend.

The National Post reported that some developers suggested, “Given that ArriveCan is a relatively simple text-based screening app, its raw development costs could conceivably have been delivered for under $250,000.”

Even worse, Ottawa can’t figure out how to pay its own employees without blowing the tech budget by billions.

The government launched its Phoenix payroll system in 2016, and it initially cost taxpayers $300 million. Fast-forward eight years and the government has dumped another $3.5 billion into the failing payroll system.

The Phoenix payroll fiasco was originally hatched to save taxpayers money. It ended up doing the exact opposite.

Phoenix’s failures include thousands of federal employees not getting paid properly for years, and, in some cases, paid far too much.

Nearly a decade and billions of dollars later, “Ottawa has abandoned all hopes of trying to salvage Phoenix,” CBC News reported.

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The government can’t create a simple app without ballooning the bill by 75,000 per cent. And it can’t pay its own employees without soaking taxpayers for billions of dollars more. In fact, it can’t even use the same payroll system for a decade before having to admit defeat.

In what world should taxpayers trust the government to lock in a 25-year contract for cloud computing services?

A recent report from academics at Carleton University warns against exactly this. The report points to the federal government’s “propensity to establish large, long-term contracts that invite project failure and promote vendor lock-in.”

Amanda Clark, a professor at Carleton and a co-author of the report, wrote that the federal government breaks “almost all globally accepted best practice for modern public sector IT procurement,” which is why there are “scandals like the ArriveCan debacle.”

Clarke also told the National Post that “Ukraine has better (digital) services than Canada does, and they’re fighting a war.”

Clarke recommended important reforms for tech procurement: the government should impose a maximum IT contract threshold of $2 million per year and a maximum length of three years, with no possible extensions.

This is a far cry from Shared Services’ plan to lock in a 25-year contract on a relatively new and evolving technology.

Shared Services must back away from this plan before taxpayers get soaked.

National Post

Franco Terrazzano is the Federal Director of the Canadian Taxpayers Federation.

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