Question Period Note: Fraudulent Billing

The Government of Canada’s is pursuing its efforts to investigate and deter fraudulent billing by sub-contractors for suppliers on professional services contracts. Since March, Public Services and Procurement Canada has disclosed a total of seven cases that have been referred to the Royal Canadian Mounted Police (i.e., three cases in March, one older case in July when charges were laid, and three cases on November 6th).

• My department has detected several fraudulent billing schemes undertaken by individuals who worked as subcontractors on federal professional services contracts. This has been the result of Public Services and Procurement Canada’s efforts over the last five years to strengthen its approach to detecting fraudulent activity and other types of wrongdoing
  • Public Services and Procurement Canada took swift action to suspend the security clearances of the individuals in question. This prevents these individuals from doing business with the Government on contracts with security requirements
  • These cases have required months of efforts by officials within my department as these schemes spanned multiple federal organizations and suppliers across multiple contracts
  • Public Services and Procurement Canada is actively pursuing the recovery of illegitimate amounts billed to the Government of Canada
  • These cases have been referred to the Royal Canadian Mounted Police, so I will not comment further

If pressed on more details about the cases referred to the Royal Canadian Mounted Police:

• The department has referred the cases to the Royal Canadian Mounted Police and officials are trying to balance the need to be transparent while also protecting the integrity of ongoing investigations
• Key components of the department’s approach to managing the risk of fraud are associated with prevention, detection and response
• The department is sending a clear message to the marketplace that this type of behaviour is unacceptable. We are taking the necessary steps to detect and deter those individuals who perpetrate this type of wrongdoing against the Government

If pressed on the providing the names of the three individuals:

• As you are aware, the names of the individuals from March have been furnished to the Clerk and the Chair of the Government Operations Committee as was requested during an appearance by officials this summer. The names of the other three individual will be submitted in the same format to the Clerk and Chair of the Public Accounts Committee as agreed in committee on November 6, 2024
• As previously disclosed, the wrongdoing in these cases occurred mainly within the information technology consulting services sector

If pressed on the consequences for the individuals investigated by Public Services and Procurement Canada:

• The security statuses of the individuals were suspended when Public Services and Procurement Canada’s investigations provided sufficient grounds to believe that overbilling had taken place. This limits their ability to do business on federal contracts
• Public Services and Procurement Canada continues to closely monitor this situation and will make the necessary adjustments to its approach as new information becomes available

If pressed on the consequences for the prime contractors:

• The focus of Public Services and Procurement Canada’s investigations have been on the illegitimate billing practices of sub-contractors, not the prime contractors. That said, Canada has provisions in its contracts to recover these illegitimate payments and is working with the impacted prime contractors to recover these funds.
• All companies from the cases disclosed in March 2024 have been asked to repay and discussions with the companies are ongoing. For the three cases disclosed on November 6th, Public Services and Procurement Canada officials will be working with departments to confirm amounts owing and will then work with prime contractors to recover funds.
• As of November 1, 2024, firms impacted by the cases disclosed in March have agreed to repay almost $800,000 of which $420,000 has been repayed and $380,000 has been agreed upon, with repayments in process. We continue to make steady progress in this regards.

Since March 2024 Public Services and Procurement Canada disclosed in seven cases of fraudulent billing by professional services subcontractors (i.e. individuals who were subcontracted) who were employed by prime contractors that held multiple contracts with a number of federal departments and agencies:

These seven cases have been referred to the Royal Canadian Mounted Police for further investigation.

On July 9, 2024, the Royal Canadian Mounted Police charged one of the professional services subcontractors referred to them by the department for fraudulently overbilling the Government of Canada. This case relates to an investigation launched by Public Services and Procurement Canada, in the summer of 2021, into a consultant who undertook contract work with eight separate departments and Crown corporations. Evidence indicated that the consultant had submitted fraudulent timesheets that resulted in overbilling by an estimated $250,000 between January 1, 2020 and June 30, 2021. Public Services and Procurement Canada referred the case to the Royal Canadian Mounted Police for a possible criminal investigation. As a result of the Royal Canadian Mounted Police investigation, Clara Elaine Visser has been charged with fraud over $5,000 contrary to Section 380(1) of the Criminal Code.

Public Services and Procurement Canada has a framework in place to prevent, detect and respond to wrongdoing in order to safeguard the integrity of the federal procurement system. This approach includes the use of a variety of tools to actively detect fraudulent activity, and respond to alleged misconduct that the Government of Canada is being defrauded in either a specific contract or on a broader scale.

Public Services and Procurement Canada employs active measures to raise awareness among procurement officers on how to identify potential instances as well as the use of data analytics and tips from the public to identify potential instances of fraud and wrongdoing. In order to respond to alleged instances, the department has an investigatory capacity to examine allegations that the Government of Canada is being or has been defrauded within its procurements.

The identified cases demonstrate that the departmental approach and techniques to prevent, detect and respond to instances of fraudulent activity are working.

The department will continue to refine and expand the use of our tools to detect and address wrongdoing and ensure that individuals or entities engaging in fraud or other illegal activities are held accountable for their actions and return monies owed to the Crown.

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