Travelers arrive at Trudeau Airport in Montreal on April 20. Graham Hughes/The Canadian Press
Canadian technology leaders who have built apps for large corporate clients described Ottawa’s $54 million price tag for ArriveCan as outrageous, explaining that in their experience most apps are built for less than $1 million.
They also question why the government did not go directly to a Canadian app developer rather than 23 separate contractors and an unknown number of additional subcontractors.
“People in the Canadian tech community that I’ve talked to are outraged, and I’ve talked to a lot of them today,” said Neil Self, a technology investment banker and founder and CEO of INFOR Financial Group Inc.
A Globe and Mail analysis of federal contracts related to the ArriveCan app found that total spending on it is on track to top $54 million this year, more than double what the government recently said it had spent.
The review also found that the Ottawa-area company that received the most federal work on the application — GCstrategies — has fewer than five employees. The company told The Globe that it works with more than a dozen government departments and fulfills its contracts through the use of more than 75 subcontractors. However, the company and the government say the identities of the subcontractors cannot be disclosed because of confidentiality provisions in federal procurement rules.
The company was also working on the COVID Alert app, which was supposed to help with contact tracing, but was shut down. This application had a reported cost of $20 million.
ArriveCan is designed as a tool for travelers to upload their mandatory health information related to COVID-19 measures. It was expanded to allow users to answer customs and immigration questions up to 72 hours before flying to Canada.
While the Canada Border Services Agency (CBSA) initially said five companies were awarded contracts to work on the app, it later revealed that the work included 27 contracts with 23 unique companies.
Public Safety Minister Marco Mendicino, who is in charge of the CBSA, defended ArriveCan’s price on Thursday.
“It was an essential tool,” he said, adding that it is now voluntary and will be used for customs declarations. “It’s an investment that will be portable for those who want to use it.”
Fahd Ananta, an investor at Roach Capital who previously held product leadership positions at Snapchat and Shopify, said he couldn’t understand how ArriveCan’s price had risen to more than $54 million.
He said that in his experience building an app for a large enterprise client would cost no more than about $1.5 million, and developers would celebrate when they landed such a large contract.
“It’s outrageous,” he said in an interview. “In my opinion, I think they are freed.”
Likewise, Apply Digital CEO Gautam Lohia, who has built numerous apps, told The Globe that his company has built sophisticated software for global organizations with total costs in the seven- to eight-figure range for a product comparable to ArriveCan.
“I’ve used it many times and it’s not complicated,” he said of the government app. “Fifty-four million over a period of two and a half years is too much.”
The Globe spoke with a total of seven Canadian-based technology executives Thursday about their thoughts on the cost and the government’s approach to outsourcing related work. All seven said the app is relatively simple from a technical standpoint and shouldn’t cost nearly $54 million.
Richard Hyatt, an entrepreneur who has founded several technology companies and is currently CEO of Candr, which facilitates the use of QR codes, described the ArriveCan app as “horrendous” and called for a review into why costs have risen so high.
“There’s no point,” he said.
Zane Manji, co-founder of Lazer Technologies, said the government’s approach raises many questions about decision-making.
“The amount spent on the app is shocking, especially around the amount of capital spent to build the app and the allocation of funds,” he said.
Nick Van Weerdenburg, CEO and founder of Toronto-based Rangle, said his firm probably built the app in less than a month for about $250,000.
“It’s a very simple application,” he said.
He added that it was “totally unacceptable” for the government to approach a company that had largely subcontracted the work. He said there are about 100 Canadian tech companies that would probably build the app directly for much less.
John Ruffolo, founder and managing partner at Maverix Private Equity and co-founder of the Council of Canadian Innovators, said Ottawa needs to do more to support Canada’s technology sector through public procurement. Yet when a Canadian company that relies mostly on unidentified subcontractors is hired, there is no guarantee that the work stays in Canada.
“It just seems like a shockingly high amount of money to pay for a fairly mundane application,” he said.
Conservative lawmaker and public safety critic Raquel Dancho said in an interview that all pandemic spending and contracts should be audited. Ms Dancho said the app had been criticized as irritating at the Canada-US border and should have been removed long ago. Although it has not been mandatory since September 30, Ms Dancho said it should be abandoned.
“It would be inappropriate to continue with something that is so expensive,” she said.
NDP MP Taylor Bachrach said the Liberal government has failed to be transparent about the cost of ArriveCan and has repeatedly chosen to “enrich private corporations” through outsourcing instead of strengthening Canada’s public services.
With reporting by Sean Silkoff
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