SAAQclic fiasco: contractual links perceived as ‘consanguinity’

An internal auditor had raised concerns about contractual links perceived as “consanguinity,” in addition to warning in 2020 that the costs could exceed $900 million, as part of the IT modernisation of the Société de l’assurance automobile du Québec (SAAQ).

On Friday morning, auditor Martin Lapierre continued his testimony to the Gallant commission, which is investigating the failures of the government corporation’s digital shift, including the SAAQclic platform.

Lapierre lifted the veil on the awarding of contracts to strategic consultants for the IT project known as CASA. He reported that restrictive criteria, which could apply to a limited number of suppliers, were required for the hiring of these strategic resources and led to knowledge of the SAAQ’s IT boss.

Five cases were presented at the time of his testimony. At the end of each of these calls for tenders, which took place between 2015 and 2017, only one bidder was deemed compliant. And, according to the audits conducted by Lapierre’s team at the time and presented in the form of an organization chart, the successful bidders had professional ties with the SAAQ’s vice-president of information technology (IT), Karl Malenfant. In some cases, they had already obtained a previous mandate for the Crown corporation.

After completing all or part of their contract as strategic advisors, some of them became employees of the Crown corporation. The spouses of some of the contractors also obtained positions with the SAAQ, in particular for the CASA project, following representations made by Malenfant, the commission was told.

One of the external professionals, Louise Savoie, was employed by LGS, one of the firms in the consortium chosen to develop the digital shift. Among other things, Savoie had drafted the call for tenders for the acquisition of the enterprise resource planning (ERP) software used to improve the SAAQ’s IT systems.

“She jumps the fence, then continues to work on the CASA project,” the commission’s attorney, Alexandre Thériault-Marois, asked Lapierre.

“Yes,” replied Lapierre, who believes that the period between the end of Savoie’s contract with the SAAQ and the start of her employment with LGS can be counted in days.

Lapierre said he submitted the findings of his research and concerns to the chairman of the SAAQ board’s audit committee, Jude Martineau, at a meeting in the summer of 2020.

“When he left, he told me: ‘Yes, yes, I’ve seen it. There’s inbreeding there.’ He understood everything. Martineau is a top manager,” Lapierre told Commissioner Denis Gallant.

A process leading to knowledge

Lapierre’s testimony suggests that the calls for tender were tailor-made. The case of Stéphane Mercier was cited. Mercier is said to have worked with Malenfant at Hydro-Québec and R3D.

Lapierre said that, when he became aware of the minimum expectations for a call for tenders that was in progress in 2017, only Mercier seemed to meet them.

Emails presented to the committee also suggest that the call for tenders was amended to accommodate Mercier, who was already carrying out a mandate with the SAAQ at the time. In particular, the number of hours for the strategic advisor contract was scaled down to reduce its value. This was in response to the fact that Mercier or his company did not have an attestation from the Autorité des marchés financiers to contract for mandates worth more than $999,999.

Mercier’s company finally won the tender worth $924,000 in April 2017. The other contracts submitted for strategic resources had each been concluded for around $1.2 million.

Under cross-examination, Lapierre stated that his audits were not intended to cast doubt on the expertise of the consultants selected. Rather, he was questioning “the process that always led to knowledge.”

“I think that if we had had slightly more open criteria, we could have had some good competition,” said the auditor.

924 million forecast for 2020

Lapierre also sounded the alarm about the future costs of the CASA project as a whole. At the request of director Jude Martineau, he had carried out calculations in 2020 at a time when the supplier was demanding more money to complete delivery of the SAAQclic platform.

The aim was to find out “what we were really getting into. We also had other phases ahead of us,” said the auditor.

“The company had to make a decision: whether or not to accept the supplier’s increases,” he added.

About two and a half years before the launch of SAAQclic, he projected a bill of $924 million, excluding the system’s operating phase.

By adding up the operating costs, the auditor said he had arrived at an estimate close to the one put forward last winter by the Auditor General (AG). According to the AG’s report, the SAAQ’s technological modernisation project could cost a minimum of more than $1.1 billion by 2027, or $500 million more than forecast.

Its summary estimates were presented in 2020 to Martineau, who, according to Lapierre, was not surprised by the cost trend.

Lapierre left the SAAQ in the summer of 2021 before returning nine months later. The auditor explained his departure by the feeling of having “a little less listening and support” as of autumn 2020. Internal auditors were invited to fewer important meetings, he said.

The Gallant Commission is due to resume its work on Monday.

Corrected version. In a dispatch sent out on Friday, The Canadian Press wrote in the third paragraph that the contracts for strategic advisors were intended to help develop the call for tenders for CASA. As some of these contracts may have had other objectives, we are withdrawing this reference and referring only to strategic consultants hired for the CASA project.

–This report by La Presse Canadienne was translated by CityNews