ArriveCan’s $54 million price tag is ‘outrageous’, tech leaders say
Canadian tech leaders who have built apps for large enterprise clients described Ottawa’s $54 million price tag for ArriveCan as outrageous, saying in their experience most apps are built for less than $1 million. of dollars.
They also question why the government didn’t 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 I’ve spoken to are outraged, and I’ve spoken a lot today,” said Neil Selfe, 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. .
Additionally, the review found that the Ottawa-area company that received the most federal work on the app — GCstrategies — has fewer than five employees. The company told the Globe that it works with more than a dozen government departments and honors its contracts using more than 75 contractors. However, the company and the government say the identities of contractors cannot be revealed due to confidentiality provisions of federal procurement rules.
The company also worked on the COVID Alert app, which was supposed to help with contact tracing but was shut down. This app had an advertised price of $20 million.
ArriveCan was designed as a tool for travelers to upload their mandatory health information in relation to COVID-19 measures. It has been 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 had been awarded contracts to work on the app, it later revealed the work involved 27 contracts with 23 unique companies.
Public Safety Minister Marco Mendicino, who is responsible for the CBSA, defended ArriveCan’s cost 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 continue for those who want to use it.”
Fahd Ananta, an investor at Roach Capital who previously held senior product manager roles at Snapchat and Shopify, said he couldn’t figure out how ArriveCan’s price soared to over $54 million.
He said that in his experience, building an app for a major enterprise client would cost no more than about $1.5 million, and the developers would be happy to land such a large contract.
“It’s outrageous,” he said in an interview. “In my opinion, I think they got scammed.”
Similarly, Gautam Lohia, CEO of Apply Digital, which has created many apps, told the Globe that his company has created complex software for global organizations with all-in costs in the seven to eight figure range for a product comparable to ArriveCan.
“I’ve used it a few times and it’s not complex,” he said of the government app. “Fifty-four million over a period of two and a half years is excessive.”
The Globe spoke to a total of seven Canadian-based technology leaders on Thursday for their thoughts on the price and the government’s approach to outsourcing related work. All seven said the app was technically relatively simple and shouldn’t have cost nearly $54 million.
Richard Hyatt, an entrepreneur who has founded several tech companies and is currently CEO of Candr, which makes it easier to use QR codes, described the ArriveCan app as “awful” and called for a review of why the costs have climbed so high.
“It doesn’t make sense,” he said.
Zain Manji, co-founder of Lazer Technologies, said the government’s approach raises many questions about its decision-making.
“The amount spent on the app is shocking, especially when it comes to the amount of capital spent building the app and the distribution of funds,” he said.
Nick Van Weerdenburg, CEO and founder of Toronto-based Rangle, said his company probably could have built the app in less than a month for around $250,000.
“It’s a very simple app,” he said.
He added that it is “completely unacceptable” that the government has turned to a company that has mainly outsourced the work to contractors. He said there are about 100 Canadian tech companies that probably could have built the app directly for a lot less.
John Ruffolo, founder and managing partner of Maverix Private Equity and co-founder of the Canadian Council of Innovators, said Ottawa should do more to support Canada’s tech sector through procurement. Yet when a Canadian company is hired and relies primarily on unidentified subcontractors, there is no guarantee that the work will stay in Canada.
“That seems like an outrageously high amount of money to pay for a fairly mundane app,” he said.
Conservative MP and public safety critic Raquel Dancho said in an interview that all pandemic-related spending and contracts should be audited. Ms Dancho said the app had been criticized as an irritant at the Canada-US border and should have been scrapped a long time ago. Although it hasn’t been mandatory since September 30, Ms Dancho said it should be dropped.
“It would be inappropriate to continue something that is so expensive,” she said.
NDP MP Taylor Bachrach says the Liberal government has not been transparent about ArriveCan’s cost and has repeatedly chosen to “enrich private companies” through outsourcing rather than bolstering the public service of Canada.
With reporting by Sean Silcoff