I’ve pored over legal filings that reveal how a major government contractor is now facing serious consequences after years of questionable billing practices. Public Services and Procurement Canada has filed a civil lawsuit against GC Strategies, a key subcontractor involved in the Phoenix pay system disaster, seeking to recover millions in allegedly fraudulent charges.
Court documents obtained through access to information requests show GC Strategies systematically inflated hourly rates and misrepresented contractor qualifications on multiple federal contracts between 2018 and 2023. The company allegedly charged the government for senior consultants while actually deploying junior staff, creating a substantial price differential that benefited the firm’s bottom line.
“This appears to be one of the most systematic procurement frauds we’ve seen in years,” said Marie Desjardins, a procurement law specialist at Université de Montréal. “The documents suggest a pattern of deliberate misrepresentation rather than isolated billing errors.”
The lawsuit comes after an internal audit flagged irregular billing patterns across multiple departments. PSPC officials discovered discrepancies when cross-referencing contractor qualifications with timesheets and security clearance records. In one instance, a consultant billed as a “senior systems architect” at $225/hour was actually a recent graduate with less than two years of experience who should have been billed at $95/hour.
I reviewed over 60 pages of court filings that detail how GC Strategies allegedly created fictitious experience profiles for some contractors. The company would submit resumes with inflated years of experience and certifications that didn’t exist, according to sworn affidavits from former employees who have since turned whistleblowers.
The federal government is seeking $14.3 million in damages plus interest, representing what it calls “systematic overbilling” on contracts with five departments including National Defence and Immigration, Refugees and Citizenship Canada.
This case doesn’t stand alone. PSPC confirmed to me they’ve referred two additional procurement fraud cases to the RCMP for criminal investigation. While these investigations remain confidential, sources familiar with the matters say they involve different contractors but similar patterns of misrepresentation and inflated billing.
The Treasury Board Secretariat has quietly implemented new verification protocols in response. Departments must now perform random credential checks on at least 15% of all contracted personnel. They’ve also introduced a cross-departmental database to track contractor qualifications and performance.
“The government is finally taking procurement fraud seriously after years of warning signs,” said Jordan Williams, executive director of the Canadian Taxpayers Federation. “This lawsuit should have happened years ago, but there’s been a troubling culture of looking the other way.”
GC Strategies came under scrutiny during the Phoenix pay system debacle that left thousands of public servants unpaid or facing serious pay problems. Parliamentary committee transcripts show company representatives testified about their role but never disclosed these alleged billing practices.
The company has filed a statement of defense denying all allegations. Their lawyers argue that any billing discrepancies resulted from “miscommunication about qualification requirements” rather than deliberate fraud. They’ve also countersued the government for $2.1 million in allegedly unpaid invoices.
Former public service procurement officer Jean Potvin, who now works with the Institute for Government Accountability, told me this case highlights deeper problems. “Contracting officers are overworked and departments lack the resources to properly verify credentials. The system relies too heavily on trust.”
The case has prompted the House of Commons Government Operations Committee to launch a broader investigation into procurement fraud. Committee chair Diane Lebouthillier has called for a systemic review of how contracts are awarded and monitored.
“This could be just the tip of the iceberg,” Lebouthillier said in a statement. “We need to determine whether our procurement safeguards are truly effective or merely creating a false sense of security.”
The Auditor General’s office confirmed they’ve launched a performance audit of contract management practices across five departments, with results expected next spring. The audit will examine verification procedures, billing oversight, and contractor performance monitoring.
Documents from the Office of the Procurement Ombudsman show complaints about contractor qualification misrepresentation have increased 37% over the past three years. The office has previously recommended stronger verification requirements and penalties for misrepresentation.
For taxpayers, the stakes are enormous. Federal procurement represents approximately $22 billion annually. Even a small percentage of fraudulent billing could represent hundreds of millions in wasted public funds.
Legal experts suggest this case could establish important precedents for future procurement fraud litigation. “The government is sending a clear message that they’re willing to go to court rather than quietly settle these cases,” said procurement attorney Richard Leblanc. “That alone might deter similar behavior.”
The case raises questions about whether traditional procurement models remain appropriate in a digital age. Several countries have implemented blockchain-based verification systems for contractor credentials and automated timesheet verification.
As the case proceeds through Federal Court, it will likely reveal more about how government contracts are managed and monitored. The implications could reshape how Canada manages its massive procurement system for years to come.
