OTTAWA -- The federal procurement department has asked the RCMP to investigate at least $5 million in suspected fraud by IT sub-contractors who were billing multiple departments for the same work and taking advantage of poor data-sharing inside the government.

Procurement Minister Jean-Yves Duclos said a recent data review, prompted by a call to a tipline, uncovered three fraudulent billing schemes that were being used between 2018 and 2022.

Duclos said his department has revoked or suspended the security clearance of the contractors and is taking action to recover the money.

The department said in a press release that this is a "first wave" of cases and it expects there will be more in the coming months. Officials said another five to 10 cases are being examined, though they could not provide an estimate of how much money is involved.

"The good news, if there is good news here, is that it shows that the investments in what we call electronic procurement, in data-gathering and data analytics, over the last few years are starting to work really well," Duclos said at a press conference.

The IT sub-contractors in the cases that are now being investigated by police submitted timesheets and billed departments under separate contracts. The scheme involved 36 federal departments, agencies and Crown corporations.

Duclos said the sub-contractors took advantage of the fact that most of the invoicing was done on paper, making comparisons of data difficult.

"Until now, there has not been any sign that this was due to mismanagement within the federal government," he said, adding no one has lost their job and an internal investigation is ongoing.

The government said it is not naming the individuals or departments involved to protect the integrity of the RCMP investigation.

The cases are not related to the ArriveCan application, which has been the subject of numerous investigations, independent reports and studies by parliamentary committees in recent months.

The main contractors that worked on the app, which was created during the COVID-19 pandemic, have been criticized for billing millions of dollars and sub-contracting out the work of building it.

The two-person firm GC Strategies got a sole-source contract for the work and billed an estimated $19 million, according to a report by the federal auditor general -- though the company insists it was closer to $11 million.

Auditor general Karen Hogan's report on the controversial contracts found the government's record-keeping was poor and its reliance on outside contractors allowed the cost to balloon to $60 million.

Conservative critic Michael Barrett said his party had to fight to get the auditor involved in the first place. "That's the type of transparency that they're not willing to put forward," he said.

The government suspended its contracts with GC Strategies late last year and has now suspended its security status.

Treasury Board President Anita Anand said Wednesday that the auditor's findings were "very concerning and unacceptable," and she announced new measures aimed at increasing oversight of contracting.

"This is a very serious issue and it deserves a very serious response," Anand said.

The comptroller-general will begin a horizontal audit of a number of government departments to assess decision-making, controls and governance of contracts next month, she said.

The guidance given to departments last fall on procuring professional services has been updated to reinforce managers' responsibilities, and a revised directive on conflict of interest will enforce that conflicts must be disclosed at the time of contracting.

"What we need to ensure is not only the accountability of the public service employee who is entering into that contract, but the responsibility and accountability of the deputy heads and managers who are overseeing those individuals," she said.

Anand said a public servant who fails to disclose a potential conflict of interest can be terminated under the current policies.

Duclos also said his department is creating a new office of supplier integrity and compliance, which will replace the existing integrity regime in May.

Under the current regime, the department cannot take action against suppliers that have been accused of serious offences ranging from human trafficking to fraud to environmental law violations.

The changes will allow it to suspend or debar contractors for things like Criminal Code offences as well as violations of financial, environmental and election laws.

The federal government will also be able to take action against contractors that have been debarred by provinces or other countries.

This report by The Canadian Press was first published March 20, 2024.