Canada Post announced another step in a significant corporate shakeup Tuesday that will see its IT services division – currently called Innovapost – sold off to Deloitte Canada.
The agreement means Deloitte, a professional services company that includes auditors and consultants, will deliver and support Canada Post’s day-to-day IT operational services. The majority of Innovapost’s employees will be transferred to Deloitte, while a “dedicated leadership team” will remain with Canada Post.
The federal Crown corporation currently oversees three subsidiaries, including Innovapost Inc., Purolator and SCI Group Inc., a logistics division. They are described as the Canada Post Group of Companies.
Last week Canada Post announced it was selling the SCI Group Inc. to Montreal-based Metro Supply Chain Inc. On Tuesday, it announced the sale of Innovapost, which is a shared services corporation that provides IT services and is 98 per cent owned by the Canada Post Group.
In a news release announcing the sale, Canada Post said Deloitte Canada is “a leader in IT operations and solutions that is known for addressing complex business challenges with world-class capabilities, insights, and service.”
“Today is the start of an exciting journey to transform Canada Post’s information technology model so that we can better meet the demands of our customers, particularly in the competitive parcel market,” Doug Ettinger, president and chief executive officer of Canada Post, said in a statement.
Anthony Viel, CEO at Deloitte Canada, said “the Innovapost team will complement our team to inspire innovation, collaboration with organizations to evolve their business, economic growth and productivity.”
Financial terms of the deal were not announced Tuesday. Canada Post spokesperson Jon Hamilton said further details will be released in public financial statements once the sale is finalized.
Canada Post said the sale followed a detailed examination, which concluded that “the current shared-service model was not providing the speed and agility needed to compete today and in the future.”
Canada Post also said that the sale and agreements with Deloitte Canada followed “a comprehensive, multi-stage bidder selection process.”
In November, Canada Post recorded a loss before tax of $290-million in the third quarter because of declining revenue. For the first three quarters of the year, the Group of Companies recorded a loss before tax of $442-million, compared with a loss before tax of $300-million in the same period of 2022.
The federal government’s increasing use of private IT services and consultants has been under growing scrutiny. The House of Commons committee on government operations is studying the growth in outsourcing and some testimony has been critical of Deloitte’s performance.
Committee member and NDP MP Gord Johns said the Canada Post sale goes against the Liberal government’s recent claims that it will cut back on outsourcing.
“Now they’re just selling public parts of government,” he said. “They’re going to rely on [Deloitte] now permanently to provide critical and essential assets to a Crown corporation.”
As part of its work, the committee has held hearings into how the cost of the ArriveCan app for international travellers grew to in excess of $54-million. The committee is also reviewing who made the decision at the Canada Border Services Agency to award a two-person IT staffing company called GCStrategies the most outsourcing work related to that project.
On Nov. 7, former CBSA official Cameron MacDonald said he presented his superior, then CBSA vice-president Minh Doan, with two options for outsourcing ArriveCan work: GCStrategies or Deloitte.
“I believe Minh Doan made the decision to go with GCStrategies because of the fact that he had been told he could not use Deloitte. Deloitte was in a timeout penalty box, so to speak,” Mr. MacDonald told MPs, adding that it was his understanding that this order came from then-president John Ossowski.
Mr. MacDonald, who left CBSA to become an assistant deputy minister at Health Canada, later told MPs that Deloitte was in the penalty box because the agency had hired the company for $350-million worth of work on a digital renewal project called CARM, or the CBSA Assessment and Revenue Management project, and “it wasn’t going well.”
Mr. Doan, who is now chief technology officer for the Government of Canada, appeared at a later date and told MPs that he did not recall using the term penalty box.
Mr. MacDonald has since been suspended without pay in connection to allegations of misconduct. In a letter obtained by The Globe and Mail, Mr. MacDonald told the government operations committee that his suspension is an intimidation effort aimed at silencing his criticism of senior government officials.