Quebec SAP Project Failure Reveals Critical Compliance Failures in Public Sector IT

A judicial investigation into Quebec's Société de l'Assurance Automobile du Québec (SAAQ) has exposed fundamental compliance failures in its SAP S/4HANA implementation, resulting in a C$245 million budget overrun and catastrophic service disruptions. Judge Denis Gallant's commission report reveals systemic violations of procurement regulations, inadequate needs assessment, and misleading reporting to government stakeholders throughout the nine-year project.

The core compliance breach occurred during pre-tender planning in 2014-2015. SAAQ project leaders relied excessively on SAP for guidance about whether an ERP system was appropriate for their digital transformation goals, granting the vendor privileged access before launching competitive bidding. This violated public sector procurement principles requiring vendor-neutral evaluations. The commission documented how SAP provided system operation details to SAAQ staff while competitors Microsoft, Infor, and Oracle remained excluded from these preliminary discussions.

SAAQ's requirements analysis process contained critical flaws. Project teams scored ERP suitability across functional areas but failed to account for significant variance in results. While SAP solutions scored well for insurance functions, performance was substandard for driver licensing and vehicle registration—SAAQ's primary services. Despite this inconsistency, directors approved ERP adoption without evidence of evaluating alternatives like custom development or best-of-breed solutions, violating due diligence standards.

Procurement compliance deteriorated further during execution. In 2019, SAAQ expanded project scope to include roadside enforcement systems without competitive bidding, directly awarding the work to the existing SAP/IBM alliance. This modification circumvented mandatory public tender processes for material contract changes. Simultaneously, the project suffered from undocumented business rules, excessive customization requirements, and critical skills shortages. The agile implementation methodology exacerbated issues when undefined processes multiplied development sprints.

Financial governance collapsed as costs ballooned. The initial C$375 million build phase budget nearly doubled to C$682 million by 2020. Leadership concealed these overruns from government oversight bodies and approved improper payments, including releasing vendor funds before project completion. By deployment in February 2023, total costs reached C$1.1 billion including support contracts—seven times SAP's original estimate of C$141-163 million.

The February 2023 launch triggered compliance emergencies province-wide:

• SAAQclic online portal failures forced citizens into physical offices, creating dangerous overcrowding
• Police lost access to license verification systems, causing wrongful arrests
• Quebec's transport minister suspended ticketing for invalid licenses
• Post-implementation audits confirmed the system failed technical specifications

Judge Gallant's report mandates three compliance priorities for public sector technology projects:

1. Needs Assessment Protocol: Conduct vendor-agnostic feasibility studies documenting evaluation criteria for all solution architectures
2. Procurement Transparency: Maintain strict separation between vendors and evaluation teams during pre-tender phases
3. Honest Reporting: Implement real-time budget tracking with mandatory disclosure thresholds for deviations exceeding 15%

SAAQ now operates a heavily customized SAP S/4HANA system requiring ongoing specialized maintenance. The commission warns this implementation creates future technical debt and recommends independent audits of customization levels every two years. Public agencies must treat this case as a compliance benchmark, prioritizing rigorous process adherence over vendor relationships when deploying enterprise systems.

Official Gallant Commission Report (French) SAP Public Sector Compliance Framework Canadian Treasury Board Procurement Guidelines