Government Operations Committee on May 1st, 2024

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Yes.

[The Chair, Conservative, Kelly McCauley]

Wonderful.

Mr. Bains, go ahead, sir.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. Chair.

Thank you to our department officials for joining us again today.

Elected officials come and go. I think I've heard from you that this procurement process goes back to 1995. We've heard from other witnesses in this committee about it going back to 2003, and the procurement process has not changed. My concern is that government officials have often been around for decades and they have built relationships with people. There are subcontractors and contractors. I know that concern has been raised by some of our friends across the way as well about the potential for collusion and favouritism.

I think you mentioned training that's being done on the standards for procurement and some that changes that are being made. What is PSPC doing to address the recurring issue of documentation missing from the files? I think we even heard from the minister that a new AI process might be implemented. Is that something you can give us some knowledge around?

[Arianne Reza]

It goes back a little bit to an earlier question about the implementation plan for this and other audits, and what we heard in ArriveCAN, to avoid the documentation challenges we face.

It goes back to training. We've put a new quality assurance officer in place to be able to review the material. We have been talking about e-procurement. We have been identifying what actually is part of a procurement strategy in terms of documentation. We've been looking at our own processes and looking to see how we can actually amp it up so that we have more clarity and transparency around it, including using the Treasury Board open portal and the training associated with it.

If you will permit me, I will pause here and turn to my colleague.

[Dominic Laporte]

Thank you.

DM Reza did touch on most of the elements, but also, one thing we did this week was to send.... First of all, we had a town hall with all our staff. We did make sure...because the last thing I want is for the procurement ombudsman to draw a negative inference from the lack of information on record. I think this is very unfortunate. It basically casts doubt as to the motivation of our employees. They don't want that. I think there's a clear desire to change.

We've put in something also as part of the PMAs, which are basically the management agreements of all the PGs, including me as the DG or director, to really make sure that this is a top priority. Employees, including me, will be measured against that. From now on, we'll be insisting—we've learned also from ArriveCAN—that there are some checklists there that were not there before. Coupled with that, we also have the electronic procurement solution; 98% of our procurement is now covered by that for PSPC.

So a lot of action is being taken on that front. I have to say that this is one of my key missions. A year from now, the last thing we want is to be there—explaining to this committee that there are some shortfalls in the documentation.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

On the electronic procurement process, it's an AI process.

What measures are being taken so everybody understands the standards and procedures that are needed to train on how that works?

[Dominic Laporte]

The EPS is basically a cloud-based solution. The goal is to have all the key elements. When the bid is published, bidders are going to be able to bid using that platform. All the key documents, all the interaction with contracting authorities, are no longer done by email.

In the past, for example, you used to send an email to the contracting authority, and this email maybe would get lost. Now we have a central repository of all the key information, all the interactions. I'm very hopeful that in the future we're going to be able to leverage that platform so all the mandatory requirements are going to be there for bidders. The financial evaluation is going to be there. There is still some investment training needed, but we have close to $9 billion of procurement and 8,700 contracts on the platform.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Do you have data on much of the human element and human error taken out of that?

[Dominic Laporte]

I don't have that information.

[Arianne Reza]

I think we should be clear it's not AI. It's a cloud-based system.

We've been speaking a lot about documentation and record-keeping and the importance of it. You used a word earlier that I recoiled at: “collusion”. Here at PSPC and across the Government of Canada, we look very carefully at our integrity and our stewardship, and we have a lot of things in place around collusion.

If you have a moment, Catherine—

[The Chair, Conservative, Kelly McCauley]

I'm afraid we don't have a moment. We're running out of time. Thanks.

We'll just finish up. I'm combining the next two rounds for the NDP and the Bloc. We'll do a five-minute round, and then you won't have anything next round.

Go ahead, Mrs. Vignola.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

Ms. Reza, as to the procurement ombud's recommendation regarding the verification of security requirements, PSPC indicates, in appendix I, that it implemented a new professional services procurement file completion checklist last February and that a communiqué was sent to procurement personnel in December 2023 reminding them of the security policy requirements.

Have those measures actually improved compliance with security policy requirements?

How do you assess their effectiveness or ineffectiveness?

How will you implement an action plan with objectives to ensure that the steps are followed?

[Arianne Reza]

The interesting thing is that this is a very complex issue. We manage 800,000 security clearances, including for consultants. Every year, we have to do, I believe, 100,000 security reviews. That's a lot for one department.

We also need to ensure that security-related information is properly included in the procurement records. So there are many elements that have to be updated.

Ms. Poulin can give you more details.

[Catherine Poulin, Assistant Deputy Minister, Departmental Oversight Branch, Department of Public Works and Government Services]

Good afternoon.

Thank you very much for the question.

First, it's important to distinguish between documentation prepared for employee security clearances and documentation for departmental security clearances.

In his report, the ombud mentioned two areas where there was insufficient documentation. The first was that employee security clearances weren't documented. It should be noted that the contract security program includes a system for checking whether people have received the correct security clearance. This can be verified by a phone call or email, but the procurement file is missing evidence of that verification.

The second deficiency involved contract security. It's important to return the contract—

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

I'm sorry to interrupt you. I think my question was misunderstood.

PSPC indicated, in appendix I, that it had implemented a new checklist and sent a communiqué to staff reminding them of the security policy requirements. That's what you've done.

My question is this: How do you ensure that all aspects of that security policy have indeed been fully implemented?

I'm not talking about what the ombud said. I'm putting the monkey on your back. How do you ensure that employees follow the rules strictly?

[Catherine Poulin]

Thank you very much for the question.

It's not a matter of security but rather of documentation. As my colleague said earlier, we want procurement files to include a checklist indicating that a clearance was completed and that it has been recorded in the contract security program system.

My colleague explained the measures he was going to put in place, the information he provided to employees and the checks that would be done in each file. The goal is to ensure that there has been a call or email confirming that the security requirements have been met.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Will these checks result in a report or will a parliamentary committee ultimately have to examine this in depth?

Is there an automatic process to ensure that employees who don't do what needs to be done are informed and receive training?

[Catherine Poulin]

I'm going to give the floor to my colleague from the Procurement Branch.

[Dominic Laporte]

Thank you.

We're in the process of putting measures in place. I think employees want to show that they've done their jobs, and we have had very good co-operation so far.

Our directors will follow up closely on quality assurance. In addition, they'll sit down with employees to remind them why we're doing this, which is always a good thing to do.

They'll also review their files for any potential deficiencies. This will then be brought to my attention and that of Ms. Royds in a biweekly report so we can identify any problems and offer further training or take any necessary corrective action.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

[The Chair, Conservative, Kelly McCauley]

We go to Mr. Bachrach, and then, as soon as he's done, we will suspend.

Mr. Bachrach, please go ahead.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thanks, Mr. Chair.

I go back to this issue of changing the procurement strategy midstream, and this is under line of enquiry one, “Competitive procurement practices leading to contracts awarded to McKinsey”. The ombudsman lays out a storyline that, I think for most people, seems inappropriate, and this is with regard to a contract for $452,000 procured by ISED. They had originally considered issuing a contract directly using a non-competitive process, and then a review board internally said, “No, that's not appropriate,” which is good—the checks and balances worked. Then they reached out proactively to McKinsey and provided them with a link to the task-based supply arrangement, and in response McKinsey said, “No, we don't qualify for that.” ISED came back to them again and said, “Hey, good news. We've changed it. Now it's a solution-based supply arrangement.”

Getting back to what we saw with ArriveCAN, there's this situation in which the vendors and people in charge of procurement are in consultation and communication about the shape of the actual procurement process. How is the public to understand this as anything other than completely inappropriate?

[Arianne Reza]

From the outset, I'm going to say that PSPC was not involved in this procurement, so I'm going to give some broadline observations.

The methods of supply for this space of professional services are extremely complex. On the face of it, the issue about which method of supply to use and pairing it, or this view that there's favouritism, may be only that the methods of supply themselves did not lend themselves to the right bidder. It's not always an issue of trying to say that you need to go through this method of supply versus another. I think that's a key piece of information that needs to be understood, because most of our clients don't understand which method of supply is actually the suitable method of supply. That's the first thing I want to draw to your attention.

The second thing I want to draw is that, in this particular case, I believe they competed the solicitation, but again, we need ISED at the table.

[Dominic Laporte]

I'm going to also add that changing from task-based to solution-based is encouraged under the directive on procurement. We want to de-risk procurement. I cannot talk about the motivation in that case but, basically, we want suppliers to take on more risk and client departments to take on less, so in and of itself it's not necessarily a bad outcome.

Not having been involved and not talking on behalf of ISED, I have to say this is now something that we're asking managers to do: Go to solution-based and stay away from task-based. Give that risk to the supplier instead of taking it on.

The outcome appears to me to be positive, so without—

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I accept that. Solution-based is better, but in this case, it's the chain of events. It's offering them this meal and then they say, “No, I can't do gluten.” Then, “Well, we have this other meal for you, so how about this?” It's that communication back and forth that makes it look to the public like things are getting cooked for a specific supplier.

If I go back to the ombudsman's report, he says, very clearly, “Collectively, these observations create a strong perception of favouritism towards McKinsey”. Changing procurement strategies to allow for McKinsey's participation is one of the observations that led to that conclusion.

I don't have your response in front of me right now, but is that one of the conclusions you accepted in your response to the report?