Government Operations Committee on June 17th, 2008

[The Chair, Liberal, Diane Marleau]

Thank you.

Mr. Moore.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Thank you for being here as witnesses, and my thanks also to Messrs. O'Neil, Lynt, and MacDonald. Thank you for taking the time out from building your businesses to be witnesses, to give us your information and feedback on this process.

Any government that comes into office, Liberal or Conservative, has an obligation to examine the status quo and see whether it can be improved. We sent out requests for information, three of them on this subject. Then you have a request for proposal to see if you can increase value for taxpayers. Then there is a process of evaluation, consideration, and debate. You put the tip of your toe in the water, and the status quo seems to have a bit of a conniption fit about it. And that's fine. But we have an obligation to look beyond the status quo to find the best value for taxpayers. If it is not there, then we re-evaluate and go forward.

I've always had the view that debates are better than having competing interviews with witnesses. So if Messrs. O'Neil, Lynt, and MacDonald do not mind, I am going to take some of the questions that they put in their statements and put them to you.

To Mr. Poole, about the June 6 RFI, Mr. O'Neil says:

The government intends to bundle the commodities in the IT professional services together in order to issue four “pillar” contracts, each of a value that could exceed $1 billion annually for a period of up to 20 years. Bigger is better. This simplistic approach to problems makes absolutely no sense and could only be conceived by people who are not spending their own money. It makes no financial sense.

I invite you, Madam Saint Pierre, to comment.

[Liliane Saint Pierre]

Regarding the RFI that was put forward, my understanding is that it was related mainly to the current plan, a consultation process, which was for the government-wide enterprise network.

Regarding the benefits of such an incentive and the comments on the advantage and the best return, the value for the taxpayer, I would like to turn the question over to Mr. Poole.

[Steven Poole]

We are investigating great potential benefits for Canadian taxpayers. It's not just about the dollars; it's about the benefits of better IT security, better experiences for Canadian citizens. When they contact a call centre, those call centres should be able to talk to each other.

There are more benefits than just the dollars, and there is considerable research to show that these benefits are there. In the B.C. government they are talking about network services savings in the order of 22%. This is significant. It is worth continuing to investigate, to consult with industry, and to manage IT better.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

About the competition, Jeff Lynt, director of the Canadian Business Information Technology Network, referring to the competition and the reality of SMEs, asked why SMEs should be satisfied to subcontract to companies that they regularly beat in open, fair, and transparent competition.

[Steven Poole]

I think it's very important to understand that the SMEs, in this town in particular, get business from two directions. They get business from their work directly with the private sector, and sometimes that includes subcontracting through larger suppliers. The other thing is they get business directly with the Government of Canada. I believe we are trying to have that complementary capability there. So we believe that those opportunities are still there and that in the network services approach we're taking....

If I could just take a moment, I did take the opportunity after one of the presentations to meet with Mr. O'Neil to understand his concerns better. As a result of those discussions, I want to make absolutely certain that we're not bundling in professional services that would impact the small and medium enterprises. To me, that is consultation: we're taking the advice and we're putting that advice to good work.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Do I still have a couple of minutes?

[The Chair, Liberal, Diane Marleau]

Yes.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

What's next in terms of the time? In that there's the concern raised by CABiNET about inadequate consultation and so on, what's the timeline for the RFP? What are the next steps the department is going to undertake between now and the issuance of an RFP in terms of consultations? Who are you going to meet with, and over what timeframe?

[Liliane Saint Pierre]

The immediate next step will be to design a formal consultation process related to this initiative, piggybacked on the experience we had--it was mentioned by Mr. Proulx--with the initiative for the office supplies and temporary help a few years ago. We will be discussing developing a formal consultation process, which we will share and ask for comments, and we'll move the agenda forward.

As such, we do not expect to have a formal RFP in the fall. We'll take the time necessary to consult further formally, with the involvement of senior executives of the Department of Public Works.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

So what is the timeframe? I suppose you're leaving it loose, but do you suspect an RFP would be issued in 2008?

[Liliane Saint Pierre]

More likely it will be at the beginning of 2009.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

So the consultations will begin, when, this summer?

[Liliane Saint Pierre]

The consultations will commence this summer--August or September.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Thank you.

[The Chair, Liberal, Diane Marleau]

Thank you, Mr. Moore.

Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you, Madam Chair.

Thank you very much for coming today.

I think the big issue we find on our committee is that people come to us with all kinds of red flags. We have to draw on our witnesses, and often our concerns are put to rest, and sometimes they're not.

Our first round of witnesses said that in the bundling process that's under way there will be a couple of big winners and potentially many losers. Two of the big winners that were mentioned were CGI and IBM, which happen to be on the TPG contract. Those are two of the very big players that were mentioned as possible winners out of this deal.

Madame Saint Pierre and I have talked in the past about this contract. It's become a bit of a symbol of the problems that small and medium-sized players are having in getting contracts.

When you and Mr. Fortier were here, I was asking about the basic rules to ensure fairness. One of the issues we talked about was the fairness monitor. I asked a number of very clear and straightforward questions: is there an obligation to bring in a fairness monitor; is there a financial requirement for the fairness monitor; is this something that's discretionary? In each case the minister answered very, very clearly that a fairness monitor could be applied, but not necessarily, that there was no financial point at which it automatically kicked in.

You sat beside him. I would assume that the minister knows his stuff and that he's being backed up by his staff. Yet the further we looked into it, that doesn't seem to be the case.

We asked Mr. Shahid Minto, who was the former risk officer, about fairness monitors. He said that the fairness monitor is “a Good Housekeeping seal of approval...and it works”, and that “on all large projects there has to be a really, really strong reason not to use one”.

From our understanding, the fairness monitor kicks in at $250 million, so are we being given the wrong information here?

[Liliane saint pierre]

Madam Chair, Mr. Angus, thank you for the opportunity to speak about the fairness monitor policy.

I'll turn to English and try to be as clear as I can in relation to this.

The Department of Public Works adopted a framework in 2005 related to the fairness monitor. Since then we have had 23 situations in which a fairness monitor was used in procurements. Those could be large procurements or smaller procurements.

It is very clear in that framework that there is no mandatory requirement for a fairness monitor. That being said, it is mandatory to consider the involvement of a fairness monitor for requirements over $250 million.

In our consideration, there are certain criteria that we need to look into, such as the nature of the requirement, the complexity of the selection process, the nature of the industry, and so on.

[Charlie Angus, NDP, Timmins—James Bay, ON]

So you're basically telling me that you aren't obliged on a contract that's up to $400 million. I just wanted that on the record, because what we see written is that $250 million is the kickoff point at which the fairness monitor has to come in. We now have you on record saying, “No, that's not the case”.

I don't have much time here.

Mr. Poole, earlier one of my colleagues asked you a question about Mr. Jirka Danek, and you said he was not a shareholder, or the largest shareholder in a company, even though he works for Public Works.

You wrote a letter, though, to TPG dated May 29, 2006, stating that Mr. Danek was a controlling shareholder of a public company called Avalon Works, which has been providing service to Public Works for a number of years, and which is a significant subcontractor on the ETS contract, which is held by TPG, and which gets a significant percentage of its revenue from its relationship with TPG.

Why did you just tell us that you didn't know he was a large shareholder in a company that bids on Public Works contracts?

[Steven Poole]

The question to me earlier was specifically “is he?” Today he is not. He divested himself of all of those resources, I believe, a couple of months ago. Those resources were in a blind trust.

When Mr. Danek joined--

[Charlie Angus, NDP, Timmins—James Bay, ON]

Excuse me. When the TPG contract was going down and questions were being raised, you said there was no problem. And yet you told our committee here that he's not. You didn't add that extra addendum. You did not tell this committee that a couple of months ago he divested himself. We were led to believe, Mr. Poole, that he was not a shareholder, that he had nothing to do with it. And you look surprised. Why didn't you just tell us the truth from the beginning?

[Steven Poole]

Madam Chair, I had every intention, and I did tell the truth. I was trying to be very succinct, and I'd be happy to clarify for you. I did not intend to mislead nor do I believe I have misled this committee.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

Madame Saint Pierre, when we had that very interesting discussion with Minister Fortier, I asked another specific question--whether or not CGI was poaching and was involved with Public Works in poaching TPG staff after TPG lost that contract. The answer was very clear--no. Is that still the case?

[Liliane Saint Pierre]

That is still the case.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Okay.

This is my final question. TPG says they have written documents that state this is not the case. I asked Mr. Fortier what responsibility he would take if the Canadian public were on the hook for a $250 million lawsuit for misleading us. I asked him if he would resign if we were on the hook for mistakes that were made under his watch.

Now, we have to trust you, as a senior civil servant, that the poaching didn't take place. But if TPG can present written proof that poaching was taking place under their watch, and under your watch, what kind of responsibility are you going to take for that?