Evidence of meeting #12 for Government Operations and Estimates in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was snc-lavalin.
A recording is available from Parliament.
3:55 p.m.
Conservative
3:55 p.m.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
Thank you very much, Mr. Chairman.
Mr. Beaulieu, thank you for being here.
I understood that you are a business owner and that you have been working on contract for Public Works and Government Services for at least 30 years. Is your business specialized in exterior building envelopes? Tell me a bit more about your business.
3:55 p.m.
Building Science Consultant, CABA Building Consultants Inc.
In fact, my business specializes in assessing the state of the exterior shell of buildings. For example, we studied the state of the marble cladding of the walls at l'Esplanade Laurier; we studied all of the brick siding on the Terrasses de la Chaudière; we studied all of the exterior siding of the buildings of phases I, II, III and IV of Place du Portage; we have studied all of the buildings, such as the Promenade building on Sparks Street or another example is the Jeanne-Mance building. Currently, we have a contract with Brookfield Renewable Power Inc—perhaps you know them—to assess the state of all of their dams on the du Lièvre river. We are therefore a business specializing in the study of the behaviour and degradation of building sidings.
In the Outaouais region, we know that the buildings are not young—particularly the one in which we find ourselves today. As a result, there is maintenance that must be done on these buildings. We must repair what is particularly subjected to inclement weather, such as stone or brick, that is to say everything that may freeze, thaw, and crack. This will require maintenance. The firm that I manage is a company of engineers specialized in this area. We assess the state of the exterior siding of a building, we say what repairs are required, and we prepare documents for the work to be done and manage that work. We do not do the work. We are like the building doctors, if you will.
4 p.m.
Conservative
4 p.m.
Building Science Consultant, CABA Building Consultants Inc.
We submit it to the client. In the case of SNC-Lavalin, they retain our services and ask us to assess the state of the walls of the Parliament buildings in Ottawa, for example. In that case, we would send a team that would go up on scaffolding to study the walls and check if the pointing in the stonework is solid. In the end, after a month or two, we would submit quite a detailed report on the state of the Parliament buildings and we would give our recommendations on the repairs to be done.
Currently, we have just completed a study on the brick siding on the Hull hospital—this is a building that is some 60 years old—and we submitted a report to them on the state of the exterior siding, the work required and its cost. Therefore, we study the building, we diagnose the problems, and provide information on the repairs to be done and the cost of doing them.
4 p.m.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
Do you think that doing business with specialists such as yourself to undertake these studies is more profitable for the Government of Canada than having their own engineers within Public Works and Government Services?
4 p.m.
Building Science Consultant, CABA Building Consultants Inc.
Absolutely, because we are bound by the obligation to perform.
Currently, we are dealing with the National Research Council of Canada, where a building will be renovated. As we have been hired to do the drawings for all the outer walls—which are made of glass—we met with the people from the council. When they presented us with their documents and drawings, we explained to them that their plan had faults and shortcomings. They told us that they had nevertheless spent two years drawing them. A private business would have drawn those plans in six months and there would probably have been fewer flaws. The people at the council have more time; they are not obliged to be profitable when they do a drawing. Therefore, they can take much more time, that is not a problem. They can stretch that out over several years. But for a private business, there is an obligation to be accountable.
For example, if you ask me for a quote to examine your house and I tell you it will cost $1,000, I cannot spend six months with you because I am only charging you $1,000. I must therefore be cost-effective. If I tell you it will be $1,000, I will do the work within a week so that it will not be too costly and so that you will have good performance.
Therefore, because of this obligation to be accountable, it is always more beneficial and cost-effective for government organizations to do business with private businesses.
4 p.m.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
It is no doubt the same thing for those who implement your reports. Will the workers who use your reports, your suggestions and your expertise be more efficient than employees who work full-time for the government?
4 p.m.
Building Science Consultant, CABA Building Consultants Inc.
It is the same thing for a business; it is an issue of accountability. When they bid on a job, the less time it takes, the more profitable it will be, the more it will be cost-effective. In any case, they will have technical documents to follow. They will therefore be obliged to follow those documents that have been prepared in order to do the repairs.
4 p.m.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
You indeed experienced the period before SNC-Lavalin and after. Have your business's sales gone down since that time?
4 p.m.
Building Science Consultant, CABA Building Consultants Inc.
No, I cannot say that my sales have gone down. What is much weaker is the relationship we have with the managers. The biggest difference is that before, we knew if we had contracts and why if we did not. Now, what we do not know is what contracts we are not getting, what contracts we might have had as well as what contracts we did not get and why we did not get them.
Finally, the biggest difference is that before, we worked in the light of day. Now, we are obliged to buy a hat with a head lamp so that we will be able to work in the dark because we work in the greatest obscurity.
4 p.m.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
In the end, you are saying that there is lot more uncertainty as far as being awarded contracts is concerned. Do you have any way of getting around...
4 p.m.
Building Science Consultant, CABA Building Consultants Inc.
It is not an issue of uncertainty, it is rather an issue of what is unknown. The problem is that now, I do not know what contracts are on offer. The government is not telling me, and the manager is not telling me. As I was explaining earlier on, if you are doing some work at your house and you do not tell me, I cannot offer you my services. You are therefore denied yourself my services. If PWGSC was more supportive of its manager, SNC-Lavalin, they would probably get better service. In fact, if the manager calls three of his friends to get bids, he will get a price from those three businesses. Unfortunately, there may not be one good bid among them. However, if he does so publicly and he receives 60 bids of which 14 are good, if he takes the cheapest one, everyone will save money. The government would get the best price and the best consultant or service provider.
4:05 p.m.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
I have a final, brief question. Does the situation make it more difficult for you to retain your engineers and experts? You might have to reduce or increase your staff from one month to the next or from one year to the next.
4:05 p.m.
Building Science Consultant, CABA Building Consultants Inc.
No, that does not affect our operations. As I explained a bit earlier, we get a lot of contracts from private companies and other organizations. What we do not obtain with PWGSC, we get with other businesses. As I explained to Mr. Nadeau, I am not here to look for work. I am not looking for any; I am very busy. We have many contracts. As I was saying earlier, our firm was founded almost 30 years ago. It is recognized in its field. We do not need to call people and offer them our services, they are calling us. I am here to inform you about how SNC-Lavalin awards contracts to professional firms in order for you to exert pressure and help change the way contracts are awarded, so that the government better control the process and generate more savings. That is all.
4:05 p.m.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
In your view, and given the state of Canadian buildings. will business be good for you over the next 10 years? As you are an expert on outside walls, you no doubt have carried out projections as to how your business will fare over the next few years.
4:05 p.m.
Building Science Consultant, CABA Building Consultants Inc.
We might consider those things, but if the old buildings are not rehabilitated, we will not have any work.
4:05 p.m.
Conservative
April 26th, 2010 / 4:05 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
Thank you, Chair.
Mr. Beaulieu, thank you for being here.
I want to say I'm very sympathetic to what you've told us about your situation. I'm also very concerned about what you've shared with us, because our main concern as the government operations committee--an oversight committee on government spending--is that we're getting the best value possible for our tax dollars.
This is a huge amount of money to deal with the maintenance of 319 buildings, but from what you've told us I understand there's very little true competition left in the tendering process in the administration of these contracts. We don't know if we're getting the best value unless we test the market with a true and open competition.
Do you know if SNC-Lavalin operates on a cost-plus basis? In other words, do they accept your price, add 10% or 15%, and then submit that to the federal government? Is that their modus operandi?
4:05 p.m.
Building Science Consultant, CABA Building Consultants Inc.
From what I know of SNC-Lavalin's contracts, the firm does add a certain percentage to the contracts and mandates that it offers. I cannot say whether it does that for all contracts, but that is certainly the case with professional services. If I am asked to bid in order to do work or offer professional services to SNC-Lavalin, and I submit a $25,000 bid, SNC-Lavalin will top up that amount with its contract management expenses.
To my knowledge, SNC-Lavalin marks up all the contracts it offers and awards.
4:05 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
As a management fee.
My first reaction to that is why don't we just cut out the middle man and go directly to you, to the one delivering the service? One newspaper article we have here says that their management fee is about 14%, which is quite generous. An architect's fee for a building is about 7%. Even in the sponsorship scandal, their standard markup fee for advertising contracts was only 16%. It seems like a very generous markup.
It almost seems like SNC-Lavalin has a monopoly on this work. It seems as if Public Works has simply off-loaded the obligation for the responsibility of all these buildings to SNC-Lavalin. To me, that's not an efficient or effective use of taxpayers' dollars. I'm very concerned.
I want to thank you for bringing this to our attention, because all of us were shocked when we saw some of these figures. Maybe they're gross examples: $1,000 for the installation of a bell somewhere, and $2,000 for the purchase of two green plants. Is it your opinion--and I won't ask you to go too far out on a limb--that perhaps we're paying more than we need to for the maintenance and administration of this building stock?
4:10 p.m.
Building Science Consultant, CABA Building Consultants Inc.
It is difficult for me to say that the government is paying too much, because there is a problem of transparency. We do not know the costs, and neither do you. I cannot compare the costs for Public Works Canada to costs that are unknown. As I was saying earlier, we are in the dark. The rules might be appropriate, but I have strong doubts about that. A process that is completely transparent allows for better competitiveness among companies and helps lower prices. If you ask a number of entrepreneurs to tender for work, and you tell me that one of them has bid $1,000, I will be tempted to ask for $900 if I am interested in obtaining the contract.
4:10 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
Apples to apples--that's real competition. I think you need to have that open. Even in the construction industry they structure themselves, with the bidding process they have in their construction associations, so there is that honesty and you can test the marketplace effectively. I think we've gone down a very dangerous road here.
We had similar testimony regarding the IT services for the Government of Canada. Some of the small contractors came to this committee and said it almost seemed that the government had bundled the work into a package so large that only a select few companies could compete.
SNC-Lavalin is like the Wal-Mart of engineering, in a sense. I think it undermines and defeats small and medium-sized entrepreneurs from taking part in all the procurement of government services out there for building management.
I don't know if I have any further questions, other than to say I'm very sympathetic to the facts you've brought to us here and to your situation as a small, honest, local businessman who would like to be able to participate directly with the federal government.
I can tell you that when we write this report I will be in support of Mr. Nadeau's position that we should revisit the awarding of these government maintenance contracts to ensure that small and medium-sized businesses like yours have a fair opportunity to deal directly with the federal government.
If I have any time left I will share it with my colleague, Mr. Nadeau, if he has any other questions.
