Evidence of meeting #32 for Public Accounts in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was contract.
A recording is available from Parliament.
3:35 p.m.
Liberal
The Chair Liberal Shawn Murphy
I'd like at this point in time to call the meeting to order and to welcome everyone here.
This meeting is called pursuant to the Standing Orders and we're dealing with chapter 5, “Relocating Members of the Canadian Forces, RCMP, and Federal Public Service”.
We have quite a host of people, and I will get the individuals to introduce their own associates when I call upon them to speak.
Monsieur Laforest.
3:35 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
I have a point of order, Mr. Chairman.
At our last meeting, the committee members agreed to vote on a list of people. You told us that we did not need to do that in the case of Mr. Marshall, the Deputy Minister of Public Works and Government Services, given that he was invited to be here today.
Given that he is not here, but that it is still just as important to have him come, I think that we should immediately adopt a motion to have Mr. Marshall appear as a witness at our next meeting.
3:35 p.m.
Liberal
The Chair Liberal Shawn Murphy
If I may, I was going to mention this in my remarks, Monsieur Laforest.
On that particular issue, you're quite right. Mr. Marshall was invited to attend and Mr. Marshall did agree to attend and he was of course scheduled to be here. I did receive a phone call late yesterday afternoon from Mr. Marshall indicating that he had been scheduled for surgery out of town and he was called and it's being done today. In fact, it was out of the country, actually. Given that, and that there will be a week of recuperation, I didn't think I had any choice. He did indicate his associate deputy minister would be here and that his associate would be fully briefed on the file.
The way I would like to handle it is I would like the meeting to proceed. At the end of the second meeting, if we feel, as a committee, collectively, that we need the attendance of Mr. Marshall, he is certainly willing to come before the committee. That is something we could probably better deliberate upon at the end of the second meeting.
3:35 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Although the deputy minister told you that the people replacing him know the file just as well as he does, we do not have any guarantee that these people were there when the decisions were made.
Given that this is an important issue, that hundreds of millions of dollars are involved and that we had agreed that the deputy minister was to appear to answer our questions, I believe that it is important that he come here himself. I am proposing this motion and I would like the committee members to be able to vote on it.
3:40 p.m.
Liberal
The Chair Liberal Shawn Murphy
I agree with you that we should vote on it, Mr. Laforest, but I would like to have the vote at the end of the second meeting. At that time we'll be better able to determine whether or not we do need him. Again, there is nobody more determined than me to get deputies here, but in this case he did inform the committee that he was scheduled for surgery, and I certainly accepted that. We couldn't cancel the meeting.
What I would like to do is this, Mr. Laforest. I accept your points; they're all valid. But I believe the motion should be voted upon at the end of the second meeting, because Mr. Marshall is not going to be here today, as you can see, and he's not going to be here on Tuesday. At that point in time we'll all be able to make an informed decision, collectively, on whether or not we want to hear from him.
Mr. Williams, do you have a comment on this issue?
3:40 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Mr. Chairman, I would like to point to you that witnesses have seen Mr. Marshall in his office today. I do want to move my motion.
3:40 p.m.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Thank you, Mr. Chair.
If Mr. Marshall is having surgery, first of all, I'm sure the entire committee wishes him well and a speedy recovery. I hope it's not serious.
The second point is that once we have determined we're going to have a hearing on a subject, we normally leave it up to the clerk to determine when the meeting will be held. I agree with Mr. Laforest. Having the deputy here on a serious matter involving hundreds of millions of dollars is important.
I'm trying to find out why we insist on having these meetings when these people can't show up. Why don't we have the clerk schedule the meetings with the witnesses we want, so we don't run into this problem of all these people and members of Parliament here when the important witnesses can't be?
I think we have to get this organization going, Mr. Chairman. I would like to talk to Mr. Marshall. He has some explaining to do on behalf of his department. If we're going to be prevented from that because we, as a committee, without consulting the witnesses, said the meeting has to be today, then we're as much at fault as he or anybody else.
Perhaps we should think these things through and ensure that the committee does work well and gets the job done properly.
3:40 p.m.
Liberal
The Chair Liberal Shawn Murphy
In response to Mr. Williams, he did call late yesterday afternoon. I didn't feel it was appropriate to cancel the meeting at that late notice.
Mr. Laforest, are you prepared to leave the voting until the end of the second meeting?
3:40 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Mr. Chairman, I want the vote to be held at the end of the first meeting, that is, today.
3:40 p.m.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
Yes. I've given the clerk a document. I want it tabled and circulated to the committee. It pertains to one of our previous meetings. I think, without a doubt, it resolves an issue we had some serious disagreement on, which was whether the minister, Anne McLellan, was briefed on the firearms issue. It's a letter from William Baker to the Honourable Anne McLellan dated January 30, 2004. The second paragraph on the second page, without a doubt, shows she was fully briefed. I'd like that document circulated to all committee members.
3:40 p.m.
Conservative
3:40 p.m.
Liberal
Marcel Proulx Liberal Hull—Aylmer, QC
You let Mr. Fitzpatrick finish, but in fact he was out of order. This meeting has been convened to discuss chapter 5, not the previous report.
Thank you anyway, Mr. Chair.
3:40 p.m.
Liberal
The Chair Liberal Shawn Murphy
Mr. Proulx, let me rule on that.
Mr. Fitzpatrick is entitled to table the document. I assume it's in both official languages. We accept it for tabling and for no other purpose. I'm not going to hear any more comments on what is in the document. The document, I assume, will speak for itself.
Anybody else? Okay then, we're going to move on, people.
Before we call upon the auditor for opening remarks, I want to make a couple of comments if I may. I want to remind all members that this is a committee of accountability; it's not a committee of management. We're here at this meeting to review the operation of the government insofar as this particular instance has occurred. We're looking at the issues of prudence, probity, efficiency, economy, and whether taxpayers' money was spent wisely. We're dealing with an issue of procurement and government contracting policies and whether the rules were followed and the principles of transparency and fairness adhered to.
We understand we have two representatives from Envoy. They're not here today. They're coming next Tuesday. I just want to remind the members of the committee--and I wanted to do it at the first opportunity--that those companies were not audited by the Auditor General. It's not our mandate to go outside the activities of government. However, these witnesses may corroborate or explain deficiencies in certain government contracting practices.
We're certainly not a committee of adjudication or retribution, and certainly I hope we don't get into such issues. I urge members to stay focused.
3:45 p.m.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
I'm perplexed that we're bringing the private sector people into this investigation.
3:45 p.m.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Quoting the Auditor General, she states specifically that “it must be noted that our conclusions about management practices and actions refer only to those of government departments.” She did not audit them, she did not ask them very much in the way of questions, because that's not her responsibility. As we know, she cannot go outside government in her audit. Therefore, I'm at a loss to try to understand why we are now bringing in the private sector to have them answer these questions, because it is not within our purview, Mr. Chairman. Our job is to hold the government accountable.
If the government made a mistake in awarding a contract, then the government has to explain itself, which is why it would be nice if Mr. Marshall were here. But if they submitted the contract in accordance with a request for a proposal, and if the government made a decision to give them the contract, then they have nothing to say. If the government failed to administer the contract properly and ensure that all documentation was in order, they have nothing to say on that matter either. So I am actually at a loss to find out why they're coming here. Perhaps someone can explain that to me, Mr. Chair.
3:45 p.m.
Liberal
The Chair Liberal Shawn Murphy
Mr. Williams, very briefly, that was a vote at the last meeting. You weren't here when they voted to add those two witnesses to the witness list. I agree with your comments, by the way, but that's how they came to be here, so I'd rather continue on with the hearing.
Mr. Christopherson, do you have anything to add to this?
3:45 p.m.
NDP
David Christopherson NDP Hamilton Centre, ON
I didn't know whether you were going to entertain discussion on whether or not we were going to continue with those witnesses. From the comment you've just made, I assume that the motion passed and it stands the way it is.
3:45 p.m.
Liberal
The Chair Liberal Shawn Murphy
Yes.
Ms. Fraser, you have an opening comment. Perhaps I'll ask you to introduce your associates too.
3:45 p.m.
Sheila Fraser Auditor General of Canada, Office of the Auditor General of Canada
Thank you, Mr. Chair.
We thank you for this opportunity to present the results of chapter 5 of our November 2006 report. It's entitled “Relocating Members of the Canadian Forces, RCMP, and Federal Public Service”.
I am accompanied today by Ronnie Campbell, Assistant Auditor General, and Bruce Sloan, senior principal, who were responsible for this audit.
In 2005 the integrated relocation program handled the relocation of approximately 15,000 members of the Canadian Forces, the RCMP, and the federal public service, at a cost of about $272 million. Members of the Canadian Forces account for almost 85% of these relocations each year.
Our audit has raised a number of important issues regarding the integrity of the contracting process that led to the awarding of the two relocation contracts, and regarding the Department of National Defence's control of funds expended under the program. Our audit also raised concerns regarding the assessment of the program's effectiveness. Let me elaborate on these issues.
Government contracts should be awarded through a process that is fair, equitable, and transparent. We found that these contracts were not awarded through such a process, despite various warning signs. The request for proposal contained materially incorrect business volumes that gave an unfair advantage to the bidder who had the previous contract.
The request for proposal indicated that for each year of the contract, approximately 7,200 members of the Canadian Forces would use property management services. However, actual usage volumes provided by the Department of National Defence revealed that between 1999 and 2005, only 183 members, or approximately 30 members a year, used property management services.
It is essential to the integrity of government contracting activities that data contained in key contracting documents, such as the request for proposal, be complete and accurate. This is particularly important when one of the potential bidders is currently delivering the service under an existing contract.
The committee may wish to ask the Department of National Defence how it certifies the accuracy of data provided to Public Works for inclusion in requests for proposals. The committee may also wish to seek clarification from Public Works regarding how it verifies information provided by client departments when concerns are raised by potential bidders.
In our audit, we found that the Department of National Defence has inadequate financial controls in place for reimbursing the contractor for payments made on the government's behalf. The contractor is responsible for issuing advances to Canadian Forces members and payments to various service providers, such as realtors, lawyers, appraisers, and home inspectors. In 2005 these expenses were almost $180 million.
During the audit, National Defence indicated that it had begun to develop systems and processes that would strengthen its control over these payments. The committee may therefore wish to ask the Department of National Defence what steps have been taken to strengthen the department's control over these expenditures, and when this work will be completed.
In our audit, we also found that rates paid by the members of the Canadian Forces for property management services exceeded the ceiling rate established in the contract. Some Canadian Forces members paid amounts ranging from $800 to $8,000 for a service that the contract indicated would be provided at no charge. The committee may wish to ask the Department of National Defence what steps will be taken to ensure that these members are reimbursed the amounts that they paid for property management services.
A key objective of the Integrated Relocation Program is to provide members of the Canadian Forces, RCMP and federal public service with flexible relocation benefits that improve their quality of life. In our audit we found no evidence that the Treasury Board Secretariat, or the other departments, formally measure the program's performance.
The committee may wish to ask the departments what steps will be taken to measure the program's effectiveness in providing flexible relocation benefits that contribute to an improved quality of life.
Mr. Chairman, that concludes my opening statement. We would be pleased to answer your committee's questions.
3:50 p.m.
Liberal
The Chair Liberal Shawn Murphy
Thank you very much, Ms. Fraser.
I'm now going to call upon Ian Bennett, who is the acting assistant deputy minister with the Department of Public Works and Government Services.
Mr. Bennett, welcome to the committee. Also, perhaps I'll ask you to introduce your associates who are here with you today.