Public Accounts Committee on Dec. 7th, 2006

[Ian Bennett]

Mr. Chair, I'd like to be clear here—

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I'm asking Mr. Goodfellow this question, sir, not you. He's at the table. He designed it. I'm not looking for somebody to defend this individual. He should be able to answer the question.

[The Chair, Liberal, Shawn Murphy]

We're going to get a comment from Mr. Goodfellow. If you want to elaborate, Mr. Bennett, you can.

Mr. Goodfellow.

[Richard Goodfellow]

Thank you, Mr. Chair.

As noted in the Auditor General's report, we followed the rules of the RFP. What we said we were going to do was what we followed.

The fact that one of the estimates, and I clarify that it was an estimate.... There's no way of knowing the actual volume for property management services. If I may explain for a second, although the Auditor General asked DND to provide that information of 183 moves a year, those services are paid for by the transferees, so there's no way of accounting 100% what that actual volume is.

For estimation purposes we consulted with the interdepartmental committee, with the client departments, and we decided as a committee that that was the volume that would be used for evaluation purposes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I'm still trying to get the answer to my question on this thing.

The successful bidder on this contract, who had it before, would have known when they bid on it what those actual volumes were. They would have a pretty darned good idea, unless they were real dummies. By coincidence, if I'm correct on this point, they bid zero on this item. Is that correct, Madam Fraser?

[Sheila Fraser]

Mr. Chair, I'd like to add a point of clarification.

When we did our audit, we learned that there are terminals, in fact, in each one of the departments on which the departments can receive all of the exact information on the number of moves and the number of people who have required these services. That, in fact, is how we got the listing of 183 people over a six-year period who used those services. That information was very easily available in those two departments.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

It was zero, was it?

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Fitzpatrick.

I understand you have a clarification, Mr. Bennett.

[Ian Bennett]

Thank you, Mr. Chair. It is just a fundamental point of accountability in terms of getting the requirements for an RFP. In other words, when a requirement for any service or any good is shaped, we deal very closely with the program departments, which can look at what is needed in the current environment and what is needed going forward. In terms of asking Public Works and Government Services how it could design a process like this and how could it take these business volumes, we work very closely with departments that are required to oversee and deliver those services. So the answer to the question, in terms of how we could design a program such as this, is that we work very closely getting the best information that we can from the departments. That is the information that was reflected in the RFP.

[The Chair, Liberal, Shawn Murphy]

Before we go to Mr. Christopherson, I just want a clarification.

I'll go back to you, Mr. Goodfellow. It appears that the 60% that was in the RFP was erroneous. Have you anything to add as to how that got into the RFP, other than what you said before?

[Richard Goodfellow]

First of all, the estimates for the property management services as well as the other third-party services were virtually the same as those in the 2002 RFP, so when we re-tendered this process, that RFP at that time was only about 18 months old. Just to put it a bit into context, we were under a lot of pressure to put out that RFP very quickly, and we made a lot of improvements to the RFP. We addressed security. We did a lot of things to ensure that all bidders would have an open and fair chance of winning one or potentially both of those contracts.

Concerning the 60% volume, that was the volume that everybody was assessed on in accordance with the RFP. Even Royal LePage has to bid based on the information in the RFP. They can't use prior information. We evaluate them based on what's in their proposal.

[The Chair, Liberal, Shawn Murphy]

Thank you very much. I'm not sure that really clarifies the answer.

Mr. Christopherson, you have eight minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you very much, Chair, and thank you all for your participation today.

We have two meetings scheduled. We have a lot of ground to cover in two meetings, and I suspect that unless we start getting some “'fessing up” around here we're going to be here a lot longer than two meetings, because we have a world of difference between the Auditor General saying there are serious problems in here, serious discrepancies, lack of information, and lack of accountability.... And we're not hearing a lot of mea culpa from the departments, which means that you disagree, that you feel comfortable defending....

Before we can go any further, we have to establish who we, as the committee, are most likely to believe, because if we do believe the departments and we think the AG is way off base, we ought to adjourn at the end here and let it go. Otherwise, we have a long way to go.

Before I go any further on that, I want to afford the Auditor General an opportunity to get an answer to the second part of her question, through you, Chair, to Mr. Bennett. The Auditor General was seeking information. Anybody can correct me at any time in any of my comments if I'm off base on a factual matter. Please feel free. My understanding is that she requested certain information. She was told that wasn't available.

Now, Mr. Bennett, upon being questioned, you're saying that the committee will have it, and you'll be glad to send it to the AG, but the second part of her question was if you had it, why didn't you give it to her when she requested it.

[Ian Bennett]

Thank you for the opportunity to clarify, because it's a very important question.

I responded to the question in terms of normally--let me be as clear as I can--why you would go to a 75-25 technical to price. I tried to outline some of the factors that would contribute to that. The Auditor General did note, appropriately so, that the reasons for going to 75-25 were not on the file. And I don't mean, by any stretch, to say that documentation exists and was not forthcoming to the Auditor General. I took the question at a different level--in terms of why you would put the weighting at 75-25, and not whether you documented this on the file.

I hope that clarifies.

[David Christopherson, NDP, Hamilton Centre, ON]

I'll ask the Auditor General. Does that clarify it for you?

[Sheila Fraser]

I understood the question from Mr. Laforest as specific to this particular bid proposal and the rationale in this particular case, which was the documentation we were asking for. So I understand the documentation for this specific proposal does not exist, which is consistent with what we are saying in the report.

[David Christopherson, NDP, Hamilton Centre, ON]

This is part of the problem, the fact it doesn't exist.

I want to start with some basics, Chair, because we do have a little time.

The Auditor General said in her report, “We have concluded for two reasons that the contracts were not tendered in a fair and equitable manner.” Today the Auditor General again stated, “Government contracts should be awarded through a process that is fair, equitable, and transparent. We found important contracts that were not, despite various warning signs.”

Yet today, Mr. Bennett, in your comments in your second-to-last paragraph, you say, “In our view, which we have expressed to the Auditor General, the process we followed, taken as a whole, sufficiently compensated for any error in the one element of the RFP information, and has resulted in a fair and open competition.”

Right from the get-go the Auditor General has concluded twice that it was not fair and equitable. You, sir, are taking a position that it is. Let's have that discussion.

[Ian Bennett]

In terms of the determination of fairness, point number one is that the Auditor General concluded that we had followed the normal processes. The Auditor General was very clear in saying that in this particular instance those processes were not sufficient, given some of the questions that were forthcoming from suppliers.

Let me speak to specifics. The committee needs to know that as part of this process, when we say it was open and transparent, there was a letter of interest, there was a draft RFP on the street, and there were bidders conferences. So this opportunity to provide information to suppliers was ongoing.

Out of 289 questions raised during the bidders conference, two questions pertained to the property management aspect.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you. I appreciate that.

But if I recall correctly, I read that the Auditor General, while acknowledging that the process was followed, stated that the process itself--my words--was inherently flawed. So for you to conclude today that you still have a fair and open competition by standing behind the fact that you followed the process, when the Auditor General has acknowledged that you followed the process, but the process wasn't any good, to me still doesn't square the circle, sir.

[Ian Bennett]

Let me just expand on the context. I mentioned that this was one aspect of six that were looked at as part of the evaluation.

In terms of order of magnitude, it's probably about 10% of the total process. When you look at whether we followed through in terms of what was stipulated in the RFP, and were the bids evaluated fairly, the answer to those questions is yes.

I don't dispute that the estimates around property management were inaccurate.

[David Christopherson, NDP, Hamilton Centre, ON]

But do you still think that at the end of the day the whole thing was an open and fair competition, given that the Auditor General has said it's not fair, to use that word?

[Ian Bennett]

I think the government has a requirement to articulate how it will evaluate bids and to follow through its process and apply that in a consistent manner. And in this particular instance, that's exactly what happened.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay. I'm sure at the end of our process we'll decide whether we agree with that or disagree, with great respect.

Let me deal again with some of the obvious things as we whittle our way down.

As I understand it, part of the problem that's been identified by the Auditor General involves this whole 60% and the second figure, which was 40%, just to make it 100%. They said that in the bid, 60% of the 7,200 relocations were expected to require the property management services. And yet in the bid itself, apparently, it said that 60% of the Canadian Forces' members were renters and 40% were homeowners.

If only homeowners used this service and only 40% of the Canadian Forces own their own home, why would there be a figure that says 60% will require a management service that only people who own would need? From the get-go it seems there is conflicting information in the RFP. Can you comment on that, please?

[Ian Bennett]

I think, again, that the information reflected in the RFP was the best information that was available to the team. This was looking at the business volumes.

This is not, Mr. Chair, one person drawing up this process; this is very much a team. These are four individuals on a dedicated basis—

[David Christopherson, NDP, Hamilton Centre, ON]

I haven't accused anybody of anything. It doesn't matter to me if there's one or twenty.