Public Accounts Committee on June 13th, 2007

[The Vice-Chair, Conservative, Brian Fitzpatrick]

I'm going to call this meeting to order.

Pursuant to Standing Order 108(3)(g), we are considering chapter 7, “Acquisition of Leased Office Space”, of the May 2006 report of the Auditor General of Canada, which was referred to the committee on May 16, 2006.

We have here as a witness today Mr. Claude Drouin, who was a member of the House of Commons for a good number of years, and a minister of the crown.

It's good to see you back today, Mr. Drouin. You look as though you're in good health, and the world is treating you well. Welcome to our committee.

Without much further ado, do you have an opening statement, Mr. Drouin?

[Claude Drouin, As an Individual]

Thank you, Mr. Chairman.

I would briefly like to thank you for your warm welcome. It is a pleasure to be here, to see the faces of former colleagues and to see new ones. I will do my best to answer your questions as clearly as possible.

[The Vice-Chair, Conservative, Brian Fitzpatrick]

Thank you very much, Mr. Drouin.

The Liberals are first on the list.

Madam Sgro, are you going to lead off?

[Judy Sgro, Liberal, York West, ON]

I'll start until my colleague....

[The Vice-Chair, Conservative, Brian Fitzpatrick]

Okay.

It's usually Borys who is anxious to get going on these things, but I don't know, he's letting us down a bit.

[Judy Sgro, Liberal, York West, ON]

I know, but he's tired. He's had a very busy couple of days, evidently.

Mr. Drouin, it's good to see you back with us, and it's nice to see you again.

[Claude Drouin]

Thank you.

[Judy Sgro, Liberal, York West, ON]

You're well aware of the issue that's under discussion here today, and what your involvement was in that whole decision-making process. I assume that you followed what the committee has discussed and talked about. Do you have some comments that you want to add to explain further your involvement in the process?

[Claude Drouin]

Thank you for giving me the opportunity, at the outset, to answer that question.

It should not be forgotten that when I was appointed Minister of State for the Economic Development Agency of Canada at the beginning of 2002, the Deputy Minister at the time, Mr. Gladu, in the course of a weekly meeting with my chief of staff, revealed to us that we were suppose to move. I asked him why. He explained that there had been a competitive tendering process and that the lowest bidder was Place Bonaventure. So I said that we would move, that we would respect the process and go to Place Bonaventure.

He also mentioned then that Place Bonaventure, which was located across from Place Victoria, was a concrete building through which trains passed, whereas Place Victoria had windows and was a better work environment for employees who had been there for about 30 years already. There were also other problems. The cost of the move was about $1 million, and so on. I told him I did not understand. Since there had been a tendering process, we had to move. I asked him whether he was suggesting that we look at other locations.

That's when I decided to do something. I did so in a very transparent manner by sending a letter to the Minister of Public Works of the time asking him to see whether it was possible to reduce the costs—I was told that the move would cost $1 million—and, in the interest of the well-being of employees, whether it was possible to move elsewhere while respecting the rules. So that's what I did. That was it. I wrote that letter in good faith.

At the time, the mission of the Economic Development Agency of Canada was to help companies increase their productivity and find new markets. As it turned out, there was less money available because of the commitments made by my predecessor. I did not see why we should spend $1 million on the move rather than using the money to help Quebeckers develop economic opportunities. But I was told that we would need the space in Place Bonaventure for public servants and that it would probably be all right for us to stay where we were. What happened afterwards was completely in the hands of the Department of Public Works. I did not intervene in any way.

That, Ms. Sgro, is more or less what happened.

[Judy Sgro, Liberal, York West, ON]

Were the employees anxious to make the move?

[Claude Drouin]

Based on the information I had at the time, no one wanted to move and the work environment was very different in the other place. I was also told about the moving costs. I repeat: the move would have cost $1 million. I was told that there would also be a loss of productivity, because no work could be done during the move. I was told that employees would be on stand-by for at least one week. I was also told that some files could be lost, and other such things. That's why I looked into the matter.

[Judy Sgro, Liberal, York West, ON]

And that was the extent of your involvement in the decision to remain there?

[Claude Drouin]

Absolutely, and that's why I was very surprised at being called before your committee today.

[Judy Sgro, Liberal, York West, ON]

Okay. That's fine. Thank you very much.

[Claude Drouin]

You're welcome.

[The Vice-Chair, Conservative, Brian Fitzpatrick]

Mr. Laforest.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chairman.

Good afternoon, Mr. Drouin. You justify writing the letter to the Minister of Public Works and Government Services because of potential savings of a million dollars in moving costs.

Were you aware that the lease had been signed so that the Economic Development Agency of Canada could move into Place Bonaventure?

Therefore, when you made your written request, you ended up with two buildings for the same department. That obviously ended up costing a lot of money, which the Auditor General assessed at $4.6 million. If you subtract the million dollars saved by not moving, as you claim, the fact remains that your intervention ended up costing an additional $3.6 million. This is significant, despite the reasons you have given, such as moving costs, and so on. I think you would also agree that the fact that there had been a tendering process meant that the needs had been evaluated first.

I'll put the question to you. Don't you find that... You cannot justify the decision on the sole basis that a million dollars were saved in moving costs when it generated an additional $4.6 million in expenses.

[Claude Drouin]

Mr. Laforest, it is important that you understand that the Economic Development Agency of Canada did not initiate the tendering process; it was the Department of Public Works and Government Services.

Second, the government needed additional office space for its employees. What I was told at the time is that even if we did not move into Place Bonaventure, the rented space would be filled by other federal public servants. So no money would have been wasted. All I asked for was that the situation be studied. I originally wanted the agency to move in order to comply with the tendering process. I was told that the Department of Public Works and Government Services would need additional office space and that it might not cause any problems if we stayed where we were . The minister of the day asked the bureaucrats and departmental officials to assess the situation and to see whether everyone could live with it.

I don't know, I did not see the numbers. I do not want to engage in a war of numbers. All I can tell you is that the original asking price of the Tour de la Bourse, at Place Victoria, was $430 per square meter, I believe. We ultimately agreed on $308 per square metre. If you talk about $4.6 million — and I don't want to get into this — it is not at all the same thing especially if, in the end, a million dollars was saved and office space was used by federal public servants.

I repeat, Mr. Laforest: my goal was to make sure that the Economic Development Agency of Canada, which did not have a lot of money at the time and whose mission was to promote economic development throughout Quebec—and your colleagues regularly questioned me...

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Sure, Mr. Drouin. A little earlier you said...

[Claude Drouin]

I did not want to invest a million dollars in a move. I wanted to use the money to help companies create jobs and generate economic growth.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

You said a few moments ago that it was not the Economic Development Agency of Canada which ultimately decided to remain at Place Victoria. Nevertheless, you made that request. Surely it was the Economic Development Agency of Canada which asked the Department of Public Works and Government Services Canada to move. The department would not have made the unilateral decision to move the agency without its consent. It was the agency which asked the Department of Public Works and Government Services Canada to move elsewhere because it needed more space.

However, after you intervened, the lowest bidder was shunted aside. Place Bonaventure was cheaper than Place Victoria. So cheaper office space was found, but the agency nevertheless stayed at Place Victoria, and this ended up costing up to $4.6 million. It was not an insignificant amount, even though it was not only the Economic Development Agency of Canada which was saving money. That seems fairly significant to me.

Did you know who the landlord of Place Victoria was?

[Claude Drouin]

No, I did not know, but if I may, Mr. Chairman...

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Did you know that members of the Saputo family were aware of the situation and that they were generous donors to the Liberal Party of Canada?

[Claude Drouin]

No, that's news to me. I really did not know.

Nobody came to see me. I learned about it from my deputy minister. You must realize that when a lease ends, Public Works and Government Services Canada must automatically initiate a tendering process. That's what I understood. The lease was up, and Public Works and Government Services Canada initiated a tendering process. That happened before I was appointed. After I was appointed, my deputy minister, Mr. Gladu, told me that we were moving. I had no objection to the move and to respecting the process. He explained to me that the move would probably cost a million dollars, perhaps more, and that there would be a loss of productivity and that the employees would be unhappy. I asked him whether he wanted me to do something about it. I did not understand why he was telling me this. I also pointed out to him that he was simultaneously telling me that there had been a tendering process, which had to be respected, but that it did not make sense.

I therefore decided to make a written request. It was transparent. It was above board. We wanted to make sure that it could happen, if possible, in accordance with the rules, without spending a penny of taxpayers' money. If it was not possible, we would have moved into Place Bonaventure, which is located just across the street.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Don't you think that this was much more of an administrative matter and that your intervention was political?

Normally a minister is not responsible for the office accommodation of his department's employees. It's a matter of administrative organization. How can you justify sending that letter, and why was it necessary?