Public Accounts Committee on Feb. 27th, 2024

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Okay—

[The Chair, Conservative, John Williamson]

Be very brief, Ms. Yip.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

This is with regard to the action plan. Have you received responses from PSPC? Has it met the timeline implementation?

[Alexander Jeglic]

The responses included in the report were the actual management action plan responses. We don't comment on the action plan until we do the follow-up.

Ultimately, what you see in our report is how PSPC, Shared Services and the CBSA responded to our recommendations and what they suggested they will put in place to respond to our recommendations. In terms of me being able to comment on their effectiveness, I wouldn't be able to truly do that until after we do our follow-up review.

[The Chair, Conservative, John Williamson]

Thank you very much.

Ms. Sinclair‑Desgagné, you have the floor for two and a half minutes. You'll also have another turn after that.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you, Mr. Chair.

I'll pick up on my previous question right away.

We heard your criteria for awarding contracts on a non‑competitive basis. We're familiar with these criteria. This isn't the issue. My question concerned the proportion of these contracts within the government.

By 2023, with the pandemic over, an emergency exception could no longer be invoked. Financial reasons aren't at stake either. We're seeing contracts over $100,000 awarded on a non‑competitive basis.

Is it normal that, under these circumstances, departments such as Public Services and Procurement Canada have awarded 27% of their contracts, or over a quarter of their contracts, through a non‑competitive process?

In other words, is it normal for the government to have awarded 7,600 contracts on a non‑competitive basis in 2023 alone?

[Alexander Jeglic]

I apologize for not answering your question more directly.

In terms of the frequency with which this has been happening more recently, outside of the pandemic, I will refer back to part of my answer. There were certainly contemplated exceptions in that the frequency with which those exceptions were invoked depended on the circumstance. I hope the frequency with which the emergency exception is invoked is greatly diminished over time.

During the pandemic—

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

I can confirm that more and more contracts are being awarded on a non‑competitive basis, even since the end of the pandemic. If a number of these contracts were awarded during the pandemic, even more were awarded in 2023. The exception for emergencies no longer applies.

Why are even more contracts being awarded on a non‑competitive basis?

[Alexander Jeglic]

I would love to answer that question as directly as possible, but again, not having done a review in this area, I would be speculating as to why that might be happening.

I think the first thing I would want to know is specifically which exception is being invoked to allow that to happen. If it's because of a low dollar value, I'll note we wrote a paper on economies of scale and fiscal efficiency associated with when one should direct a contract for low dollar value threshold procurements. If it's for the other three exceptions, being that there's only one supplier, I think it would be troubling to learn that the frequency with which that exception is being invoked has escalated. However, again, I don't know that to be a fact.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Okay. However, you can confirm that this should be a minority of cases.

[Alexander Jeglic]

It has to meet the requirements of the regulations.

I'm not trying to skirt your question. I don't want to create a volume assessment. If it meets the exception and it's appropriate, it should be invoked.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

However, not just any exception can be invoked.

[Alexander Jeglic]

Exactly.

[The Chair, Conservative, John Williamson]

Thank you.

Ms. Gazan, you have the floor for two and a half minutes. You'll have an additional turn after this one.

[Leah Gazan, NDP, Winnipeg Centre, MB]

Thank you so much.

I want to build on what I was asking before, because it seems that with the outsourcing the way it is, it's impossible to hold these companies accountable. It almost seems like it would be easier to invest in training the public service to fill this gap, rather than make the same mistake over and over again with the same results.

We've heard of many private companies being untrustworthy and being unreliable resources to undertake the work. This was according to the Auditor General, who said it's impossible to determine the actual cost. It is concerning because, again, these are taxpayer dollars and we should know and be able to very clearly confirm costs related to government spending.

To the Office of the Auditor General, in your recommendations in report 1 on ArriveCAN, you highlighted that procurement decisions “did not support value for money” and that government departments did not document due diligence. I'll ask you this again. Did a breakdown in internal public service capacity cause this issue? What were your key findings and opinion in this regard?

[The Chair, Conservative, John Williamson]

You have about a minute. If you finish before, that's fine. It's just so you know.

[Andrew Hayes]

Thank you.

What we highlighted in our report was a continued reliance on external resources. At the outset of the pandemic when there was an emergency, the Canada Border Services Agency determined that it needed external resources. What we would have expected is an analysis along the way to identify whether it could reduce its reliance on external resources. We included an exhibit in the report that showed the difference between the reliance on external resources and internal resources.

We also put out some numbers about the average per diem cost. The daily cost of external resources was $1,090, whereas the average daily cost for an equivalent IT position in the government was $675. That's a little more than $400 difference, which reinforces the point that it's important to a look at when you can reduce your reliance on external contractors.

[The Chair, Conservative, John Williamson]

Thank you. That was well done.

Next we're turning back to Mrs. Block.

I know I cut off an answer that I think you were in the process of hearing, but it was repetition. It's over to you for five minutes, please.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Mr. Chair. I appreciate the diligence you are demonstrating in keeping us to the time we have been given.

Mr. Jeglic, I'm going to come back to you.

Throughout the course of our study on ArriveCAN, we have identified what I would say are extensive issues with scrutinizing subcontractors. In fact, we've learned from departments that the scrutiny of subcontractors is far less than for contractors. The Office of the Auditor General made it very clear to us at their appearance at OGGO that their mandate restricts their ability to audit subcontractors, especially relating to value for money.

Does this issue of the inability to scrutinize perhaps even the volume of times that subcontractors are used concern you? Do you have the ability to make any recommendations on how to implement more oversight of subcontractors in government contracts?

[Alexander Jeglic]

I will answer the question backwards in the sense that we hear from subcontractors specifically within our office about issues they're experiencing with the prime contractor. They're looking for our services in hopes that we can help them. Unfortunately we cannot. We have limitations similar to those of the OAG.

That being said—and again, I didn't make this recommendation—by listening to much of the testimony here and before the OGGO committee, I see there is a need for more transparency associated with monies from the federal purse that flow down to subcontractors. I understand there are obviously privity-of-contract issues associated with information shared between the primes and subcontractors and sub-subcontractors, but I think when you're involved in federal government contracting, there is an obligation of transparency.

While I couldn't make that recommendation because it wasn't appropriate given the parties subjected to this review, it's certainly an issue that I think warrants a significant analysis to see whether it's possible. I think it would help address some of the issues that we're seeing.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

I'm going to turn now to Mr. Hayes and the Office of the Auditor General.

At a previous meeting, I noted the Auditor General's report mentioned that CBSA had added a firm to a task authorization under GC Strategies rather than contracting the firm directly. When I asked if you knew who that firm was, you said at the time you didn't. Then you provided me with the answer at the very end of the meeting, and I think KPMG was the firm that had been added to a task authorization form of GC Strategies.

Since this company was not approached to do the work and was added to a task authorization form to become a subcontractor for GC Strategies, were you able to determine the value for money of their work? I'm suspecting maybe not because they were a subcontractor. Can you comment on whether or not it would have been cheaper for CBSA to contract this firm directly rather than making them a subcontractor of GC Strategies? Doesn't that have the appearance of providing GC Strategies with an additional cut?

[Andrew Hayes]

It was a confusing situation, quite frankly. Having a subcontractor the agency identified put through the GC Strategies contract meant that the terms and conditions of the contract with GC Strategies applied, meaning they got their finder's fee for having a subcontractor even though it was the agency that identified the resource.

Ultimately, to the nub your question, I think it cost more because they shouldn't have had to pay for GC Strategies' portion of that. They could have just paid KPMG for it if they had put a contract directly in place with KPMG.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

[The Chair, Conservative, John Williamson]

Thank you very much, Mrs. Block.

We're turning now to Ms. Bradford.

You have the floor for five minutes, please.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you very much.

As you know, this particular topic has been examined extensively. This is our fifth meeting, and it was referred to OGGO. As it has been examined extensively, it's getting hard to come up with new questions.

I just want to get your take, Mr. Jeglic, from the opposite perspective, on one posed to the Auditor General's office earlier.

The Auditor General's report noted that Public Services and Procurement Canada “challenged the Canada Border Services Agency for proposing and using non‑competitive processes for ArriveCAN and recommended various alternatives.” From your perspective of procurement, why did they do that?