Government Operations Committee on Feb. 15th, 2007

[The Chair, Liberal, Diane Marleau]

We're just at the end of our time. If you have one comment, that's it.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

I'm sorry, I accepted your invitation that this be a bipartisan or non-partisan matter and I thought I addressed it that way; that's not what I'm getting back. Minister, apparently I'm not going to get straight answers. I'm sorry about that, because I think this is a very serious matter.

[The Chair, Liberal, Diane Marleau]

We will go to Mr. Poilievre.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Further to that, when Mr. Brison was Minister of Public Works and Government Services, he said, “The truth is, being a landlord is not a core business of government, nor should it be.” That was in the Winnipeg Sun on September 22, 2004. He also indicated to the Canadian Club that “...there is real opportunity for savings in our real estate area where we now spend $3 billion a year. Again, why shouldn't we aim to save about 10% a year by doing business better and more efficiently”, and he describes “more efficiently” as the use of leases with private sector landlords. That is the principal tool for finding those savings. It was Mr. Brison's position and the position of the previous government that Canadian taxpayers would reap serious savings by using private sector landlords and signing quality leases with those private sector landlords.

Is that your understanding?

[Michael Fortier]

It was, after I got my way through the 350-page RFP, Mr. Poilievre. That was my reading of it.

I don't want to turn this into a partisan issue, because Monsieur Bélanger is right, it is not a partisan issue, except that at the end of the day...if the banks are all getting out of bricks and mortar and if most Canadian companies that are in the business of delivering services to consumers are not owners of real estate, what do we know that they don't know?

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

You're right. Mr. Brison said as a result that we are not a particularly good landlord, and he was referring to the government. Our core function as a government is not to be a landlord, so you are continuing in the philosophy that he initiated as minister.

[Michael Fortier]

The approach I have, Mr. Poilievre, is very different. As I said, it looked as though he wanted to spin off 372 buildings lock, stock, and barrel. I restricted the review, Mr. Poilievre, to 40 — a sample of 10% — and asked the experts to come back to us with options.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

My question is about procurement, which is a major issue for ridings in the National Capital Region.

The former government had introduced a process that changed the government procurement system. This change is of concern to a number of small companies that supply goods and services to the government.

Could you tell us how you will protect the competitiveness of smaller companies, in order to ensure that our government takes greater advantage of the opportunities available by doing business with these smaller companies?

[Michael Fortier]

As you know, Mr. Poilievre, last April we opened offices throughout the country to support small- and medium-sized businesses.

As I mentioned earlier, these offices have already had some success. In fact, they get over 500 calls a month.

We found out that the vast majority of the 800 companies that have registered to do business with the Government of Canada since the announcement was made last April are SMEs.

Since you are speaking about the Ottawa region, I would mention that there are many smaller companies here. They were very concerned about the fact that the changes to the supply process would have a particularly negative impact on them.

Over the summer and fall, as you know, I made some adjustments to the approach regarding the calls for tenders. We eliminated some of the irritants for some of these small companies, for example the one that required what is known as the reverse option. So the reverse option was eliminated. It was an irritant for a number of these small firms. We worked together with a third party, the Conference Board, which sounded out these companies and took an interest in their views. A number of meetings were held here and elsewhere in the country—but particularly here, since you were speaking about Ottawa—in order to find out about their concerns. I know that we have found solutions to the vast majority of the problems they raised.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Excellent.

I would like to thank you for your efforts to improve relations between the government, your department and small- and medium-sized businesses. I am hearing fewer complaints now than before, and I think that the situation is gradually improving.

What more can be done to ensure that our smaller companies can be genuine partners in our procurement system?

[Michael Fortier]

As I said earlier, we have already taken a number of important steps. The procurement code, which will be in place soon, will be another step in the right direction. Essentially, the rules in place between suppliers and the government will be properly laid down.

We are going to restore trust. You are right when you say that trust did exist, because you referred to that indirectly. Perhaps the trust was broken. We must forget the past and try to rebuild bridges.

I think we are moving in the right direction. In light of the comments I am hearing, the small- and medium-sized business community seems satisfied with the progress made to date.

[The Chair, Liberal, Diane Marleau]

Thank you. You have used up your seven minutes.

We will now move to a five-minute round.

Mr. Wrzesnewskyj.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you, Chair.

Thank you, Minister, for appearing before us.

I find it quite ironic that a multi-billion-dollar defence and military procurement contract—and it's Boeing I'm referring to—meant to safeguard Canadians and Canadian sovereignty would in fact be the construct that undermines fundamental pillars of Canadian society. U.S. ITAR legislation undermines our Charter of Rights, forcing Canadian companies to discriminate against Canadians born in certain countries.

In Canada we do not discriminate amongst Canadians based on their place of birth. In fact, a colleague of ours, a member of Parliament, Omar Alghabra, who has been entrusted by Canadians to pass legislation in our House of Commons, would not be allowed to work on this contract.

Secondly, this contract fundamentally undermines Canada's sovereignty. Although Americans are our friends, only Canadian laws should apply on Canadian soil. We need to stand up for legislative sovereignty.

Yesterday in the Senate, Minister, you stated, “The good news is that such cases are rare. That is very good news...”. Just recently here in committee, you said you were proud of this particular contract. Minister, how can you categorize as good news any breaching of Canada's Charter of Rights and Freedoms or of legislative sovereignty on Canada's soil?

[Michael Fortier]

It is not being breached by the acquisition of the Boeing aircraft.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

There's a $1 billion contract to be spent here in Canada. Can you guarantee that as part of this contract, as part of the service contract, $1 billion will be spent in Canada? In fact, 30% is aimed at your province of Quebec. You've been arguing for a bigger percentage, at 50%, but that's a separate issue. It's a $1 billion contract that undermines our Charter of Rights and Freedoms and our legislative sovereignty.

Can you guarantee that the ITAR conditions will not apply? In fact, will you go one step further and inform all Canadian companies and subsidiaries of foreign companies operating in Canada that they must abide by Canadian law, by the Canadian Charter of Rights and Freedoms, by Canadian sovereignty? In fact, you mentioned here that you have a code of conduct for procurement. Will you specifically put in your code of conduct that ITAR rules will not apply, that Canada's Charter of Rights must be subscribed to, and that our sovereignty will not be undermined?

[Michael Fortier]

Maybe I'm confusing two issues, but I think there are two issues at stake here. One is the purchase of the aircraft, and then there are regional benefits, or “benefits flowing from”. I think you're referring to the latter. Boeing or any other foreign company that's subject to foreign legislation will sign contracts with Canadian companies to supply them with parts on whatever piece or asset they're building.

With respect to those contracts that are between a Canadian private company and another private company based offshore, this is a Foreign Affairs issue. As you know, my colleague Mr. MacKay has told his counterpart and the Prime Minister has told the President that we reject the notion of extraterritoriality.

We made those statements known to our counterparts in the U.S., and the charter applies in Canada. Those individuals who believe their rights have been violated as Canadians will take action in the context of which these rights have been violated.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Minister, with all due respect, we should not put the onus on Canadians to have to go to the courts to protect their rights, especially when dealing with government contracts. It should be up to the Canadian government to protect Canadian rights and to uphold Canadian laws.

You have a code of conduct that you put together. Will you put in it, as points within that code of conduct, that we expect Canadian companies and subsidiaries of foreign companies to subscribe to Canadian legislation and not to foreign legislation?

[Michael Fortier]

That's my point about the confusion. These are not contracts. That is why I wanted to make the distinction. It was to make sure we're talking about the same thing. These are contracts between a foreign manufacturer and a Canadian supplier. That's different.

You seem to be insinuating that the Canadian government—

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

I'm sorry, but you just said they're with Canadian companies or with subsidiaries of foreign companies on Canadian soil. What laws apply on Canadian soil?

[Michael Fortier]

Between a private company and the U.S. company with respect to their commercial relationships, obviously the laws in Canada apply to the Canadian company in the way it conducts itself. Canadian laws apply everywhere.

[The Chair, Liberal, Diane Marleau]

Thank you very much. Your time is up.

Monsieur Nadeau.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you, Madam Chair.

Good afternoon, Ms. Kenny, Mr. Marshall and Mr. Fortier.

I would like to raise three points. The five minutes will go by quickly, but I will try to touch on all of these matters. We have heard talk about selling buildings. You mention some 40 buildings. That is your plan.

In a regional context, will there be an effort made to respect the 25:75 ratio that is often mentioned—namely that federal jobs on the Outaouais side of the river would increase from 18.9% to 25%? Is that part of this proposal?

[Michael Fortier]

Not exactly, Mr. Nadeau, because of the buildings in the greater Ottawa region included in the sample of 40—unless I am mistaken, and Mr. Marshall will correct me if I am—none are located on the other side of the river. However, I may be wrong about that.

Are there any buildings in the 40 on the other side of the river? No.

[Richard Nadeau, Bloc, Gatineau, QC]

Have you started to develop a plan with respect to the 25:75 ratio? If I recall correctly, last time, you said you were at the drawing board, and about to develop a plan to achieve this objective.

[Michael Fortier]

The drawing board is still in place. The plans are becoming clearer. Of course, we must proceed in accordance with the government's needs in the Ottawa region.

I do not want to create a situation whereby there would be a move to the other side of the river unless there are commercial reasons for doing so. Consequently, we must take into account the expiry dates of the leases and prepare future investments in accordance with the dates on which the current leases expire.