Government Operations Committee on May 17th, 2007

[Liliane Saint Pierre]

When we receive requests, apart from specifications—pumps, in this case—we have to check to see whether the good that we have to purchase is subject to a free trade agreement or not. It depends on the nature of the good and its value.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

All right. So the free trade agreements count.

There are three local chambers of commerce in my riding. As much as possible, I buy the products of my riding. Buying local is important, and I encourage my fellow citizens. Do you have that philosophy in your department? Is buying Canadian important? Are we encouraging our Canadian labour force, or the American labour force?

[Liliane Saint Pierre]

For all purchases that are not covered by free trade agreements, so low-value purchases like purchases of goods under $32,000, we strongly encourage the use of credit cards, which enables the departments and regional government offices to buy directly in the region. That in itself stimulates local procurement.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Yes, but let's suppose it's a $60,000 pump. It could be a $3 million Boeing aircraft.

[Liliane Saint Pierre]

Let's take the example of the $60,000 pump. That purchase is subject to and covered by the free trade agreements. Consequently, we have a legal obligation to issue a call to tender to all businesses in the countries that have signed a free trade agreement.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Would it be possible for you—

[The Vice-Chair, Conservative, Daryl Kramp]

Your five minutes are now up. Thank you, Madame Bourgeois.

Mr. Hawn.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Thank you, Mr. Chairman.

I have a number of questions, none of them too long.

Under socio-economic impact, you talked about the amount set aside for aboriginal, regional, environmental, and so on. Can you give me an idea of how big that is? Is it a percentage or a dollar amount?

[Liliane Saint Pierre]

I don't have the exact amount of the total contract value, if you wish, of procurement that we did last year related to set-asides.

Having said that, I think it's very important to understand what a set-aside does. As soon as we start a procurement process by which we identify a set-aside, such as the aboriginal, this allows us to remove that procurement from the trade agreements, which will allow us to procure in Canada.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

There was a new ITAR agreement signed today. Are you concerned with ITARs? Does that fall under your bailiwick in terms of the impact of the new agreement? You may not even know the details, and I don't.

[Liliane Saint Pierre]

I'd like to say that I don't know all the details, although I do have an expert we could call. Having said that, ITARs are very important because we are also responsible for large military procurements on which ITARs have quite an impact.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Right. So it has significant impact.

In summary notes, it says that NAFTA imposes procedural disciplines aimed at promoting transparency, predictability, and competition in public sector procurements. How has the Federal Accountability Act impacted that with respect to merging with the NAFTA procedures?

[Liliane Saint Pierre]

First, the Federal Accountability Act is a piece of legislation that has quite an impact on my world in acquisitions because it reconfirms our openness and fairness, which is the foundation of what we do.

At the same time, when you look at the FAA provisions, a procurement ombudsman needs to be appointed to review the procurement practices of the government and also to respond to vendor complaints. It's complementary to the Canadian International Trade Tribunal and others.

At the same time, our department will draft a code of conduct for procurement through the FAA, and it will be promulgated soon. The code will clarify the government's expectations from both suppliers and public servants, and it will strengthen our commitment to openness and fairness.

Finally, the FAA is also putting an emphasis on the office of small business in Canada.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

There's no conflict that you see between the FAA provisions and NAFTA. You can make it work together.

[Liliane Saint Pierre]

Actually I think it's quite complementary, because as part of the mandate of the procurement ombudsman, he will look at and review some of the complaints for procurement that are under the threshold of the NAFTA.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

I assume you keep statistics on these kinds of things. We talk about Canadian content and so on. Do we track how much Canadian content we've had in government contracting over the years? Is it going up or down, or staying the same?

[Marshall Moffat]

We don't actually evaluate the Canadian content, except when trade agreements don't apply. In that case, we try to maximize Canadian content through the industrial and regional benefits policy. On all of those excluded large contracts, for example, military contracts in which we don't necessarily have to follow international trade law commitments, we maximize Canadian benefits on every single one of those huge purchases. So that's one thing we do.

In our ongoing contracting--that is, where we do have to follow trade law--we follow the law and the requirements. We don't differentiate between a Canadian-owned company operating in Canada and a foreign-owned company operating in Canada. We call both of them Canadian-based companies.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Because they're providing Canadian jobs.

[Marshall Moffat]

Exactly. When we buy from a Canadian-owned company or a foreign-owned company, we don't measure the Canadian part of the value of their product versus the foreign-produced part of the product. We don't do that. It's possible to calculate those things, but that's what the Department of International Trade, Industry Canada, and StatsCan do.

[The Vice-Chair, Conservative, Daryl Kramp]

Thank you, Mr. Moffat.

Ms. Nash.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, Mr. Chair.

Welcome to the witnesses. Thank you for your simplified complex presentations.

I want to pick up on Mr. Moffat's comments. Except for defence procurement, it seems as though the federal government has largely abandoned using procurement as a tool for industrial and regional development under trade agreements. I know in the U.S., for example, there are “buy American” programs that are exempt and there are certain minority contractors exemptions.

I'm wondering why we don't have policy flexibility here in Canada, if we're covered by the same agreement.

[Marshall Moffat]

The way the agreement was negotiated, if you had a program in place that provided domestic preference in procurement, you were allowed to keep it. It was grandfathered. But if you didn't have a program like that, you were prohibited from introducing one.

[Peggy Nash, NDP, Parkdale—High Park, ON]

So we weren't swift enough to get one in place while the negotiations were going on.

[Marshall Moffat]

I'm not sure that's a disadvantage for our companies, and I'll explain why. First of all, the free trade agreement in North America allows free trade across borders. What that means is it gives better access for our companies to bid on U.S. government business, just as it allows U.S. companies to bid on Canadian government business. But the U.S. government procurement is 15 times bigger than ours.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Is it possible to get that type of trade balance, the statistics of the trade balance, how much of the U.S. procurement goes to Canadian companies and employment, and how much of Canadian procurement goes to U.S. companies? It would be interesting to see a trade balance, and if that's changed at all since 1994, say, when NAFTA was signed, and what the balance is today. I suppose you folks have those numbers.