Government Operations Committee on Feb. 26th, 2008

[The Chair, Liberal, Diane Marleau]

Thank you, Mr. Moore.

We'll go to Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

I'm very interested in the timeline of how all this unfolded to see if there's anything of interest here.

On September 20, 2006, in the middle of the municipal election, Pierre Poilievre wrote to the city asking if they could show that there were no cost overruns associated with this project. Now, most MPs tend to crow when there's federal government money coming into their ridings. Yet Mr. Poilievre is writing to the city asking the city to show that there are no cost overruns, even though seven federal departments have already signed off.

Were you surprised by Mr. Poilievre's letter?

[Kent Kirkpatrick]

Madam Chair, I guess I would characterize it as unexpected, but there had been a fair amount of discussion at the time in terms of the extent to which the contract was a fixed-price contract. I think, as Mr. Chartrand confirmed earlier, that was the case. And more to the point, he confirmed that the federal government contribution was capped at $200 million. That was something that was made clear in the original memorandum of understanding in 2005, which was that no matter what, the federal and provincial government contributions would both be capped at $200 million.

[Charlie Angus, NDP, Timmins—James Bay, ON]

So it was unexpected. The very next day, candidate Larry O'Brien issued a public letter to John Baird basically asking the same thing. So the day after Mr. Poilievre raises it with the city, Mr. O'Brien, in the middle of the election campaign, goes public, and he asks John Baird to intervene in this situation.

Now, this is in the middle of a very contentious municipal election. I've written many letters to ministers as a member of Parliament. In fact, I wait sometimes months, sometimes half a year, for them to bother responding. And yet in the middle of a municipal campaign, John Baird responds to a candidate who obviously has his own personal interest in raising this.

Mr. Kirkpatrick, were you surprised to get the letter from John Baird asking to see the contract?

[Kent Kirkpatrick]

Through you, Madam Chair, in terms of accuracy, there was not a letter that was received. A copy of the contract was requested through the officials in the transport ministry. The purpose that was stated was that the contract was required prior to Treasury Board finally reviewing and making a decision on the file.

We were surprised. I indicated earlier that we had done a lot of work and a lot of consultation throughout the entire process, ensuring that we understood. We were able to anticipate what the information requirements were going to be of both the federal and provincial governments in terms of their due diligence and processing of this file.

I think we did that very successfully. In all cases we met all of the information requirements of both governments. And this was a requirement that had never been raised throughout that time period.

It was unexpected. In our opinion, it was unusual that a copy of the contract would be requested. There were significant commercial proprietary interest issues involved with that. It took a fair amount of consultation with the consortium to gain their approval that we would release a copy of the contract.

In doing so, we covered the contract with a letter that was very explicit and clear about what our expectations were around confidentiality and the information that was in that contract.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I was looking at this memorandum city officials wrote on October 5, after they had received this request. They stated:

Staff had not anticipated this new requirement from Treasury Board because both the Federal and Provincial governments have been quite clear over the three years of negotiations that they were not parties to the City's contract in any way. In fact, the Memorandum of Understanding between the City and the Federal and Provincial governments explicitly states that the Federal and Provincial governments were not parties to the procurement process or any contractual arrangements the City was undertaking for this project.

So on October 6 you complied with John Baird's request, and the city had included in that the letter stating that “...no information contained in the Agreement...will be disclosed to any person other than those who have need to review the Agreement for the sole purpose of the internal review by the Treasury Board”.

That was on October 6. On October 10, John Baird went to the media. He didn't go to the city. He went to the media and said that he had found in the contract the provision that allowed the contract to be extended past the election date.

Your understanding, if I'm correct, was that they wanted to see the contract to see if due diligence was being done. Instead, Mr. Baird got access to confidential contract information and basically dropped a political cluster bomb in the middle of the campaign.

Were you surprised by his actions?

[Kent Kirkpatrick]

Chair, through you, we didn't anticipate those. We would have appreciated the opportunity to clarify exactly what the purpose and intent of those clauses in the contract were for. They were for the purpose of allowing any delay in the schedule that was required in order to bring financial closure to the contract.

The city and the consortium signed the contract on September 15. The contract allowed for a period until October 15 for financial closure. That was the expectation. It also then provided for either party to have the ability to request up to a ten-day extension. There was provision for six of those, for the purposes of arranging for the completion of issues necessary for financial closure to the project. Those purposes would extend to things like getting the contribution agreements from the senior governments and to other issues that would allow for financial closure.

I can tell you this, and it's public, as I stated it back in October. The intent of those clauses in the agreement was not to allow for an extension of 60 days to allow for another council in place of a duly elected council that had made the decision on behalf of the city and its residents with years of public consultation behind it to be revisited. That was not the intent of those clauses in the contract.

We were very clear with council and with the federal government in regard to that.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Kirkpatrick--

[The Chair, Liberal, Diane Marleau]

Thanks very much. We'll get back to you.

We'll go for five minutes now.

Mr. Holland.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Thank you, Madam Chair.

I think in seven minutes Mr. Moore asked one question. This is supposed to be the opportunity to ask questions. But I found it interesting that the only thing Mr. Moore was missing was John Baird's radio ad. That's the only thing he didn't play.

But here's the problem. In that radio ad his defence of his involvement in this whole affair is that it was going to be a billion-dollar boondoggle. Yet seven different federal departments under your government signed off on this, including Treasury Board, under the condition that the new council would just have to agree with it. So seven different departments either signed off on a boondoggle, or it isn't a boondoggle.

It's not about whether light rail was a good idea or a bad idea; this is about whether or not a minister inappropriately intervened in a municipal campaign. We've established to this point that the decision to make the funding contingent until after a municipal campaign was without precedent. I've asked for an example, and it has never been given; it doesn't exist. The minister intervened in this process, and the question is why. In fact, we even learned that it's not Treasury Board's role to get involved in these particular details.

On that line, I want to come back to this point. Mr. Baird received a copy of the contract based on the condition of confidentiality. Specifically, the letter that accompanied it stated:

…delivery and acceptance of this Agreement is based on the premise that no information contained in the Agreement, and no part of the Agreement will be disclosed to any person other than those who have the need to review the Agreement for the sole purpose of the internal review by Treasury Board…

So Mr. Wouters, did you approve of Minister Baird's decision to leak these pages of the contract to the media?

[Wayne Wouters]

I was made aware by Minister Baird that he had received a copy of the contract. I indicated to him that we would do a legal assessment to determine whether delaying the decision would result in the project costs going up. We made a determination that the decision could be delayed up to December 15 without incurring additional costs. That information was relayed to the city in my letter of October 10. So I was informed by the president that he had received a copy of the contract, and we proceeded on that basis.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Did Treasury Board secure consent from either the City of Ottawa or Siemens prior to Minister Baird releasing the two pages that were released to the media?

[Wayne Wouters]

You'll have to ask Minister Baird about the release of documentation. I wasn't party to any of those discussions with the minister on the release of the information he put forward.

[Mark Holland, Liberal, Ajax—Pickering, ON]

You said you did not receive a copy of the contract. Can you tell me if anybody at Treasury Board received a copy of this contract and reviewed it? Who was advising Mr. Baird? In the four days that he had this document before releasing this to the press, from whom was he getting advice, if anybody?

[Wayne Wouters]

I wasn't aware of when the president received a copy of the contract. We had a discussion on October 9, I believe, about the contract. He indicated that he had received a copy of it. Of course there were issues at that time around the implications of not signing the contribution agreement and whether it would result in additional costs. I indicated to him that we could have our justice department lawyers take a look at it, and we did. We made a determination that according to our interpretation of the contract, the city had up until December 15 to ratify the agreement without incurring additional costs.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Minister Baird received this over the Thanksgiving long weekend, which covered three days, and then there was one additional day. So I'm hearing that over that time he didn't receive any particular advice before leaking this.

You didn't answer before—and I wonder if you could now—whether you approved of the decision to leak the information.

[Wayne Wouters]

Again, I'm not aware of any decisions the president made vis-à-vis his communications of the decisions. That was a decision of the president.

[The Chair, Liberal, Diane Marleau]

Thank you very much. Your five minutes are up.

Ms. Bourgeois, it's your turn.

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

Thank you, Madam Chair.

My questions are for Mr. Réjean Chartrand, whom I would like to get to know a little better.

You are the former director of economic development and strategic projects at the City of Ottawa. I suppose that you worked to implement the light rail project from the very beginning, is that right?

[Réjean Chartrand]

That's right.

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

The idea behind this light rail project, if I understood the documents clearly, did it come from one individual, that is, the then-mayor of Ottawa, or from city council?

[Réjean Chartrand]

In fact, these large-scale projects are always studied in depth. Conceptual studies dating from 2003 had been done for a light rail project and had received all the necessary authorizations from city council and the province of Ontario.

Further to the announcement, in spring 2004, concerning the funding that would be made available by the province and the federal government, the city immediately began the environmental impact assessment study. This study, which lasted 18 months, was approved by city council in July 2005. During that period, the city began the contracting process for the project, which had been ongoing for several years and had been presented to council on numerous occasions. I think that in the two years during which we oversaw the project, we made at least a dozen submissions to city council. All the decisions had been ratified by the council, and we continued with the project.

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

Before you left, all the loose threads of the project had been tied up and the council was going to go ahead with no problem. There was nothing to lead you to believe that you would run a deficit.

[Réjean Chartrand]

Not in terms of the budget, no. All the conditions of the contract were very clear. The risks were to be assumed by the city. The contract conditions were such that city council was very comfortable with all its clauses. In July 2006, it had approved the awarding of the contract by a vote of 14 to 7. All that was left was to sign the three-way agreement with the province and the federal government for the final approval of the federal funding.

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

So at that time, everything was ready, and then you left. Then, there were municipal elections. Do you believe that these elections had an impact on the decision as to whether to grant funding?