Government Operations Committee on April 10th, 2008

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

I think it's fascinating that here you have a $400 million contract that drew public allegations, and you don't have any kind of fairness monitor system in place. This is $400 million of taxpayers' money. No offence, Mr. Fortier, but I think that's incredibly lax.

[Michael Fortier]

Absolutely not. We have fairness monitors when the situation warrants.

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

So is it a personal choice? At what point do you include a fairness monitor? At what point? You say sometimes.

[Michael Fortier]

It depends on the situation.

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

The situation?

[Michael Fortier]

We don't need a fairness monitor in this case. My department confirmed that the process was handled fairly and transparently and that these allegations will be fought in court.

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

So you don't have a guaranteed standard for fairness monitoring. It's at whim.

Thank you.

[The Chair, Liberal, Diane Marleau]

Thank you, Mr. Angus.

Mr. Casey.

[Bill Casey, Independent, Cumberland—Colchester—Musquodoboit Valley, NS]

Thank you.

I'm pleased to be here to ask you some questions, Minister.

I'm going to ask questions about the Victoria in-service support contract. My understanding is that Treasury Board was asked for about $1.5 billion for the total contract. And it's divided into three levels: level one maintenance; level two maintenance; and level three maintenance, extended dock and work period major submarine overhauls and refits.

The puzzling thing is, although it's a $1.5 billion contract, only $57 million has gone to tender. That's 4% of the contract; 96% is not tendered. I wonder, did the original tender include only the first level of maintenance, the second level...? I don't believe it could have included the third level of maintenance in the program. What did the first tender include?

[Michael Fortier]

My understanding is that the tender was for the entire amount. It wasn't broken down, but we'll get somebody to provide you with those details.

[Bill Casey, Independent, Cumberland—Colchester—Musquodoboit Valley, NS]

But the contract is $1.5 billion and only 4% went to tender. The contractors deemed to be the preferred bidders say that significant work packages such as submarine refits and equipment overhauls will be added by contract amendment.

This means that 4% went to tender and 96% will be added by amendments. So the amendments will be 25 times bigger than the original contract. That simply does not make sense, and it does not provide for any accountability.

[Michael Fortier]

I'll ask Liliane saint pierre to address your question. She's responsible for procurement.

Liliane.

[Liliane saint pierre, Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services]

It is true that the total estimated value of the contract could go up to $1.5 billion. For the evaluation process, we asked the companies who intended to send in their bid to provide us prices and level of effort for a total of approximately $57 million.

[Bill Casey, Independent, Cumberland—Colchester—Musquodoboit Valley, NS]

So that's the only part of the $1.5 billion contract that will go to a public tender process. Only 4% will be tendered, and 96% will not be tendered.

[Liliane saint pierre]

No, in the sense that in order to do a proper evaluation we provided the companies with a series of tasks to be performed, and we asked them to provide a level of effort against that for a total estimated price. Because there's a lot of repetition, of course--because we are talking about maintenance on that basis--then it will be pro-rated.

[Bill Casey, Independent, Cumberland—Colchester—Musquodoboit Valley, NS]

According to the contractor, there's a scheduled refit to start in early 2009. They've already said that the contract will be amended. That refit is scheduled. Will that go to tender?

[Liliane saint pierre]

The total package of work to be covered under the contract is for a potential total of $1.5 billion. Every time there is base maintenance work per year and every time there is a new work requirement, at that time we'll ask the contractor to do it, but we will have obtained the total contracting authority of up to $1.5 billion.

[Bill Casey, Independent, Cumberland—Colchester—Musquodoboit Valley, NS]

So every year it will go to public tender?

[Liliane saint pierre]

No.

[Bill Casey, Independent, Cumberland—Colchester—Musquodoboit Valley, NS]

Only the 4% of the contract is going to go to public tender?

[Liliane saint pierre]

This is quite a normal practice. With requests for proposal or tenders, we have an estimated value of work to be done that could cover 10, 15, or 20 years. We don't have all the specifics up front, so we ask the companies to provide us with level and effort prices for the first few years, and then it will be pro-rated. And each time there's work to be done in addition to the maintenance, the company will provide us with estimates at that time.

[Bill Casey, Independent, Cumberland—Colchester—Musquodoboit Valley, NS]

That company, but nobody else, will be asked to tender on it or provide prices?

[Liliane saint pierre]

No, because it was stated up front in the request for proposal. So it's very--

[Bill Casey, Independent, Cumberland—Colchester—Musquodoboit Valley, NS]

Does it make sense that the amendments are going to be 25 times more than the original contract? Does that make sense to anybody? I don't think it does.

[Liliane saint pierre]

It is not an amendment related to increasing the value of the contract. The companies are fully aware when they bid against those requirements about the total potential business volume--