Government Operations Committee on April 10th, 2008

[Michael Fortier]

I don't know whether we have a document that we can table. As you know, it's a matter of real property space. Last spring, we announced the construction of two office buildings in Gatineau. So that will take us to that 75:25 ratio, and even better. If you want, we'll table a document that presents the denominator, that indicates how the ratio is calculated.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

I was using your expression. In your presentation, you told us: “[...] we have a plan in place to achieve the 75:25 ratio [...]” I thought you could table it.

[Michael Fortier]

To achieve it, we have to build two towers in Gatineau, Mr. Ménard. That's the plan.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

That's fine.

I have one final question. Since I've been in public life, I have noticed that one thing is at least as difficult to predict as legal fees, even more so. And that is computer costs. There are considerable cost increases. I believe that the increase in firearm control management is due to that increase. We also had problems in Quebec when I was minister. When you want to implement projects and you request the cost of computers, you get the most diverse range of figures. I have previously spoken about that to the Auditor General, who acknowledged that it was indeed very difficult.

You come from the business world. You know all the advances that have been made in computer technology. Surely you must have had the same difficulties. Could you tell us how the computer costs of a new project can be anticipated?

[Michael Fortier]

You're talking about a new project.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

What method do you use?

[Michael Fortier]

In fact, new projects aren't our biggest challenge. Here I'm somewhat exceeding the framework of my responsibilities. Nevertheless, as I said earlier, we spend nearly $5 billion a year in the computer field, for either software or other goods.

I was really reassured to see that the Treasury Board had retained the services of a very experienced computer person. He's a man who was previously at Public Works Canada. So he was transferred or promoted. He now has an overview. When I arrived, I was worried and wondered whether someone somewhere understood all the system interrelationships and noted on a list the various types of software used from one department to the next, even within the departments. I've noted a distinct improvement since I've been here, both in my department and in government. Have we reached the point where we should be? That's the direction we're heading in.

As regards costs, since you mentioned them, I'll say that with regard to government operations and our total expenditures, that $5 billion amount is not disproportionate, Mr. Ménard. It's consistent with the ratios prevailing in the private sector.

[The Chair, Liberal, Diane Marleau]

Thank you, Mr. Fortier.

We'll now go to Mr. Brown.

[Patrick Brown, Conservative, Barrie, ON]

Thank you.

Thank you, Minister Fortier, for coming here again. You've been generous in your frequent visits to this committee.

I wonder if you could update the committee on the LEED standards and the greening of government assets and vehicle fleets. What initiatives are being taken to adopt a green approach?

[Michael Fortier]

With the exception of emergency vehicles for the RCMP and military vehicles, the executive fleet is being replaced by hybrid cars. As soon as a vehicle needs to be replaced, it will be replaced by a hybrid automobile. Folks at this table could tell you how many non-hybrid vehicles remain to be replaced, but as months go by, that denominator is going to go down significantly.

The LEED project is a neat program run by a U.S. entity. The Government of Canada has decided that every new building it puts up will have to meet the LEED standards. The building will have to be environmentally friendly. We'll take into account energy costs, and the number of parking spots will encourage people to use public transit.

Also, when we plan to invest significant sums of money in the retrofit of a building, we will consider it as if it's a new building and make the retrofit meet the LEED standards. We're committed to this.

I inaugurated the building in Montreal last year. There is a building in P.E.I. that will be inaugurated soon. The buildings I mentioned earlier to Monsieur Ménard that will be built in Gatineau will meet the LEED standards. We have an RFP in Quebec City for a new building, and it will have to meet the LEED standards. That's the rule and we should be proud of it.

[Patrick Brown, Conservative, Barrie, ON]

The Federal Accountability Act made provision for the appointment of a procurement ombudsman. Can you update the committee on that?

[Michael Fortier]

The procurement ombudsman will be appointed shortly. We had an office set up in preparation for this announcement. When the announcement is formalized, that person can hit the ground running.

In a previous answer to a question put to me by Mr. Kramp, I referred to my meeting with small and medium enterprises. Many are looking forward to the procurement ombudsman. It's not that they don't trust the department, but they see this as an interesting venue for seeking advice and lodging complaints.

As soon as that person is formally appointed, he will hit the ground running and the office will be ready to go.

[Patrick Brown, Conservative, Barrie, ON]

Just to go back to the greening of government assets, when the committee discussed this about a year ago, one thing that was mentioned was the hope to have measurable targets. Are there adequate resources to have measurable targets? What percentage of federal infrastructure would you like to see meet the LEED standards?

[Michael Fortier]

Well, you can imagine with the thousands and thousands of real estate property assets that we have, for us to undertake a retrofit of all of them would be extremely costly. What we are doing for new buildings is simple: the rule is that you have to meet the LEED standards. In other buildings, when we are considering a significant investment in the building--as a maintenance, a retrofit--we will insist on the LEED standard.

It's not just a question of the LEED standard. In terms of greening government, we've also looked at our supply chain. As I've said before when I've appeared before this committee, we're trying to green the supply chain. We are slowly but surely getting there, making sure that people provide us with more green products.

As time goes on, we are getting better results from the supply chain. But they also need to adjust, and we're working with them to make sure they understand that for us, at one point, this actually will be a criterion.

[Patrick Brown, Conservative, Barrie, ON]

Thank you.

[Michael Fortier]

So we're working together towards that goal. I'm not dissatisfied with the efforts and the results so far.

[Patrick Brown, Conservative, Barrie, ON]

Terrific.

[The Chair, Liberal, Diane Marleau]

Thank you very much.

Mr. Cullen.

[Roy Cullen, Liberal, Etobicoke North, ON]

Thank you very much, Madam Chair.

I want to thank Minister Fortier for coming to attend this meeting. I am not a permanent member of this committee, but I have some questions to ask.

One relates to the modernization of the payroll system and the other relates to the sale and leaseback of office buildings. On the payroll system, Minister, I gather it's about 40 years old. Maintenance costs are very high. Documentation probably is not that good. In the last week or two you've sent out an RFI, a request for information, which is a very preliminary step in the process.

You just completed a modernization of the pension, and there would have been a certain logic, it seems to me, to proceed from that to the payroll system. In fact, in your own departmental plans and priorities you talk about this as being a priority initiative and also that it would generate significant savings for the government.

I have a couple of questions. Why is it taking so long to get this moving? Secondly, do you have approved and allocated funds for this project to proceed?

[Michael Fortier]

I'll ask the deputy to answer your question. In terms of commitment, I wouldn't want you to think that this is not a priority. There was significant backlog. This committee actually was very good in reminding me every time I've shown up. We have gone through the backlog in terms of the delay in pay processing. It's a very complex system that needs to be upgraded, and it will be.

I'll let the deputy talk about resources and his plan of action.

[François Guimont, Deputy Minister and Deputy Receiver General for Canada, Department of Public Works and Government Services]

Thanks, Minister, Madam Chair.

A very accurate analysis of where we stand.... It's an older system. There's no question that 40 years is accurate, so with that comes a lot of manual treatment of the information.

Now, we in Public Works essentially manage that centralized system, and we have what we call pay administrative clerks in various departments, but they're using the main system of Public Works. So that's the first thing.

The second thing I would say is at the very core of that system is the reason we're facing some backlogs. The point I want to make here is that with an older system you have to apply more resources, human resources, in order to get the demands through.

So I just want to say that, because it's an important thought in the sense that individuals working are not doing a poor job; it's just that we need many more people to carry through the various requests that are coming our way. So that's just the problématique, the issue.

We've been working with colleagues in central agencies to put together essentially a proposal, an approach. We are supporting an off-the-shelf software approach. Why off the shelf? Simply because we feel it would be a wiser investment, more quickly applicable. That, frankly, emphasizes the point made by the minister earlier on vis-à-vis military procurement. If we have a piece of equipment that is available, instead of working hard at developing it, our taking it off the shelf, carrying out the purchase, is probably more efficient.

So we have a plan, then, to do that, and we have an approach, just not a plan. The issue then becomes le nerf de la guerre, which is the resources required to support an investment.

I have a brief point on that. On pension modernization, we've been supported, in order to move forward, to carry the actual investment, so that's been proceeding and it's on track, working very well.

On the issue of pay modernization, we are working with central agencies to get the proper funding, and everybody knows it's a priority. I'm tempted to say there's no denial out there that a 40-year-old system needs to be upgraded and changed in order to carry out the basic function of any organization, which is paying your people.

[Roy Cullen, Liberal, Etobicoke North, ON]

Thank you. I hope you can proceed expeditiously and that the funding will be in place, because if you're going out to request RFIs and you're having groups that put together this information, if their funding isn't available that would be a bit of a problem, I think you'd agree.

I'd like to move on to the sale and leaseback. If you look at the private sector, a sale and leaseback might be considered a last resort. It's like factoring. We get the capital up front, but downstream, in terms of the overall economics, it's not always a preferred option. It's a last resort.

In the case of these office buildings, I can see the opportunities to improve efficiencies. I can see opportunities to get funding to modernize, renovate, and keep these buildings up to speed, but I'm worried about the downstream when the leases come up for renewal. Presumably there is an option to buy. I'm worried about monopolistic pricing. You might say there are a lot of office buildings around, but once the leaseholds are in and commitments are made, your wiggle room is diminished somewhat.

I'm wondering if you could comment on that and if you've ever looked at models like the one I'm familiar with in British Columbia, where there's a crown corporation, B.C. Buildings Corporation, which is committed to highest and best use of properties, which is committed to market rents or market-based rents, and it seems to work very well. Did you look at a model like that?

[Michael Fortier]

No, I did not look at a model like that.

I would tell you that on sale and leaseback, I disagree with your preamble. Sale and leaseback is not the last resort. Most commercial companies outside real estate are spinning off their real estate assets. These are for-profit companies. The banks have all sold their downtown towers--the banks, the for-profit banks. It is too complicated to run unless you're in the business, so I think what we did makes a lot of sense.

On your question about 25 years from now, yes, we have an option to buy. I can see you looking at it from the other side and saying we will have a lot of people to move. Don't forget that the owner will have several hundred thousand square metres to fill if we move. So I'm an optimist by nature and I think we will be able to renew our lease, and if we can't, we'll find space. But for the next 20 or 25 years, we have found the best solution for taxpayers.

[Roy Cullen, Liberal, Etobicoke North, ON]

Thank you.

I suspect my time is up.

[The Chair, Liberal, Diane Marleau]

Yes, it is. Thank you very much.

We are going to Mr. Warkentin.