Government Operations Committee on April 10th, 2008

[The Chair, Liberal, Diane Marleau]

I'll call the meeting to order, seeing that we have a quorum.

We have before us today Minister Fortier, the Minister of Public Works and Government Services. Mr. Fortier has been before us many times.

We thank you for making yourself available. We hope your cold has improved, because we know that last year you were absolutely unable to attend. It happens to all of us sometimes. We're pleased to have been able to accommodate you.

You know how the committee works, so I'm going to turn it over to you, Mr. Fortier, with up to 10 minutes for whatever is your desire at this point.

[Michael Fortier, Minister of Public Works and Government Services]

Thank you very much, Ms. Marleau.

Good morning, ladies and gentlemen.

I'm very happy to be here to discuss our main estimates and whatever other topics the committee would wish to discuss with respect to Public Works.

I am accompanied by my deputy minister, François Guimont, and two of his departmental officers, Tim McGrath, who handles real property, and Mike Hawkes, Chief Financial Officer. Behind me are other senior officers from Public Works and Government Services Canada. We are here this morning to talk about the main estimates for 2008-2009.

Public Works and Government Services Canada is a department, which you have previously directed, Ms. Marleau, which is mainly associated with supply. The purchase of goods and services for the public service is still a very important aspect of what we do.

We're also involved in real estate and we've had several discussions with your committee on real estate issues, much of it in terms of managing office buildings, as that is important, but also to discuss leases. We have over 1,800 leases to house public service employees around the country.

We're also responsible for the translation department, and that's often overlooked, but it's a very important department that resides within Public Works.

We are also responsible for the greening group, which is part of our department, and the purpose of which is to green the supply chain. I'm sure we'll be talking about that this morning. Lastly, I'll tell you that the Office of the Receiver General for Canada is one of the department's important functions. I'll be pleased to discuss all these matters with you.

Mr. Guimont is here with his colleagues to answer your questions, if necessary.

[The Chair, Liberal, Diane Marleau]

Thank you, minister.

We're going to start the questioning with Mr. Holland, for seven minutes.

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

Thank you, Madam Chair.

Thank you, Minister, for appearing before the committee today. It's much appreciated.

I want to start, if I may, with the government's real property holdings. I know we've discussed this before, but there are still a few outstanding items, and some specifically flow through the estimates.

Later I may get into procurement, but I have a number of concerns with respect to procurement, and they don't exactly fall into estimates, so I don't want to start there.

The appropriation request through Parliament for capital expenditure relating to the government's real property holdings has decreased by some 14.5% for the 2008-09 fiscal year. Could you tell me why? It's a pretty substantive decrease. What's behind it?

[Michael Fortier]

The increase on the real estate side?

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

No, there's a decrease in the appropriation request to Parliament for capital expenditures relating to the government's real property holdings.

[Michael Fortier]

I'll ask Mr. McGrath to answer that question.

[Tim McGrath, Assistant Deputy Minister, Real Property Branch, Department of Public Works and Government Services]

Madam Chair, the premise is that we receive an annual appropriation based on the amount of inventory we have. In addition, there are specific projects that we carry out.

In the situation between 2007-08 and 2008-09 for those specific projects, such as the Skyline project, you'll see a decrease of almost $30 million, and that's a result of the Skyline project's completion. The expenditure in 2007-08 was $60 million, and the expenditure in 2008-09 is only $30 million as that project concludes.

It's not a matter of having less money; it's a matter of just finishing up projects. Our base amount for capital reinvestment stays the same under our national investment strategy, but in addition we have specific projects that make this total from the previous year.

So while it appears as a decrease, it's a result of those specific projects that are finishing, the largest being the Skyline project.

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

As you undertake renovations and work to existing capital, that would be considered a capital expenditure. Is that correct?

[Tim McGrath]

That's correct.

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

So my concern is that we have a lot of inventory that's deteriorating, including many historic buildings. In fact, one just to the west of us, the West Block, is deteriorating so rapidly that they have to slow down the work. So I'm looking at that decrease, and while I appreciate that some projects may be done, we have a number of extremely important projects, including projects of major historic significance, that one might argue should be taking up that difference.

Why are we seeing a decrease in that budget instead of a reallocation to these other priority projects, including heritage properties?

[Michael Fortier]

To reassure you on the parliamentary precinct, because you are indirectly referring to that, moneys have been allocated, and as you know, this is going to be a long-term project. It began way before I showed up. But work will get done, likely after I've departed, but work will get done and moneys have been set aside for that, Mr. Holland.

With respect to those one-offs, basically work has been completed, so I don't think you should be reading in this decrease—you shouldn't, because that's not the fact—a decision by the government to invest less money in the maintenance of its buildings.

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

I don't want to belabour the point. I'm going to move on, but I'll just make this statement.

We have an inventory that is crying out in many cases for investment. I just used West Block as an example because it's right here, but that's a project that will finish in 2020. Yes, as you say, there probably will be a new minister. I don't know if I'm going to be here in 2020. That's a long time away. In the meantime, we have so many other projects, and I see a decrease of 14.5%. The point is, and it would be for your consideration, that there has to be money reallocated to address many of the priorities that exist, including for heritage buildings, within the government inventory.

That brings me to my next point. You've made previous statements, and I don't necessarily take objection to this, that you see a preference, perhaps, for government not to own buildings but to do leasebacks and explore other possibilities. I disagree with how it was handled under phase one and I have great concern about phase two. I'm wondering if you could explain to me your objectives and those of the government with respect to the holding of federal property and where your thinking is at right now. What's your long-term vision on the holding of federal property?

[Michael Fortier]

My thoughts on this, Mr. Holland, haven't changed that much. My focus is mostly on office buildings, not on the entire real estate portfolio, which as you know goes beyond Public Works. There are tens of thousands of buildings that we own, if you add DND and all sorts of other agencies and departments. My focus has always been only on the office buildings, and so there are 45 or 50 of them pro forma of the sale left.

I wouldn't refer to phase one or phase two, Mr. Holland. There was one sale. As I've said, we're going to digest that transaction. It only closed a few months ago, frankly. Once everybody is happy that it was the right decision in terms of our relationship with the landlord and how things are proceeding, then we'll see. But for the time being there is no phase two being planned.

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

So have you had any discussions? Call it phase two, call it whatever you want, but have there been discussions with respect to the properties that you are considering or would be considering to sell? Would you acknowledge that there were mistakes in phase one, that there were problems? If so, what were those, and how would you be changing and addressing those concerns moving forward? I don't think that phase one was handled well.

[Michael Fortier]

I know you're not trying to be partisan here. I've never been quite sure what your beef was on the sale. The timing was superb. You'll tell me there was a lot of luck in this, but I pushed this as quickly as I could because I just knew the real estate markets wouldn't remain as vibrant and as dynamic as they had been for several years. It was seven buildings. We had two independent opinions. We had a lot of people dealing at arm's length, who had absolutely no link to me or the government, who said, actually, that's a good idea.

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

We won't get into that debate, because we had it on a different day. But certainly consultation with first nations and the fact that there was a court injunction that stopped the sale of two buildings have caused me concern. They didn't cause you concern, and that causes me further concern.

Have you had meetings or discussions around the next buildings that might be contemplated for sale? What are your thoughts on that? If you haven't had those discussions, when will they be taking place? When will you be formulating a strategy on any additional properties you might be considering for similar leaseback?

[Michael Fortier]

I am not having any such discussions.

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

Do you plan to? Is it something within your immediate schedule of work?

[The Chair, Liberal, Diane Marleau]

Mr. Holland, your time is up.

Madame Bourgeois.

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

Thank you, Madam Chair.

Good morning, gentlemen.

My first question concerns technology services and a presentation that was recently made to the Ottawa Centre for Research and Innovation. The integration of information technology services, such as the shared services initiative, was promoted and the consolidation of contracts talked about. Some information technology is also managed by PWGSC. Minister, this is a document that was presented by Mr. Steven Poole on March 5.

The grouping together of contracts or purchases means giving a single person or business all the technology services supply contracts. Have you studied the impact of this grouping on small- and medium-size enterprises wishing to do business with PWGSC?

[Michael Fortier]

That's an excellent question. First, I want to reassure you. It is absolutely out of the question—this is not our intention—for the government to grant all information technology service contracts to a single company.

Someone will correct me if I am wrong, but the government's information technology expenditures, across government, represent nearly $5 billion. So you can imagine that these contracts are offered to a host of corporations possessing different expertise. There is a fragmentation of services that must be reviewed. We deal with various service providers for certain technology services for which there are reasons to question whether it is appropriate to have different types of software from one department to the next. That concerns not only me, but also the staff of the Treasury Board Secretariat. There should be better supervision of software used. It should not be concluded that there would only be one supplier.

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

That means that you have a plan or a document stating that you will be examining the possibility that small- and medium-size enterprises can receive information technology contracts. Are you assuring me of that?

[Michael Fortier]

I assure you all the more willingly since we created the Office of Small and Medium Enterprises in the summer of 2006 out of a concern to maintain favourable circumstances for small- and medium-size businesses across Canada. There is even an office in Quebec whose taskor responsibility is to anticipate small and medium enterprises and to help them understand how to do business with us.

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

That leads me to a second question concerning contracts for military materiel. May I know how much money PWGSC has allocated to military materiel? We know that the Department of National Defence pays for military materiel, but PWGSC forwards the technical specifications.