Government Operations Committee on Dec. 1st, 2009

[Shahid Minto]

Thank you, Madam Chair. Just for the record, I was appointed ombudsman designate in September 2007. I know the act was passed in 2006, but there was no ombudsman at first. I was only appointed as a designate.

Then the regulations were prepared and it was in May 2008 that I became the ombudsman. Really, what that meant was that I and a summer student or two were trying to find paper, accommodation, and books, and setting up rules. It wasn't until September of last year that we began operations, just for the record.

On the subject of funding, my view is that we have been provided a reasonable budget to do what we're doing. The one part of our business for which we have not asked for funding and for which none was provided initially is alternative dispute resolution, because nothing had been set up. We have that set up. We'll see how that goes. If that business expands a lot, we can always go back and ask for more money.

I think the operation has to be not just effective but also affordable. I'm very conscious of that. The system has to be able to absorb that. I'm not unhappy. I think a reasonable budget has been provided.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you. You adopted a business model that is based on cooperation and not confrontation. Why did you make that decision?

[Shahid Minto]

If you recall, I said that we were set up at a time when the procurement community was totally demoralized. They had been the subject of hearing after hearing, with headlines in the newspapers. A deluge of new rules had been sent out by the centre to respond to this crisis. The number of transactions had improved tremendously, but the resources had not improved.

On the other side, we met with the supplier communities. They were being faced with these consolidation buys, standing offers, and new arrangements that they thought were threatening their businesses.

It was in that atmosphere that we had to create an office that everybody could respect and deal with and that could share their concerns. We had to create this trust. It was on that basis that we went with this collaboration model.

Let me say that it has worked quite well. We've had absolutely no problems. But on the other hand, please rest assured that if we do have problems, there's no problem in changing our approach. We'll do anything that needs to be done to implement your mandate.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

If Government of Canada suppliers call you to point to problems relating to the awarding of certain contracts, how does that work? They talk to you, you talk to the people from the department and you call back the suppliers to give them advice?

[Shahid Minto]

First, we made it very easy for the suppliers to get to us. We have electronic ways for them to get hold of us, but we always advise them to go to the department first. If they cannot resolve their issue with the department, they can come back to see us, and we'll see what we can do. That's how it works.

Then we ask them to please not put in a formal complaint yet, because that takes me into a very legalistic procedure and we ask if we can just help them resolve their issue. Almost every time, they say, “Yes, that's the way we'd like to get it done.”

Then we use our contacts in the departments. We go to the departments and explain to them exactly what is happening and what they've overlooked if they are at fault. It's not that the department is always wrong. Many times the issue is not with the department; it's at the other end.

That's how it works. People have been very appreciative of this approach and it seems to be working fine.

[The Chair, Liberal, Yasmin Ratansi]

Ms. Bourgeois, you have five minutes.

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

Thank you, Madam Chair.

Mr. Minto, I want to come back to the question I asked you in the beginning concerning small and medium businesses and the role of your office.

I listened to your answers. You are an ombudsman, but mostly a negotiator, a facilitator. You try to see to it that small and medium businesses don't get too mad at the government and you see to it that they can do business with the government. Moreover, you also try to see to it that Public Works not be seen in too bad a light in the awarding and administration of contracts.

Personally, this bothers me a great deal. You have had some 110 complaints that draw my attention. Those 110 complaints were from small and medium businesses that were not satisfied with the awarding and administration of contracts. That's pretty peculiar.

You say that in your report you specified, and this was heard on CBC news, all of the difficulties that small and medium businesses face. Of course, there is a trust issue, but there is also the problem that derives from the fact that Public Works staff is not able to answer them, to inform them, or to award and manage contracts properly. You must admit that this is a somewhat unusual situation.

What do you think of this? As ombudsman, are you going to spend your time negotiating and facilitating the work?

[Shahid Minto]

Let me go back to a very important issue. Unlike other ombudsmen, we are not dealing with personal grievances. We are dealing with commercial transactions. Two parties have either signed, or are about to sign, a commercial contract, and that contract gives both parties rights and obligations. I am not going to be a lobbyist or an apologist for either party.

My role is to be neutral and come across as a neutral person. My job is not to make Public Works less daunting to anybody or get more business for any SME. My job is to make sure the playing field is level and the procurement process is done in a fair, open, and transparent manner, and whatever it takes to get the job done, we will get that done.

You talk about not getting enough debriefings. We have a chapter in here that came out of the concerns that the small and medium enterprises expressed to us again and again that they were not getting the debriefings.

The big companies really don't care about debriefings, to be honest with you. They have enough lawyers and they have experts in the field? It's the small guys who need guidance and who need somebody to help.

On your assertion that Public Works cannot manage contracts, I'm sorry, but I'm not there yet. I think there are a lot of very dedicated public servants in Public Works and other government departments working very hard under very difficult circumstances to produce the results they're producing.

I think one of the things they would really like from this committee is some appreciation of the effort these public servants do put in. There are so many transactions now and so few people, and they've come through such a tough time. But I think that's one of the things the committee would perhaps get to hear from transactions...to get into systemic issues. And hey, let's show some respect for the work these people are doing, because they are trying hard.

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

Let's move on to another topic. As concerns the Advanced Contract Award Notifications, in order to enter into a contract without soliciting bids, there are four exceptions possible.

You list the exceptions in your report: pressing emergency; estimated contract value under specified dollar thresholds; not in the public interest to solicit bids—I would like you to explain to me when a bid solicitation would not serve the public interest—and only one supplier capable of performing the contract.

Your office is almost exclusively focused on the fourth exception in its report, but according to a report from Public Works and Government Services, only 7% of the Advanced Contract Award Notifications lead to the submission of a statement of capabilities by the business, and only half of those are accepted.

[The Chair, Liberal, Yasmin Ratansi]

Ms. Bourgeois—

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

So how can you explain that there are only 7%? Is that a way for the government to give preference to certain companies, according to you? Can you explain under what circumstances bid solicitation would not serve the public interest?

[The Chair, Liberal, Yasmin Ratansi]

Ms. Bourgeois, please wrap up.

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

This is very technical.

[Shahid Minto]

Thank you. There are really two questions in this.

The first question is, if it's not in the public interest, why is there an ACAN? According to Treasury Board policy, the only time you should issue an ACAN is when you're willing to accept a challenge to that ACAN and you have another supplier who does that business.

But if there's an urgency and if it's not in the public interest, obviously you're not going to accept the challenge. The only time you should issue an ACAN is if, in your mind, there is only one person capable of doing the work, but you're not totally sure. But if there's an urgency and it's not in the public interest, then don't issue the ACAN.

This is the unintended effect. You issue the ACAN because you get higher authorities, so hey, let's issue it anyway. That's the first part.

At the end of the day, what do ACANs do? That is the issue to look at. As for what they do is, you start with the premise that there is only one supplier, but you are not completely sure. You go to the market and confirm that there's only one supplier, right? Just because you confirm that there's only one supplier, you're suddenly given additional authorities.

If you had started with the premise there's only one supplier for services and stayed with that, for most departments the authority would have been $200,000, but once you confirm that there's only one supplier, your authority goes to $2 million. So there's a built-in incentive to go the ACAN route. It's an unintended effect.

Thank you, Madam.

[The Chair, Liberal, Yasmin Ratansi]

Thank you.

Mr. Martin for five minutes.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you.

That's more or less where I wanted to go, Mr. Minto. In rereading your presentation carefully, I was kind of shocked to see that there's what could be a massive loophole that gives the government the right to give sole-source contracts up to the $2 million level, not up to the $100,000 level, by deeming them ACANs.

Let me see if I understand you correctly. The advance contract award notices are deemed to have been competitive. In other words, the competition has been satisfied by doing a market survey or by a presupposition that there's only one person out there who can do the job. But that gives carte blanche to the government to give away contracts as high as $2 million, without any competition, to a preferred contractor. Do I understand that correctly?

[Shahid Minto]

Madam Chair, yes, that is what we're concerned.... You see, sole-source contracts or directed contracts are considered high risk in principle, and the risk mitigation strategy that the government has is that it gives lower levels of authority to government officials. You have to go to Treasury Board or senior management to get approvals.

Now, just because you've gone to the market.... And you've improved transparency, no question about it, but confirmed is only one supplier. You know, your authorities go up....

Let me just apologize for a minute for not explaining that in addition to the annual report, we've produced five detailed reports. I would really recommend you, sir, to look at them, because in the case of Public Works, for goods, the authority goes from $2 million to $40 million.

[Pat Martin, NDP, Winnipeg Centre, MB]

What? Under an ACAN?

[Shahid Minto]

Under an ACAN, because ACAN is considered to be exactly the same as electronic bidding. There's nothing wrong with the deeming provision, by the way. The Income Tax Act has deeming provisions, too, but your authorities shoot up.

[Pat Martin, NDP, Winnipeg Centre, MB]

Authority goes up to, I'm sorry, $40 million...?

[Shahid Minto]

Yes.

[Pat Martin, NDP, Winnipeg Centre, MB]

But also, on your labour market survey or the market survey that is mandatory, you say that the 15-day minimum has in fact become the maximum, in your experience.

[Shahid Minto]

That's right.

[Pat Martin, NDP, Winnipeg Centre, MB]

Even with a 15-day survey to see if there's anyone else qualified, sometimes the preferred contractor has begun the process of negotiations even within that truncated 15 days.

[Shahid Minto]

Yes.