Government Operations Committee on April 26th, 2010

[The Vice-Chair, Conservative, Chris Warkentin]

I call to order meeting 12 of the Standing Committee on Government Operations and Estimates.

This afternoon we'll have testimony provided pursuant to Standing Order 108(2) on the study our committee is engaging in on federal buildings maintenance contracts.

Today we have a witness, and we'll provide him an opportunity to provide testimony to the committee. We'll begin and have questioning for the first hour. Then we'll pursue a different study in the second hour.

We have Monsieur Beaulieu before us today. We want to welcome him to our committee. He is a building science consultant, I believe.

We'll turn it over to you to provide testimony now, and we'll follow with questions.

Welcome.

[André Beaulieu, Building Science Consultant, CABA Building Consultants Inc.]

Thank you, Mr. Chair. Good afternoon everyone. I am not used to making presentations before committees. I hope that everything will go well and that the next hour will be enjoyable and, in particular, rewarding. That is the point of this exercise.

I am here to help you learn about and understand the process through which consultants go in order to provide services to the federal government and, in particular, to help you manage and maintain the federal government's buildings and properties.

I will introduce myself. My name is André Beaulieu. I am an engineer and I head up a firm that specializes in building envelopes. In case you are wondering, the building envelope is everything that makes up the exterior shell of the building. It is not structural, but rather everything that protects the building from the outside elements, such as rain and snow. So this means stone siding, brick siding, roofing, vinyl siding, and so on. It consists of all the outside components. So my firm specializes in that area and currently provides services to the government through SNC-Lavalin.

We have worked on nearly all the major buildings in the region, including Esplanade Laurier, Terrasses de la Chaudière, phases I, II, III and IV of Place du Portage, the Jeanne-Mance Building and the Jean-Talon Building. So we have worked on major buildings, and we are working in cooperation with SNC-Lavalin, which currently manages the building maintenance.

My intention here today is not to penalize or blame anyone or to criticize the operations or approach used by SNC-Lavalin. What I do want to do is to shed some light for you on how SNC-Lavalin manages building maintenance for the federal government.

I mention SNC-Lavalin because, as you are no doubt aware, that company is managing the buildings, but it is not the first company to do so. Through Public Works Canada, the federal government held a bidding process in 1999. Through that process, the firm BLJC was awarded a contract to manage the government's buildings. That company was later replaced by SNC-Lavalin, which currently manages the maintenance of the federal government's real property across Canada, but more specifically in this region. That is where my concern and interest lie. I do not think that the rules are any different for the rest of the country, since this same company is managing all of the real property.

SNC-Lavalin, which has been tasked by Public Works Canada through a bidding process to manage the maintenance of the federal government's buildings, hires the services of professionals. SNC-Lavalin is a maintenance manager and therefore requires the assistance of engineering firms, architectural firms and firms specializing in building construction, repair and maintenance.

To that end, SNC-Lavalin has us sign contracts and service agreements for a limited period. In our case, the agreement with SNC-Lavalin has just been renewed until 2013. So SNC-Lavalin gives us a contract, tells us that we are an accredited consultant and that we have the knowledge, skills and everything necessary to do business with SNC-Lavalin and assist it with maintenance management.

That said, when we have a contract with SNC-Lavalin, it is clearly indicated that there is no obligation, despite the contract, to provide us with any work. Our services may be called for at some point. So SNC-Lavalin has no obligation to us and is not required in any way to retain our services to prepare plans, specifications, appraisals or anything else involved in building maintenance.

It means that, from the time it awards us a contract, SNC-Lavalin has total responsibility—up to now, as far as we know—for federal government real property maintenance and carries its mandate out secretly. I say “secretly” because nothing is known about the contract between SNC-Lavalin and Public Works Canada. We don't know if SNC-Lavalin is required to call for tenders to procure professional services. We do not know if it is required to call for tenders regarding the fees for professionals to assist it with its management activities. So when SNC-Lavalin does deign to hold a bidding process, no one—except SNC-Lavalin—knows how much the bids are, which companies are called on to bid and what the outcomes are.

That means that SNC-Lavalin can decide to ask professionals to bid by invitation only. Only SNC-Lavalin knows the identity of these professionals. It can then decide to award the contract to one of the firms that it has invited to submit a bid. Only SNC-Lavalin knows which firms submit bids and what the outcome of the process is.

I am not saying that this is the case, but you can understand that this kind of process could easily open the door to cronyism and kickbacks. Everything is secret, nothing is disclosed, nothing is known. We have no idea of the rules governing SNC-Lavalin under its contract with Public Works and Government Services Canada. We did know the rules when we dealt with Public Works and Government Services Canada. We have had a number of contracts with Public Works and Government Services Canada, and we knew what the rules were. We knew that Public Works and Government Services Canada could award contracts directly to a consultant if the fees were under $25,000. With SNC-Lavalin, we know nothing. With Public Works, we knew that if the contract was for a certain amount, there had to be a public call for tenders. With SNC-Lavalin, we have no idea whether that is the case.

So we are completely in the dark and have no idea whether our services have been retained. When SNC-Lavalin does retain our services, we do not know what process was used. Recently, there was work to be done on the Louis-St-Laurent Building, which is 1.5 kilometres from our office. We know the SNC-Lavalin building manager. So we asked if there was some work to be done, and we were told that a roofing consultant would be needed. That was good news, since that is our specialty. We are only 1.5 kilometres away and we have already done business with them.

We were told that we would be called on to submit a bid. However, the next thing we knew, the contract had been awarded to a Montreal firm. We heard nothing about any bidding process. We do not know why we were not invited to submit a bid. So the government's building may be well managed or poorly managed, but we are in the dark. Anything that is not transparent has a tendency to get dirty.

We want to help the federal government manage its buildings properly and do so at a reasonable cost. My only objective here today is to ensure the government's money is spent properly, and in particular, fairly.

[The Vice-Chair, Conservative, Chris Warkentin]

Thank you, Mr. Beaulieu. We appreciate your testimony.

Committee members, I know that many of you recall that we'd also invited SNC-Lavalin and Public Works and Government Services Canada, but whereas they were intended to come before, they'll probably come later. I know some of you had queried whether they were coming and what happened to the invitations. It was because of our scheduling that they were bumped to a later date. So I leave you with that.

We'll start with the Liberals for the first round. I believe it's Ms. Hall Findlay for the first round of eight minutes.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you, Mr. Chairman.

Mr. Beaulieu, I want to thank you for being here with us today.

You heard the chairman say that we needed to hear testimony from people at SNC-Lavalin and Public Works and Government Services Canada. Now, my questions deal with the management of contracts by SNC-Lavalin, and I would really like to talk to the Public Works and Government Services Canada officials who manage the real property maintenance contracts for the federal government.

Could you tell us about the contracts that you have signed with SNC-Lavalin? You said that you did not have much information about what SNC-Lavalin does for Public Works and Government Services Canada, but only about what SNC-Lavalin asks you to do for that firm.

Were you awarded the contract with SNC-Lavalin as the result of a bidding process? Was it only because you knew people? Could you explain the process that you followed in obtaining the contract with SNC-Lavalin? You may have talked about it, but could you tell us whether you have signed contracts directly with Public Works and Government Services Canada?

[André Beaulieu]

I will try to answer as simply but as completely as possible.

I said earlier that SNC-Lavalin had been contracted by the federal government to manage building maintenance. It is playing a management role. So the company called on professionals to assist it in preparing the technical documents. Before any work is undertaken, whether we are talking about renovating Parliament or building a road, a professional has to prepare technical documents. That professional is hired by SNC-Lavalin. Once the documents are prepared, SNC-Lavalin holds a public bidding process to select the firms that will carry out the work indicated in the document prepared by the professional.

The problem is that there is no process requiring SNC-Lavalin to deal with professionals, as far as I know. I have been in business for 30 years, and I may have forgotten a few things. The contract that I—

[Martha Hall Findlay, Liberal, Willowdale, ON]

Is the contract management process left to the discretion of SNC-Lavalin?

[André Beaulieu]

I will give you an example. Projects involving work, repairs and maintenance to be carried out are generally listed on the government's electronic tendering system called MERX. If you consult MERX, you will see that SNC-Lavalin regularly lists construction and repair contracts for federal government buildings across Canada. In almost all cases, the technical documents need to be prepared by professionals before the work begins. However, despite the fact that the work projects are up on the MERX site, I hardly ever see a call for tenders for professional services to prepare the technical documents required before the work is undertaken. How are those professionals selected? To my knowledge, that is the biggest problem.

There are some 10 SNC-Lavalin building managers in this region. I would have to go see them every day and ask whether there were any projects or professional services corresponding to my area of expertise. That would be a full-time job. It is not how things should work. If I do not know who needs to have painting done, how can I offer my services as a painter?

The work that the federal government needs done should be made public. That way, professionals could prepare technical documents required for the work, which would then be done properly. The way things stand now, there are no rules governing how professionals are hired, at least as far as I know. SNC-Lavalin may be applying rules or may have signed an agreement with Public Works Canada. If so, the agreement is being kept well hidden. In my opinion, it has never been put into effect. I have had a lot of work from SNC-Lavalin and contracts from Public Works Canada, but every time, it has been a matter of going to the project manager and insisting that it was my turn to get a contract. Then I was asked to bid. It is rarely because the work was listed on MERX that my services have been called for.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I would like you to clarify something. You stated that the contracts you obtained directly from Public Works and Government Services, without going through SNC-Lavalin, were not granted through MERX?

[André Beaulieu]

Now that SNC-Lavalin is in the picture, it is practically impossible to obtain contracts from Public Works Canada. That is it. It is SNC-Lavalin that manages the entire building inventory of Public Works Canada. Only when the costs involved are higher than a certain amount is SNC-Lavalin no longer responsible for this management. But we don't know what that amount is for the time being. If the fees to be paid to the professional are a certain amount, then SNC-Lavalin loses management of the project and it becomes the responsibility of Public Works Canada. But regardless of the case, the amount that triggers this responsibility transfer is not known. SNC-Lavalin manages all the contracts. We no longer have any contracts with Public Works Canada. It would be different if professional services for the construction of a second Parliament building were required, because this would require fees of several billions of dollars. In other words, Public Works Canada manages SNC-Lavalin, which in turn manages building maintenance.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Did you sign contracts directly with Public Works and Government Services Canada in the past?

[André Beaulieu]

Yes, we did.

[Martha Hall Findlay, Liberal, Willowdale, ON]

But you don't anymore.

[André Beaulieu]

Yes, all that is over now. To my knowledge, maintenance contracts are granted exclusively to SNC-Lavalin.

[Martha Hall Findlay, Liberal, Willowdale, ON]

There are other companies that oversee the maintenance of the federal buildings, aren't there? It is not just SNC-Lavalin.

[André Beaulieu]

To my knowledge, there is only SNC-Lavalin.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Is that the case for all federal buildings?

[André Beaulieu]

I believe SNC-Lavalin manages 319 buildings.

[Martha Hall Findlay, Liberal, Willowdale, ON]

So building maintenance is managed entirely by SNC-Lavalin.

My time is up, but I would like to thank you.

[The Vice-Chair, Conservative, Chris Warkentin]

Monsieur Nadeau is next, for eight minutes.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you, Mr. Warkentin.

Good afternoon, Mr. Beaulieu.

SNC-Lavalin manages 319 buildings in the Ottawa and Montreal regions and in other places. These are large buildings. There are more buildings than that throughout Canada because they are of all different kinds. Here we are referring to large buildings in the federal capital region. One hundred and thirty-eight thousand of Canada's 522,000 government employees are in this region. These office buildings allow federal government workers to do their job.

Mr. Beaulieu, I would like you to know that on September 2, 2009, I wrote a letter to Minister Paradis, who was responsible at the time for Public Works and Government Services Canada. I wrote the same letter again on March 15 when Ms. Ambrose became the minister responsible for PWGSC, and I wrote again to Ms. Ambrose on this topic on April 13.

I am the member for this region. Therefore, the problem that you have raised here is frequently mentioned by small- and medium-sized enterprises and by larger firms. It's not transparent. There is something strange going on for building specialists. In the Outaouais region on the Quebec side, we are even more heavily penalized if we compare Gatineau to Ottawa. Only 1.4% of contracts are awarded to Gatineau businesses, whereas 98.6% of these contracts are awarded on the Ottawa side, which is absolutely shameful. And yet, there is much more expertise on the Quebec side, and you are a representative of this.

I hope this gives people an idea of what is going on. I presume that the people from PWGSC and from SNC-Lavalin are listening. I especially hope that the people from PWGSC are listening because we're talking about elected officials. The minister is responsible for PWGSC, not for SNC-Lavalin.

If I understand correctly, this is about awarding contracts. Now, contracts are awarded upon invitation by SNC-Lavalin. Certain businesses, specialists or engineers are invited to bid. These are no longer public calls for tender. So we're going from a public system paid for by the taxpayers to a non transparent system where SNC Lavalin issues invitations to companies it selects, as if it were the owner of all these buildings, the federal government's building inventory.

We are currently following up on a lead. We heard things in March concerning certain invoices. Apparently, it cost $5,000 to replace six lightbulbs under the contracts awarded by SNC-Lavalin to certain people. And we don't know how they were awarded, Mr. Chair.

There was a $36,000 invoice for office cleaning. This was to clean the offices of federal ministers. Two thousand dollars was paid for green plants—I don't know what was so special about them—and up to $1,000 was paid to install doorbells. It's absolutely appalling. It's unacceptable.

What do you understand from this system? On the one hand, there is a public method of awarding contracts, and on the other hand, there are invitations issued to bid on contracts.

[André Beaulieu]

What we want to find out are the rules that govern the government, and especially those that govern Public Works and Government Services Canada and SNC-Lavalin. Obviously, PWGSC is a serious, organized and structured organization that has existed for a very long time and has experience in overseeing maintenance of federal government buildings. PWGSC looked after this until 1999, when it was decided to transfer this responsibility to the private sector.

The problem is that no one knows what is in the contract signed between SNC-Lavalin and PWGSC. No one knows what the rules governing the awarding of contracts are. We do not know what rules or process SNC-Lavalin uses to hire professionals, launch a public call for tenders, or launch an invited tender. In the case of a public call for tenders, everyone knows there is a contract to be awarded and people will be interested in offering their services. If a certain party doesn't obtain the contract, it may be because it did not offer acceptable services or an acceptable price.

If we don't know the process SNC-Lavalin uses to hire professionals and award contracts, it is difficult to offer one's services or assess the quality and costs of the services offered. We just do not know. If the people from SNC-Lavalin are the only ones who know the rules, how can we who wish to offer our services be sure we are following them?

[Richard Nadeau, Bloc, Gatineau, QC]

Did you put these questions to the people at SNC-Lavalin?

[André Beaulieu]

We only deal with project directors at SNC-Lavalin. We work regularly with them. They are people we know well, to whom we provide services and who use our services regularly.

On Friday, I asked one of the project directors at SNC-Lavalin what the rules are that govern them. I asked her what the process was, for example, for a contract that had been awarded to a Montreal firm and why we had not been invited to bid. She told me that she was not authorized to disclose the rules or the process used or to explain how things worked or why people do and do not have to bid. If you give me a contract, but you don't tell me what its parameters are or what rules I must follow, it is hard for me to provide services in accordance with the price that I will bid.

It is too bad, because when PWGSC managed the federal government buildings, the rules were better known and more clearly defined. I do not know what happened when the contract was transferred to SNC-Lavalin, but some rules got lost along the way. Certain words disappeared from contract documents. This means we are now in the dark. It is all managed by the private sector.

I am not saying that SNC-Lavalin is a bad company, but it is working in the dark, and that means that we do not know the value of our work.

[Richard Nadeau, Bloc, Gatineau, QC]

If I understand correctly, you are not the only specialist in siding and building envelopes. In your opinion, does this situation affect the entire profession? There are all kinds of things in a building. Electricity, changing the carpets, installing water, buying the furniture, windows, etc., all of these things have to be dealt with. Does this affect everything that is found in a building or does it only affect certain aspects of building maintenance?

[André Beaulieu]

It is an issue of all aspects of building maintenance, whether you are talking about structural parts, the mechanical systems, the ventilation system, the lighting system, maintenance and replacement of carpets, the parquetry, replacing the roof, masonry work, painting, the structure, the exterior, the roof. In fact, everything concerning building maintenance is managed by SNC-Lavalin. All contracts are awarded in complete obscurity, which means that it is practically impossible to know what their value is.