Government Operations Committee on May 10th, 2010

[Martha Hall Findlay, Liberal, Willowdale, ON]

Yes, please.

[The Chair, Liberal, Yasmin Ratansi]

The floor is yours.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you, Madam Chair.

Thank you for being here today.

Before asking questions, I would like to say that this Department is so complex and so large that managing it must also be a truly complex task. That is why I want to thank you for the work you do. We don't do that enough.

But we do have a few fairly key questions, and the first is on the expenditures. I note that in all of the years from 2004-05 through to 2009-10—and 2009-10, we know we don't have the finals, but based on the budget, the mains from last year—the expenditure of the department has been relatively consistent, and I think that's worth commending. There are a number of other departments, as you well know, that have not in fact kept their spending relatively stable. Public Works has, which on the one hand is commendable, I think, but it makes the increases of this year particularly noticeable. It's a massive increase, $456 million.

I understand that you have a couple of examples--one, by far the single biggest piece of this, to deliver on the commitments under the economic action plan. Given that this year is the second year of the economic action plan—last year was the first year—I'm not sure where, all of a sudden, we have a significant increase that ought, I think, to have shown last year.

My question is in two parts. One, I don't think that's enough detail, quite honestly, to justify having such a significant increase after six years of relatively consistent expenditures.

Given that PWGSC is part of the freeze but also one of the departments subject to the strategic review, we've raised concern in a number of cases, and I will raise it again with you, of significant padding of the department's expenditures just so that then you can pull back to end up at the same place and look good.

There is a concern that when we have such an increase in spending in the environment that we have now, that can get lost in the economic stimulus requirements and big deficits, what happens if it's a little bit bigger and so on? These kinds of numbers can get lost in the numbers that we're looking at. I am worried that we're adding just so that later it'll be easier to then look good when we're cutting.

I would also like to ask then—I mentioned this before you arrived, but I'll mention it again—about the expenditure review report that my colleague John McCallum had done in 2005, and had found, across government, $11 billion in potential savings over the course of four years. PWGSC was one of the departments that exhibited an ability for significant savings. In that report, the commitment was that the department would be able to save $23 million a year. Over the course of four years, that's $100 million.

Can you comment, one, on the significant increase that we're looking at this year as opposed to the past five or six years? And two, what, if any, of the recommendations from the 2005 expenditure review report were implemented in PWGSC?

[François Guimont]

Thank you.

Thank you for the question, and thank you for your good words. I appreciate them, and my staff appreciates them.

Let's talk about the main estimates adjustments, if I can call them that, and more specifically the $456 million, which you rightfully single out as being a substantial amount of money. It's half a billion dollars.

There are three entries, and I'll just walk through them. They're pretty straightforward, at least from my perspective.

One of them, $73 million, is really reprofiling, and reprofiling as a result of work that could not take place last year...into the new fiscal year, related to the parliamentary precinct.

Frankly, I will tell members, we've made very good progress on the precinct, but we do find surprises. You poke at walls, things happen. You've got to start and take a fresh look. It takes time. We therefore—not the first time—reprofile, every so often, moneys that could not be wisely spent in a given fiscal year. So $73 million of the $456 million is for that.

The other entry is $90 million, for price increases. These are the hard realities--rent, utilities, electricity, things of that nature--which...that increment we get adjustment for systematically.

Otherwise, these increments in price, which are passed on to us...and we have to detail that, in excruciating detail, with Treasury Board and Finance. When they're satisfied that the case passes muster, they give us price adjustment.

The rest--

[Martha Hall Findlay, Liberal, Willowdale, ON]

I understand that. We all deal with inflationary pressures and price increases. But I still say that in context of PWGSC having kept its expenditures relatively constant, what happened to all those same price increases and price pressures of the past five or six years? I'm still questioning why there is all of a sudden almost $100 million that wasn't shown before.

[François Guimont]

These adjustments were done from year to year. We have price adjustments, on what we call these entries, systematically, if we can make our case, and we've always been able to make our case and get a price adjustment.

The one entry that is a new variable is the economic action plan; there's no question there. This year it is half of the amount, $224 million. We had some of that money last year, and this year, as you said, is the last year. This increment will disappear. So in practice, in reality, next fiscal year this amount will not be in the main estimates. We all know--the signal has been very clear--it is to be used, and at the end of the fiscal year it will disappear.

The point I'm making here, my emphasis, is that in terms of price adjustments, we get relief for that when we can make our case. So one can expect that, for next fiscal year, if we can make our case and convince people that we should get price protection...and I'll use my words here. Secondly, there could be still some reprofiling: money that we were not able to use and that was carried forward or reprofiled with a view to making the proper amount of work.

[The Chair, Liberal, Yasmin Ratansi]

Ms. Coady is trying to get in.

Go ahead, Ms. Coady.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Thank you very much.

Sorry, we have only a very short period of time. I want to follow through on some earlier questions with regard to PCO.

Public Works and Government Services Canada has a tremendous amount of money and has a tremendous number of programs under its responsibility. I appreciate the work that you do and appreciate the fact that you're here today. A question came up earlier to the Privy Council Office concerning support to ministerial staff, and whether they have been put under pressure by the minister's office. One of the questions was around--I'll use the term--the “Jaffer affair”.

We have received a tremendous amount of information from your office, or from Public Works and Government Services Canada. There have been a number of e-mails and a number of discussions that were going on.

I have two questions. First, is it normal practice for the minister to ask you to meet with a potential supplier?

Second, this goes to a question from an e-mail from André Morin--I think he's a strategic adviser to you--who says,

The DM is concerned about this type of request

—I'm assuming it's the request for the meeting—

and by the fact that it can contravene and disrupt our daily operational or program requirements, task and work.

Can you elaborate on your concern for that?

Thank you.

[François Guimont]

Thank you for the question.

On the first segment of your question, I would say that it hasn't happened—I'm going by memory here—that the minister would ask me to meet with someone. Now, my office may be approached by the minister's office; that is a possibility.

The department has a number of points of entry. Our Office of Small and Medium Enterprises, in the last three years, if I remember the numbers, has had contact with 70,000, either individuals or companies, and we want to promote these relationships so that they can get a better appreciation for how to be successful at getting contracts.

In the department there's a basic rule, and it goes like this. When we tender, we don't talk to people. When it is a contract management issue, people can talk to people, because there's a contract in place and solutions must be found to the problem. Contracts can be complicated, in interpretation and otherwise. Very often our philosophy is to try to tackle issues and deal with them at the lowest common denominator: between the contract officer and the person who probably has an issue. And on the front end, as the small and medium-sized enterprise, or regarding representations that can be made by people outside a bidding, the department does have dealings with individuals. We have quite a few, actually. And in 70,000 contacts--phone calls or otherwise--there is a substantial amount of back and forth between the department and people who want to do business with the government.

[The Chair, Liberal, Yasmin Ratansi]

I'm sorry, the time is up.

We now go to Ms. Meili Faille.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Thank you.

Mr. Guimont, I am pleased to see you again at the Standing Committee on Government Operations and Estimates. We are used to seeing you at the Standing Committee on Public Accounts in connection with the Auditor General's reports.

You are required to answer to us under the federal Accountability Act, which is why it is important for you to be here today. As compared to other government agencies, your department has a large budget, in terms of expenditures. I think you are aware of the complexity and size of your department. The two biggest planned spending increases for Public Works and Government Services Canada come to $357 million. That is a 21% increase in expenditures on accommodation and real property assets management.

First, what interests me in particular is the $69 million increase, a 26% increase, in expenditures on internal services. To date, you have been open in explaining the legal cases involving your department that might have a financial impact on it. There was the Rosdev case, which is not over, I believe; the problems relating to the Integrated Relocation Program; and the disputes concerning various technology contracts. And I have to mention an incident that complicated things, the dismissal of one of your deputy ministers for conflict of interest.

In reply to a question from my colleague, you said: "When we tender, we don't talk to people." At some point, you receive representations. I want to try to understand the role of Cabinet. Has the Minister or have members of Cabinet ever asked you to take direct action against companies doing business with the Department or against employees of Public Works and Government Services Canada who are suspected of fraud?

[François Guimont]

If I may, Madam Chair, I'm going to go back to one point, briefly.

We say there is no contact when a contract is to be issued, but during the process, there may be an Industry Day. That is part of a transparent process in which the companies introduce themselves, depending on the contract we are preparing to offer. There may be a fairness monitor there. That is part of the process, and it is very structured. There may be contacts, but they are not indirect contacts with people making representations when a contract is being awarded. That is the first point.

On the second point, you asked me whether I had been approached directly or whether I had been asked to sit down with people...

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

I may be able to clarify, Madam Chair.

In your presentation, you said: "Our goal is clear: it is to excel in our mission to deliver high quality programs and services that meet the needs of federal organizations while also ensuring good value for Canadians."

In addition there is a concern that you have often expressed: ensuring fair and equitable treatment for contractors looking for new business opportunities. Is that solely your responsibility, as the person in charge, or are there times when the Minister's office, if the Minister is aware of a case that could be litigious, expresses interest, one way or another, in what you are doing?

[François Guimont]

When the competitive processes are prepared, when it involves an acquisition strategy, criteria, the team responsible for selecting or evaluating criteria, I am not even involved in those decisions. That is done at the program level. So there is some distance established, and I think that is very sound. The process takes place, I am told who got the contract, for example if it is about airplanes, etc.

The Minister is made aware when Treasury Board has to be approached for the supply needed. In other words, if the authorities are within the Department, the contracts are awarded. I'm talking about 60,000 transactions. So I don't see them. That responsibility is assigned to people; as Deputy Minister, I create the conditions that allow them to work properly. To do that, I have the assistance of my management team.

When some delegations exceed my authority and the approvals needed have to be obtained from Treasury Board, a submission for it is prepared. We submit comments to the Minister, which is to be expected. It is then forwarded to Treasury Board, and then it is approved or refused. That is what ties it all up. Those are the circumstances in which the Minister is involved.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

I would like to ask you again whether people in the Minister's office have ever asked you to do something directly against a company doing business with the Department. What is your answer?

[François Guimont]

No.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Thank you.

In the course of the process, would you discuss the details of measures you are going to take against an employee or a company suspected of fraud, or involved in an action against the Department, with the person in charge of a federal law enforcement agency?

[François Guimont]

Yes. I might not do it myself, it might be done by the members of a group called the Departmental Oversight Branch. That is a branch that is unique to our Department. Unless I am mistaken, we are the only ones to have one of them. The people in that group are the ones who do the work. However, if I need to consult a commissioner to get advice or legal services, those consultations will take place in order for the case to move ahead.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Do you also communicate with the people at the Canadian International Trade Tribunal?

[François Guimont]

No, I do not communicate directly with those people. When there is a dispute, if we decide to make representations, it's the people in legal services who handle it. They may be asked to work with the people at the CITT.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Those people are not in direct contact with you, but they communicate with staff in your division, in legal services?

[François Guimont]

Absolutely, to make our representations. In some cases, we win; in others, we lose. Either way, it involves making contacts.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

With respect to management contracts for the maintenance of federal buildings, given the operating budget freeze for the coming years and the strategic review, how are you reporting the outsourcing of the maintenance contracts to SNC-Lavalin? Can you also tell us what the management fees cost and what percentage of the contract that represents?

[François Guimont]

On the first question, I think the contract does what it is supposed to do and that works well. I know there are some problems. It would be a little naive to ignore that. Comments have been made on certain work. Access to information was in issue. However, if we set those items aside and consider things with a very structured approach, by doing an audit, we see that those people have done a good job and savings have been achieved.

With respect to the fees and percentage, I think, if I am not mistaken, that this is confidential information. From what I understand, the committee is going to have an opportunity to question the people from ProFac Inc. and SNC-Lavalin O&M at an in camera session. Those people may then be able to answer that question themselves. It's not that I'm refusing to answer, rather it's that this information should be provided directly by the company.

[The Chair, Liberal, Yasmin Ratansi]

Madame Faille, this is just to let you know that SNC-Lavalin has said they will provide the information, in camera, to the committee.

Thank you very much.

We will now go to Monsieur Petit pour huit minutes, s'il vous plaît.