Government Operations Committee on June 7th, 2010

[Richard Nadeau, Bloc, Gatineau, QC]

You mean $25,000 to $50,000?

[John McBain]

It's $25,000 to $200,000. From $200,000 to $5 million, it is publicly tendered, and SNC-Lavalin uses MERX as its public tendering vehicle.

[Richard Nadeau, Bloc, Gatineau, QC]

How many firms are on the list for contracts from $25,000 to $200,000?

[John McBain]

Five firms.

[Richard Nadeau, Bloc, Gatineau, QC]

I will repeat what you said. Contracts from $0 to $5,000 are awarded directly; for contracts from $5,000 to $25,000, there is a list of three firms; and for contracts from $25,000 to $200,000, there is a list of five firms. Is that right?

[John McBain]

Yes.

[Richard Nadeau, Bloc, Gatineau, QC]

What is the procedure? Do you choose from a databank and tough luck for everyone else? How does it work?

[John McBain]

In terms of the management of this, I would invite my colleagues to join. In terms of the specifics of that aspect, the contractor is required to pre-qualify firms, both consultants and contractor/suppliers, in the databank. They then go on a rotational basis and select those firms and ask them for a price. Then the lowest price from those five firms is used to conduct the work.

[Richard Nadeau, Bloc, Gatineau, QC]

There is something else that the media reported, something that made quite a few waves during question period for a few days. Someone asked SNC-Lavalin or Public Works and Government Services Canada—you are the ones people deal with, you are the direct representatives of a department that is responsible for public money—for access to all the invoices submitted to the government for the work performed. With the figures I gave you earlier... It involves small jobs, such as changing light bulbs. But when the work is renovating a building's exterior or doing major upgrades, it involves huge amounts of money.

Are you prepared to release all the invoices you received, to see if there are other cases where small jobs cost an exorbitant amount, so as to make sure those cases are the exception to the rule? Is it necessary to probe further to discover that even larger amounts were spent? Is it possible to make the invoices public?

[John McBain]

First of all, on the subject of the invoices and the work you referred to, let me say that on the surface, 32 characters, which was about the field that was used in the invoices, does not describe the full amount of work that was done. So to simply say “changing a doorbell” or “installing six pot lights” is one thing when I do work at my house; however, when I do it in a commercial context in a high-rise office building, after hours, according to codes and according to contractual requirements for overtime, it's quite something else. So there is a detailed explanation behind each of those invoices, which describes that there is much more to the work than was actually portrayed in that short character field.

In terms of the invoices we deal with, right now they literally deal with about 6,000 projects per year. The volume of paper would be quite remarkable, and they are accessible right now through access to information.

[Richard Nadeau, Bloc, Gatineau, QC]

So they can be obtained by going through the Office of the Information Commissioner? In the documents, I read that reporters had requested information but had not received it. Are you prepared to risk having your hand burned and say that if people want to see the numbers, all they have to do is go through the Office of the Information Commissioner?

[John McBain]

Absolutely, yes.

[Richard Nadeau, Bloc, Gatineau, QC]

That is good to hear.

[The Chair, Liberal, Yasmin Ratansi]

Ask a question, please.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you, Madam Chair.

[The Chair, Liberal, Yasmin Ratansi]

That's it? Merci.

We now go to M. Gourde, pour huit minutes, s'il vous plaît.

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

Thank you, Madam Chair.

Thank you, gentlemen, for being here this afternoon.

At the risk of being redundant, I have the following question: Could you explain the procedure for companies and businesses to bid on government contracts with Public Works and Government Services Canada?

[John McBain]

Well, there is a process for PWGSC, ourselves, which is quite distinct from the process that is used by our service provider in these contracts. I'd be happy to share a diagram with the committee, which describes that.

For example, for PWGSC, for contracts for construction from zero to $10,000, we use the select process—three firms are selected. From $10,000 to $100,000, five to eight firms are selected and bids are received. And for anything over $100,000, it's publicly advertised on MERX.

If you compare that to SNC-Lavalin O&M, there's perhaps a greater discipline because SNC-Lavalin goes from zero to $5,000 with a direct contract, $5,000 to $25,000 with at least three firms, and then $25,000 to $200,000 with five firms. Anything over that for them is publicly tendered, and they use MERX as well, as does PWGSC.

So there is a rigorous process. I must also add that as part of our annual reviews of the contract with SNC-Lavalin, the statement of work allows us to go in and make sure it is following that procedure to engage suppliers and contractors when it contracts its work.

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

Would you say anything in that procedure is missing in terms of transparency and fairness? What measures are in place to ensure that contracts are awarded fairly?

[John McBain]

In terms of the contracts with SNC-Lavalin, as I said, the statement of work allows us to assess and review their practices to ensure they are following the procedures set out in the statement of work. Beyond that point, you will have to ask SNC-Lavalin. I know they are subject to internal audits, and the relationship between SNC-Lavalin, as our contractor, and their subcontractors is something of their management. We have no legal standing in that relationship.

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

What measures are in place to ensure that small and medium-sized businesses have access to government contracts?

[John McBain]

The contract requires that SNC-Lavalin O&M includes the provision to engage small and medium enterprises. I regularly receive reports from SNC-Lavalin O&M, and I can show you the breakdown by province of the number of firms they engage. So we are providing oversight to ensure that is done.

Secondly, the contract prohibits SNC-Lavalin from bidding on any of the work that is being executed by the contract.

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

What impact has Canada's economic action plan had on the awarding of government contracts?

[John McBain]

There was absolutely no change in terms of how we delivered our work through the economic action plan. We were very adamant about that. We didn't want two sets of rules or two different processes for our regular work and the economic action plan.

I am very proud to say that we were able to accelerate our work for the action plan through this contract, but in all cases they followed the rules that were set in place from the outset and from the award of the contract.

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

What efforts are made so that small and medium-sized businesses can be competitive when bidding on government contracts?