Evidence of meeting #22 for Government Operations and Estimates in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was contract.
A recording is available from Parliament.
4:45 p.m.
President, SNC Lavalin Operations and Maintenance (O & M)
I'm not sure.
You might be?
4:45 p.m.
General Manager, Public Works and Government Services Canada, SNC Lavalin Operations and Maintenance (O & M)
Actually, I am personally.
I know that many people at the company are. We belong to all kinds of organizations.
4:45 p.m.
Bloc
Meili Faille Bloc Vaudreuil—Soulanges, QC
What is the value of your sponsorships with respect to workshops?
4:45 p.m.
General Manager, Public Works and Government Services Canada, SNC Lavalin Operations and Maintenance (O & M)
Workshops?
4:45 p.m.
General Manager, Public Works and Government Services Canada, SNC Lavalin Operations and Maintenance (O & M)
We have not done any sponsorship.
4:45 p.m.
Bloc
Meili Faille Bloc Vaudreuil—Soulanges, QC
Since the contract was awarded, have you had any meetings with Brian Card?
4:45 p.m.
General Manager, Public Works and Government Services Canada, SNC Lavalin Operations and Maintenance (O & M)
Brian?
4:45 p.m.
Bloc
Meili Faille Bloc Vaudreuil—Soulanges, QC
Brian Card is the president in charge of fundraising programs for the RPIC.
4:45 p.m.
General Manager, Public Works and Government Services Canada, SNC Lavalin Operations and Maintenance (O & M)
I do not know him.
4:45 p.m.
Bloc
Meili Faille Bloc Vaudreuil—Soulanges, QC
My question has to do with the $50-million savings that was identified when the contract was awarded.
Since then, have you been asked to report on greater savings in order to justify the size of the contract?
4:45 p.m.
Bloc
4:45 p.m.
President, SNC Lavalin Operations and Maintenance (O & M)
Well, the $50 million, from what I understand, is a number between the baseline of Public Works, when they were self-performing these activities, and when they outsourced to BLJC. I don't really understand where that number comes from, so I can't really comment on that.
We have a budget we have to meet on an annual basis, which is reviewed and dissected with Public Works. That's our commitment to the department. I don't think any of us can comment on that $50 million.
4:45 p.m.
Liberal
4:45 p.m.
Conservative
Patrick Brown Conservative Barrie, ON
Thank you, Madam Ratansi.
The first question relates to the access that small and medium enterprises are given for the opportunity to bid on work.
Can you explain how that opportunity is arranged, the economic impact for small and medium-sized Canadian businesses, and the amount of work they're getting through your company?
4:50 p.m.
Senior Vice-President, Facility Management, SNC Lavalin Operations and Maintenance (O & M)
It's a good question. Thank you very much.
All companies have had access since we started this contract in 2004. We did a public release throughout the industry inviting any company to pre-qualify. We identified to them what our process would be and how to join the roster of pre-qualified subcontractors. That makes sure we adhere to the government's requirements for security access, insurance coverage, and worker safety and compensation.
Since that time, and beginning at that time, we've met regularly with all the associations, whether provincial or national--for example, the Canadian Construction Association. They've been able to train their membership to a great degree on how to access pre-qualification and bids to our company.
Generally, on an annual basis we also publish regarding pre-qualification for anyone who hadn't been aware of it before. We publicly tender all jobs over $200,000, through newspaper advertisements as well as MERX postings. Again, we're out in the industry, not only in our services for Public Works, but dealing with tens of thousands of subcontractors, and we explain to them how to access work through us.
In terms of your question around value, approximately 80% of the moneys that are given by Public Works to pay for the direct services are funnelled through to small and medium enterprises. The only distinction are large utilities, which can't be considered to be SMEs. They are monopolies, so we have no choice, and that takes a significant amount of the money.
After you exclude utilities, the balance of funding, the 80%, finds its way to small and medium enterprises.
4:50 p.m.
Conservative
Patrick Brown Conservative Barrie, ON
Given the large economies of scale that SNC Lavalin possesses, can you also expand upon the savings we may see for Canadian taxpayers?
4:50 p.m.
Senior Vice-President, Facility Management, SNC Lavalin Operations and Maintenance (O & M)
I think that's an interesting follow-up question to what we've been able to deliver as additional value to the crown.
Certainly the formula that Public Works is able to calculate on what those savings are... We don't have access to their prior year costs, but we are measured on a continuous improvement basis. We have traditionally seen costs below inflation in the parts of the portfolios we manage. If I take one particular example, aside from economies of scale in service procurement, and look at the energy side, we know we've saved millions and millions of dollars for the crown and Canadian taxpayers by more prudently operating the portfolio in an energy efficient manner.
4:50 p.m.
Conservative
Patrick Brown Conservative Barrie, ON
Perfect.
Mr. Holder had a quick question he wanted to get in, so I'll share my time with him.
4:50 p.m.
Conservative
Ed Holder Conservative London West, ON
Thank you very much.
And again, thank you to our guests.
In fact, I'd like to be a little bit more specific. According to the information we heard from PWGSC, in the very first relationship they had with Brookfield LePage Johnson Controls, if I read correctly, they indicated that savings achieved were in the order of $20 million annually. I gather that, according to this, in the first three years of the contract with SNC-Lavalin O&M contracts, the department saved almost $87 million above and beyond the savings from the original contracts.
That strikes me as fairly significant. When we heard the folks from Public Works talk about some of the rationale behind what they could do, what became very clear to me and what they had indicated was to not compete in those areas where private enterprise should have the opportunity to do so. I'd like to commend SNC-Lavalin for that, because that is a testament. Those millions of dollars of taxpayers saving is hugely significant and really does support the decision that was made to farm out what they consider non-core services.
My Cape Breton mum used to say the proof of the pudding is in the eating. In truth, when I look at that $87 million of savings, that is some pretty good eating, or lack of eating perhaps, as the case might be. But again, it is hugely significant.
You indicated the number of audits, Mr. Rate, in terms of what you do internally within your organization. I was struck by that. If I read and heard correctly, you indicated that you carried out some 400 internal audits. Explain to me how that works, please. You have obviously more suppliers than that, but do you pick a certain number? How do you determine what you're going to audit where? Is it a flow-through?
We do that with various departments where we try to determine savings in various departments by picking different ones annually on a triennial basis. What is your logic with respect to audits, who you audit and how that works?
4:55 p.m.
President, SNC Lavalin Operations and Maintenance (O & M)
I'll let Martin go through some details, but really what we're trying to do is test on an ongoing basis how we are carrying out work. We have to test a number of things. These aren't just financial audits. They are health and safety audits, which are extremely important to us. We need to be able to keep our people, our subcontractors, our building occupants, and everyone who uses the building safe, so that is an area of audit.
We have eight contracts across the country. We would typically spread out audits across those eight contracts. We do project audits. We do value-for-money audits. We really try to test each of the individual contracts to make sure they're performing as we expect them to.
4:55 p.m.
Conservative
Ed Holder Conservative London West, ON
Thank you.
One of our members opposite talked about why we made a decision—or a decision was made by the minister—to bring in an external auditor to review some expenses that you've outlined there, what the rationale was, and was that a question of confidence in our own folks at PWGSC. I would submit, as I recall sitting in the House during that period of time, that there were a number of members opposite who were fairly aggressive about the expenses associated with some of the items you have outlined that would, on the face of it, appear higher than what might otherwise be, until you got into “the devil is in the details”.
Where you've indicated that you look forward to or certainly welcome and are prepared to be supportive of the external audit, do you believe that the expenses associated with those half dozen or eight items in particular that were outlined in some recent press will stand up to scrutiny of the external audit?
