Government Operations Committee on Nov. 25th, 2010

[Marilyn MacPherson]

I will start.

With respect to the cap on travel conferences and hospitality, we invoked inside of PCO a very rigorous process whereby we have been soliciting input from all of our secretariats and allocating within. We have managed to stay below the cap, and we do intend to continue to try to do that going forward.

With respect to the salary increases, it is 1.5%. The managers in this fiscal year are expected to manage that within their current budgets. Next year we will be entering a period when the reductions with respect to strategic review will take place, and during the course of this year we will be looking at the budgets across the organization.

[The Chair, Liberal, John McKay]

Thank you, Madame Coady.

Thank you, Ms. MacPherson.

I'm assuming if you want a further elaboration on that question, you'll come back in another round.

Ms. Bourgeois, you have eight minutes.

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

Thank you, Mr. Chair.

Good morning, ladies and gentlemen. Thank you for coming.

My first questions will of course be for Public Works and Government Services Canada. As you probably guessed, my questions pertain to the supplementary estimates. PWGSC is requesting $3.7 million for pre-construction activities associated with the rebuilding of the Grande Allée Armoury in Quebec City.

What are the timelines for this project? What are the total cost estimates associated with this project?

[John McBain, Assistant Deputy Minister, Real Property Branch, Department of Public Works and Government Services]

Thank you for the question.

Mr. Chair, I am pleased to speak to those elements. The total amount of the funding set aside for this part of the work on the manège militaire is $5 million. The supplementary estimates request the access of $3.6 million of that $5 million.

This fiscal year a further $1 million is being spent from the economic action plan on the project. The work that is being carried out by the department includes the cleaning of the building interiors, removal of contamination, installation of a temporary heating and ventilation system, and investigation of the masonry walls in terms of speaking to their solidity and appropriateness for re-use.

We're preparing some preliminary cost evaluations and preparing the functional and operational programs for the future use of the site. In addition, there is an opportunity posted on the electronic tendering process, MERX, right now, which seeks proponents to propose solutions for the long-term reconstruction and use of the site.

That MERX posting will close on December 6, the evaluation will follow, and then the selected proponents will be asked to come forward and propose solutions in 2011. At that point the department will seek the approval of government for a long-term solution.

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

Thank you very much.

I am surprised to see that you have requested $88 million for increased expenditures associated with state-owned buildings and leased offices. I am told that these are mandatory expenditures. This surprises me. Considering that we have talked about the condition of federal government buildings for several years, why were these expenditures not forecasted? You knew about this. It seems to me that we have studied the issue of buildings in an in-depth manner for the past two years. Why are you looking for an additional amount?

[John McBain]

Thank you for the question, and it is a very good question.

As you know, the department is charged with housing the Public Service of Canada. We hold in our inventory in excess of 7.1 million square feet of office space, which we deliver through crown-owned, leased, and lease-purchased facilities. We consider these costs to be quasi-statutory. They are non-discretionary, but they do fluctuate from year to year.

If I could draw a parallel to a homeowner, these would be your heating, electricity, insurance, and tax costs. You know they are coming, you just don't know exactly what they are. The quasi-statutory request in these supplementary estimates is a practice that we have established with central agencies and it has been in place since 1991. They reflect our calculation of the actual costs.

So I would suggest, Mr. Chair, that these are costs, which we know are coming, through supplementary estimates we are able to adjust to the precise figures that are required in any given year. They cover our costs for operating and maintenance contracts, which fluctuate with labour costs, utility costs, payments in lieu of taxes, and costs associated with renovation, which change depending on which projects fall in any given year.

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

I want to really understand. Initially, you're asking for $88 million for an increase in statutory expenditures. These are expenditures that were not accounted for in the budget initially. If they are statutory, why not include them in the regular PWGSC budgets?

Then you are seeking $14.4 million for costs associated with additional office facility requirements. That brings us to just over $100 million. That is a great deal of money that has not been accounted for in the budget.

[John McBain]

The supplementary estimates, the first number, the $88 million, seek adjustments for expenses that occur this year. They will then be included in next year's base. It is an in-year adjustment.

The $14 million that you speak about is a second category, and that is for us to provide accommodation for new programs that have been approved through a decision of the government. So there's--

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

All right. As for the $14 million for the provision of accommodation, does this pertain to leased facilities or those that belong to the Government of Canada and require modification? What type of facility are you referring to?

[John McBain]

Regarding accommodation, this is a formula that is used in submissions that go before government. It is based on 13% of salary. So in terms of new programs or continuation of programs that had already been established but may have had a sunset date, 13% of the salary dollars associated with those proposals is set aside for the department to access to provide accommodation.

We will use a number of solutions to meet that need, depending on location, duration, and the nature of the programs to be accommodated. For example, it may be crown-owned in Moncton, New Brunswick, but it may be leased space in Toronto. It depends on who we are accommodating, where they are located, and for the duration of the program.

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

I will turn to another subject. You are seeking an additional amount for the Office of Small and Medium Enterprises to enable it to promote Canadian products on the market.

What is the difference between the promotion done by Public Works and research and development?

[The Chair, Liberal, John McKay]

Very briefly, Mr. Lakroni.

[Alex Lakroni]

If I may, this is a new initiative, a pilot project that was approved in the federal budget to promote innovation and support small and medium enterprises. There are few components to this program. I can provide you with the background of the program, which is aimed at encouraging small and medium enterprises that have developed innovative products but are unable to test them on the market. The federal government wants to give them an opportunity to test out their products on the market.

The program has four priorities: the environment, health, security and enabling technologies.

To qualify the businesses must operate in Canada, must propose innovation with an 80% Canadian content, and must meet one of the four priority areas I talked about. They must not have sold their innovation commercially and have proposal costs less than $500,000.

[The Chair, Liberal, John McKay]

Madame Bourgeois, on a point of order?

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

Mr. Chair, I do understand that this is about market development for small and medium enterprises. However, I find it hard to distinguish between research and development and market development for small and medium enterprises. We are being asked to give a few million dollars to this program.

Could we request that a document be tabled with the committee clerk that describes exactly what is going to be done for small and medium enterprises? May I make such a request?

[The Chair, Liberal, John McKay]

That is not a point of order. It is a point of information.

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

All right.

[The Chair, Liberal, John McKay]

Madame Bourgeois is requesting, if you will, an expansion of the information. Is that available?

[Alex Lakroni]

Mr. Chair, if you allow me the time, I have all the background. I can give you all the information right now. I have it.

There is a press release that's being made public that details the whole content, the criteria of the program. I think this is public knowledge and I will be happy to share that with you.

[The Chair, Liberal, John McKay]

Unfortunately, time is up for Madame Bourgeois. Possibly Mr. Warkentin will be generous with his time, and even share it with the Bloc.

Why don't we turn to Mr. Warkentin and we'll come back to that, if in fact it's not picked up by other questioners.

Mr. Warkentin.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chair.

I want to go forward on this issue, the kickstart program. It's something our committee has worked on. It is an initiative to help small and medium-sized businesses access government contracts, especially when they have innovative or leading-edge technology, or something they have found impossible to demonstrate in other venues, which they believe the federal government would benefit from.

Our committee heard last year that some businesses were having a difficult time accessing government contracts, because their product was so innovative that it didn't fit within the criteria the government had brought forward to solicit bids for replacement of existing materials. I'd like additional information on this, because I am concerned. I believe it's important that small and medium-sized businesses have access to federal government contracts. I see that there's $3.8 million allocated for this. These are usually products that would be purchased anyway, initiatives that would be happening anyway. I'm wondering what the $3.8 million is specifically intended to do. Is it to test them? What is the money being spent on?

[Alex Lakroni]

The program is designed to promote innovation and to support outreach. The activities have already started. We just closed the first of four calls for proposals on November 16. We will start procuring innovative goods and services before the end of this fiscal year. The program is for two years; this is the first of the two years. The program total is $40 million, and it is a pilot.

[Chris Warkentin, Conservative, Peace River, AB]

Can I get some clarification? We heard testimony from a computer company that was designing a computer that they felt would do a better job than any other. They were light-years ahead of the pack, but they were finding it difficult to access federal government contracts. They wanted to go in and put their product up against the others on a general competitive basis, but they found that the RFP was outdated in relation to the technology they were proposing. Does this work to address some of that? Does it bring in prototypes independent of what other RFPs might be requesting?

[Alex Lakroni]

I'm not an expert in procurement, but I'll give you my perspective. This is basically a program to allow small and medium-sized enterprises to test innovative ideas, to give them a kickstart in commercializing their products. The government would procure those goods and services in compliance with the usual procurement process, with all fairness, openness, and transparency. We are targeting four areas, and there are specific criteria that these individuals or companies have to meet in order to qualify for the program.

[Chris Warkentin, Conservative, Peace River, AB]

Is this project being undertaken by OSME, the Office of Small and Medium Enterprises?