Evidence of meeting #44 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 hollander.
A recording is available from Parliament.
Program Coordinator, Economic Crime Studies, Centre for Forensic and Security Technology Studies, British Columbia Institute of Technology
I am not sure what you're referring to, sir. Are you referring to change orders that were issued after the contract was finalized?
Liberal
Denis Coderre Liberal Bourassa, QC
No. The contract was finalized afterwards, but it seemed that within weeks there were some changes, and if we hadn't changed that, that enterprise wouldn't have had that contract.
Program Coordinator, Economic Crime Studies, Centre for Forensic and Security Technology Studies, British Columbia Institute of Technology
Very briefly, I would have to have more information about the nature and extent of the changes in order to answer that question.
Diane Bourgeois Bloc Terrebonne—Blainville, QC
Thank you, Mr. Chairman.
I will begin with Ms. Trombetti, and then move on to Mr. Morse.
I would first like to make a comment. I find it quite odd that, in your opening remarks, the opening statement for the Office of the Procurement Ombudsman, you have so many good things to say about PWGSC. We know that PWGSC has always had trouble managing risks. As a matter of fact, it was exposed by the auditor general of Canada. We can list the files. We could, for example, talk about the computer processing file with regard to small and medium-size companies, that this committee studied.
I therefore find it odd that you have so much praise for PWGSC which, it would appear, made some efforts. However, I am wondering to what extent you are not in a conflict of interest for the simple reason that you have agreements with PWGSC and your hands are tied.
When...
Deputy Procurement Ombudsman, Office of the Procurement Ombudsman
Can I reply to that?
Bloc
Diane Bourgeois Bloc Terrebonne—Blainville, QC
No. That was one of my comments.
On page 2 of your document, you say that you decide which procurement practices to review. Given the mind-boggling amount of money that is going to be spent to repair the government buildings, would it not have been judicious to examine the procurement practices that were used in the case of this work? Did no red light come on: we are talking about $5 to $7 billion dollars?
Deputy Procurement Ombudsman, Office of the Procurement Ombudsman
Yes. In fact in our planning exercise—we have been doing them since May 2008—that issue did come up. We have a number of factors we consider when we are deciding which practice reviews to do. We have resources to take into account. We have areas of risk. We have what the Auditor General is already looking at; we consider that because we want to avoid duplication. We consider what the Comptroller General of Canada is looking at, again because we want to avoid duplication. We look at Canadian International Trade Tribunal decisions to determine what areas are of particular interest.
Since others were already looking at that issue, we decided not to look at that. But again, there were other considerations in our planning and our decision-making for the practice reviews we have conducted over the last two years.
We are a young office, so it could be that we'd look at something like that in the future. But at the time, decisions were made based on a number of considerations.
Bloc
Diane Bourgeois Bloc Terrebonne—Blainville, QC
Thank you, Madam Trombetti.
We heard Mr. Hollander's evidence this morning. I did not know Mr. Hollander. We should perhaps have heard him at the beginning of our work on this issue.
Given the information that he has provided us, do you think it would be possible for your office to work with Mr. Hollander to audit and do a more in depth examination of the contracts that have been granted for West Block?
Deputy Procurement Ombudsman, Office of the Procurement Ombudsman
I won't tie the hands of the next procurement ombudsman, but it is a possibility that Mr. Hollander can be contracted to provide some expert advice to our office.
Bloc
Diane Bourgeois Bloc Terrebonne—Blainville, QC
Mr. Hollander, the committee heard a certain Duff Conacher, who told us that it is legal for ministers to intervene in the contracting process by virtue of Treasury Board policy itself. In his opinion, it is even very easy for a minister to intervene in the contract awarding process, while all the while avoiding any responsibility or accountability.
Are you in agreement with those two statements?
Program Coordinator, Economic Crime Studies, Centre for Forensic and Security Technology Studies, British Columbia Institute of Technology
Once again, you're asking me for a legal opinion, which I am afraid I'm not qualified to give. If the gentleman who gave that testimony was qualified to give it, then of course I would accept it.
Conservative
Chris Warkentin Conservative Peace River, AB
Thank you, Mr. Chair.
To follow up with you, Mr. Hollander, I guess everyone is entitled to their own opinion, so the matter that was just talked about was simply the opinion of an individual and not one based on fact.
Anyway, I do want to correct a little bit of information. One piece of information that we've heard from members opposite is that changes to the pre-qualifications that were made to the bid documents favoured the person who received the bid. In one case that is the fact. In the other case it actually made it more difficult for the person who got the contract to get the contract, and the only change that was made in reference to the person who received the contract was that it allowed the general contractor to do some of the masonry work themselves.
Simply put, the change that benefited the Sauvé contract was that the Sauvé company would undertake the masonry work themselves rather than hiring somebody outside of their own firm to do it. Obviously, LM Sauvé was known for its capacity to undertake large masonry contracts. It is important that this be on the record.
I'm wondering, Ms. Trombetti, whether any evidence has come to your attention or if anybody has brought evidence to you that would indicate there was some type of political intervention in the renovation contracts of West Block.
Deputy Procurement Ombudsman, Office of the Procurement Ombudsman
We have no such evidence.
Conservative
Chris Warkentin Conservative Peace River, AB
Mr. Hollander, I wonder if you have any evidence of any political interference or intervention in the renovation contracts of West Block.
Program Coordinator, Economic Crime Studies, Centre for Forensic and Security Technology Studies, British Columbia Institute of Technology
I haven't been following the case in any great detail. While it's certainly possible, I could also see how it could very well have been done without any political interference. So I would need more evidence.
Conservative
Chris Warkentin Conservative Peace River, AB
Have you any evidence that would lead you to believe that there was political intervention in the renovation contracts of West Block?
Program Coordinator, Economic Crime Studies, Centre for Forensic and Security Technology Studies, British Columbia Institute of Technology
All I know is what I read in the media. The only evidence I have in that regard is the same that you would have, sir.
Conservative
Chris Warkentin Conservative Peace River, AB
Yes, and that's exactly the point. We don't have any evidence of political intervention on the renovation contracts of West Block.
Certainly we appreciate both of the testimonies we've heard here today. We do appreciate the contributions that you've made, because it is important that governments at all levels undertake a review of the practices as they relate to contracting to ensure that taxpayers are always getting the best price and the best value for money.
I wonder if we might go through some of the suggestions. Many of the suggestions, Mr. Hollander, that you've made this morning are actually suggestions the department and the government have undertaken to put into place. Obviously there was a desire and a need to ensure transparency and to elevate the assurances to the taxpayer that no wrongdoing was being undertaken within government departments. As a result of the Federal Accountability Act, many of the provisions that you're suggesting have actually been undertaken.
Specifically, many of the different points in which you believe that some wrongdoing might take place wouldn't really apply to this particular study. You specify that in determining whether a project should go ahead, that may be an opportunity for an intervention of some wrongdoing.
In this case, there is no question that West Block is falling down. There really are not many who would question the legitimacy of the need for the restructuring of the masonry of the West Block.
I am wondering, as it relates to the study that we have in hand today, if you have any suggestions that aren't covered off by the Federal Accountability Act or things we should look at as we move forward to ensure everything is in place. Every government wants to ensure that taxpayers are getting the best value for money, but we want to keep on the topic at hand today as well.
Program Coordinator, Economic Crime Studies, Centre for Forensic and Security Technology Studies, British Columbia Institute of Technology
Thank you.
As alluded to earlier, the matter of whistleblowing and strengthening the whistleblowing piece would go a good way toward helping the situation we now have. I realize that we have the integrity commissioner, but also I believe the Auditor General recently found that the way the legislation had been implemented was a bit problematic. Some beefing up there may be necessary.
Quite frankly, if a person is going to report adversely on their own department, they're taking a risk and they know they're taking a risk. If they're going to take that risk they have to be assured, among other things, that the matter they bring forward is going to be taken seriously and followed up on. If they see a situation where, according to the Auditor General's report, this wasn't the case--you have the legislation and the bureaucracy in place, but their effectiveness is close to nil--nobody will want to take the chance.
Liberal
Liberal
Geoff Regan Liberal Halifax West, NS
Mr. Warkentin has said there's no evidence. If there's no evidence, why was Mr. Varin paid $140,000? If there's no evidence, why is the RCMP investigating? If there's no evidence, why did Mr. Côté--an assistant to the Minister of Public Works at the time, Mr. Fortier--meet with Mr. Sauvé? If there's no evidence, why was Mr. Sauvé asked to organize a fundraiser for the Conservative Party?
Mr. Hollander, don't these issues raise red flags?
Program Coordinator, Economic Crime Studies, Centre for Forensic and Security Technology Studies, British Columbia Institute of Technology
If the committee will indulge me, I can speak hypothetically, divorcing ourselves from any particular instance.
Suppose that a contractor believed I had political influence--which I certainly do not--and came to me and asked me to arrange for a contract to be directed to him, and he'd make it worth my while. I could say, “Certainly, I'll need some front money to grease some wheels--$100,000 to $150,000 would help”. I take the individual's money and come back to him a couple of weeks later. I say that the fix is in and he needs to lowball his bid. Bring it in even below his own cost, and we'll see to it that he's going to be right, because once he has the contract the change orders will come through and they will be very lucrative. As a matter of fact, I think anybody who has worked in construction will be able to say that the real money is in the extras.
What happens then could be very interesting, because I could also say that when these change orders start coming through I want 3% off the top, plus--once he gets the contract, in order to reward me--I want him to pay off some of my political debts by holding a fundraiser. All right. Now, this could be done, but here's an interesting twist to the situation.
Suppose I took the contractor's money and didn't do anything for him. I just took the money, folded it in half and put it in my pocket. I never visited anybody of any importance. I just brought him back the message.
He puts in a bid that's below his own costs--shockingly low. Naturally he's going to get the contract. He thinks I helped him out, so he's going to hold the fundraiser for me. He gets the contract. If the change orders start coming in, he's doing well. He pays me my 3% and I do well. Win, win.
If the change orders don't come in, too bad. I still have my $140,000 front money. The contractor may be disappointed, but he can't exactly go to the police and say he gave money for a bribe and didn't get what he was paying for.
So this is one of a number of possible scenarios. Again we are divorcing ourselves from any particular case.
