Government Operations Committee on Feb. 3rd, 2011

[The Chair, Liberal, John McKay]

Ladies and gentlemen, I call this meeting to order. I see a quorum.

It's our great honour today to welcome to the committee Parliament's Auditor General. She has been to many committees and therefore needs no introduction.

I'll ask the Auditor General to make her opening statement, and then we'll move to questions from members.

Ms. Fraser.

[Sheila Fraser, Auditor General of Canada, Office of the Auditor General of Canada]

Mr. Chair, we thank you for this opportunity to meet with the committee to discuss chapter 3 of our 2010 spring report, “Rehabilitating the Parliament Buildings”.

I'm accompanied today by Sylvain Ricard, Assistant Auditor General, who was responsible for this audit.

The importance of the buildings on the Hill cannot be overstated. The Parliament buildings are the centrepiece of our national political life. The site, the architectural style, and the building layout were designed to convey an image of ceremony and order. With time, the buildings and the grounds have become a symbol of Canada's parliamentary democracy and the federal government.

The Parliament buildings have been in need of major repairs and upgrading for over two decades. Through its assessment of building conditions, Public Works has identified serious risks that could affect the continued operations of Parliament.

The heritage character of some buildings is also threatened. Furthermore, the Senate and the House of Commons have indicated that their current and future needs cannot be met by the buildings in their present state.

The governance arrangements are hindering rehabilitation work while the buildings continue to deteriorate. We found that decision-making and accountability are fragmented. We also found that the current arrangements do not allow for reaching consensus on priorities and committing resources to implement long-term plans.

These weaknesses, which cannot and should not be attributed to any organization alone, result in delays in making decisions and implementing projects, and contribute to increasing project costs and risks.

We have reported similar findings in audits we carried out in 1992 and in 1998. We believe that unless governance is fixed, only limited progress will be made on the rehabilitation of the Parliament buildings.

Three critical issues need to be dealt with: accountability relationships; long-term planning to rehabilitate buildings and meet the requirements of their main users; and finally, stable and long-term funding to complete planned work.

The ultimate purpose of these buildings is to support Parliament's unique operations. In our view, the Parliament buildings are a special purpose space and the control and responsibility for these buildings need to rest with Parliament.

We recommended that the Minister of Public Works and Government Services, in cooperation with the principal players, should develop and propose mechanisms to ensure that the responsibility and accountability for the Parliament buildings rest with the Senate and the House of Commons.

At the time of the audit, the department acknowledged the recommendation and undertook within its mandate and authorities to work with other stakeholders to strengthen governance. Should the committee want an update on their progress, it may wish to invite officials from the department.

We understand that the committee has also been looking at contracting related to work on the precinct. I would just like to point out that our audit, which was completed in October 2009, did not look at contracting activities.

In conclusion, the long-standing governance problem, which we and others have raised over many years, has to be resolved.

This concludes my opening remarks. We would be pleased to answer any questions that committee members may have.

[The Chair, Liberal, John McKay]

Thank you, Ms. Fraser.

The first round goes to the Liberal Party.

Mr. Regan.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you for being here, Ms. Fraser. It's always a pleasure to have you come before the committee. I must say that I find it even more pleasant now that I am in opposition.

I want to reiterate some of what you said. In fact, I'm going to quote from page 11 of your report. You said:

The governance framework in place is inadequate to guide the overall rehabilitation of the Parliament buildings. In particular, decision making and accountability are fragmented, and the framework does not allow for reaching consensus on priorities and committing resources to implement long-term plans. ...These gaps in governance contribute to the delays in addressing the continuing deterioration of the Parliament buildings.

It's worrisome because what this seems to suggest is that these buildings may be deteriorating faster than the ever-so-slow work to repair them is occurring. Can you tell us if there's been any meaningful progress since you tabled your audit?

[Sheila Fraser]

Chair, we have not done any follow-up work per se. We are of course aware that members have been moved from the West Block and that work will begin--I presume imminently--or has begun on the West Block. But we have not done any follow-up, so I think that's a question that the department would be best placed to answer.

[Geoff Regan, Liberal, Halifax West, NS]

Do you think there is a need for a single body or agency to take over the responsibility, to take over a strong oversight role, for this kind of work on the Parliament buildings?

[Sheila Fraser]

Chair, it was probably pretty easy for us to recommend that Parliament assume control of the buildings. As they say, the devil is in the details on how this would actually be structured. I think it is up to Parliament and government to determine.

There has been work done in the past on looking at different models, and we recommended to the department and the minister that they come forward with proposals. To my knowledge, that has not been done yet. But again, that would be something to ask the department: where they are at, what discussions have been held with the parliamentary partners, and if there is a common agreement on a model that would work. But clearly we believe the responsibility has to be given back to Parliament.

[Geoff Regan, Liberal, Halifax West, NS]

So you'd say, I guess, that a single oversight body led by Parliament would be a better role than leaving this with Public Works and Government Services.

[Sheila Fraser]

At the current time, Public Works and Government Services Canada is the custodian of the building. The two houses of Parliament will express their needs to Public Works, but then Public Works has to try to negotiate the funding. Parliament is not involved in those discussions. There are often conflicting priorities, as we mentioned, between Parliament and the government, and there are too many sort of intermediary steps.

Under government policy, if there are special usage or special purpose buildings, they generally will belong with the agency or department that is using those buildings, and clearly, the Parliament buildings, I think we can all agree, are special purpose, so Parliament needs to be much more involved, responsible, and accountable for the rehabilitation of the Parliament buildings and their ongoing maintenance.

[Geoff Regan, Liberal, Halifax West, NS]

In your report, you set out the context for your report and you talk a little bit about how the present system functions and the history of the Parliament buildings. You mention the Parliamentary Precinct Oversight Advisory Committee. What was your reaction when you learned that the committee could not even secure a meeting with the minister to outline their concerns about this process?

[Sheila Fraser]

I really can't comment on that, Chair. We looked at the role that committee plays. We know there have been meetings and recommendations by that committee, but beyond that, I have no comment to make.

[Geoff Regan, Liberal, Halifax West, NS]

Okay. Well, should we be concerned that the advisory committee could not even get a meeting with the minister to present their advice to her?

[Sheila Fraser]

Again, I'm reluctant to comment on that.

[Geoff Regan, Liberal, Halifax West, NS]

Well, I think you should, but....

Now, I understand that the West Block work is expected to cost just over $750 million by the time it's finished, in about eight years from now--if it is. We hope it's eight years and not longer.

It's reported to be the largest of the $5 billion in renovation projects that are planned. But unfortunately, in the last year, it's been linked to illegal lobbying, biker gang ties, ministerial incompetence, unfinished work, companies going bankrupt, and suspicious fundraising dinners.

From your experience with this file, can you say that it's currently on budget and on time?

[Sheila Fraser]

We have not looked at the project for over a year. I would say that in the long history my office has had with this project, it has never been on time. When we go back to the audits of 1992, there was a plan that all of the renovation and rehabilitation work would be completed by 2013. Obviously that's not going to happen.

The budget at the time I think was around $1 billion. Given, of course, increasing costs and a number of other issues, the costs have gone up. We mention in the report an estimate of $5 billion, but even that is very preliminary and dates back to I think 2005, so I would not think that it would be a precise number either. It's really only when they start the work and probably begin to do some of the exploratory initial work that they will be able to do more precise cost estimates.

Personally, I would not be at all surprised if the cost estimates increase over the project. As anyone who has ever renovated a house probably knows, even if you have a good contingency, there are always a few surprises along the way.

[Geoff Regan, Liberal, Halifax West, NS]

How would you describe the management of the project for the West Block, particularly for the north tower?

[Sheila Fraser]

We looked at very specific elements of project management. Were they considering the heritage aspect? Were they doing proper costing? We looked at a few elements like that, and we found that the department was using good practices and generally accepted practices. We had no recommendations as regards the specific issues we looked at.

[Geoff Regan, Liberal, Halifax West, NS]

So I take it, then, that you felt adequate safeguards were in place to mitigate any risk to taxpayers? Or did you...?

[Sheila Fraser]

We didn't look at issues like contracting. We looked at sort of the general framework of project management. We did not get into specifics, for example, as I mentioned in my opening statement, like contracting or issues like that.

[Geoff Regan, Liberal, Halifax West, NS]

I have a lot more questions, but I guess my time is up, Mr. Chair.

[The Chair, Liberal, John McKay]

Actually, you have 45 seconds.

[Geoff Regan, Liberal, Halifax West, NS]

Good.

Looking at what happened on the north tower, we saw LM Sauvé win the bid over other firms that seemed to be much more qualified, only to go bankrupt. I assume they would have posted a performance bond to protect the government's interest. That's the normal practice, I understand, for Public Works contracts.

But would you agree that the work on the north tower was mismanaged? And do you know if the performance bond was called in when LM Sauvé ran into its financial difficulties?

[Sheila Fraser]

Mr. Chair, that's not an issue we looked at in this audit.

[The Chair, Liberal, John McKay]

Thank you, Mr. Regan.

Madame Bourgeois.

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

Thank you, Mr. Chairman.

Ms. Fraser and Mr. Ricard, hello and welcome to this committee. The observations and the reports of the Office of the Auditor General of Canada are always greatly appreciated by members of this committee.

Ms. Fraser, in your report, you indicate that the decision-making and accountability processes were fragmented. What do you mean by that?