Mr. Chair and members of the committee, good morning.
My name is Alex Lakroni, and I am the Chief Financial Officer at Public Works and Government Services Canada. With me is John McBain, Assistant Deputy Minister of the Real Property Branch.
We appeared before this committee to discuss supplementary estimates (B) on November 25, and we are pleased to return today as part of your review of the supplementary estimates (C), which were tabled in the House of Commons on February 28.
With these estimates, our appropriations will increase from $3.1 billion to $3.3 billion.
The supplementary estimates (C) identify a total requirement of $261.4 million. This amount is reduced by $58.7 million as a result of funding available within our existing budgets. Thus, the net funding required for PWGSC is $202.7 million.
As the first three items in supplementary estimates (C) constitute over 95% of the funding sought, these will be the focus of my initial remarks. I will address these three items by order of magnitude and will then be happy to answer any questions you may have on the remaining items.
PWGSC is responsible for, among other things, the accommodation needs of federal employees across Canada. To ensure the effective delivery of accommodation services, the first item in these supplementary estimates (C) is the department's $216.8 million acquisition of the former Nortel Carling campus located at 3500 Carling Avenue.
While the purchase of the campus offered a significant real estate opportunity, this acquisition was made by PWGSC to enable the consolidation of the Department of National Defence in the national capital area. At present DND is distributed across 48 locations. Upon completion of the fit-up and move to the Carling location, DND will be concentrated in approximately 10 locations, offering significant operational efficiencies.
As taxpayers rightly expect with a purchase of this scope, PWGSC undertook rigorous due diligence prior to bidding on this property. The department first canvassed for potential sites across the national capital area. Once the Nortel building was determined to be the optimal option, a third-party engineering firm was engaged to assess the condition of the building and campus infrastructure. Prior to entering the bidding process itself, the department engaged third-party real estate professionals to assess and advise on the market value of the property. Individually and collectively, the third-party independent analyses confirmed that this acquisition represents exceptional value for money for Canadians.
Over a 25-year period, this purchase represents savings of approximately $600 million, compared with sustaining status quo accommodations, and more than $300 million over the next-lowest cost option.
Beyond the outstanding value of this purchase, it is also important to recognize that no other potential site offered the immediate capacity, the security capability, or the existing municipal infrastructure offered by the Carling campus. My colleague John McBain will respond to any questions you may have about the advantages of this purchase.
It should be noted that this purchase in no way affects our commitment to the 75-to-25 target ratio of division of office space between Ottawa and Gatineau.
The second notable item in these supplementary estimates (C) is funding of $17.5 million that will be used to renovate and recapitalize a portion of our real property portfolio. Finally, $16 million is required to address the increasing cost of providing office accommodations, attributable to the renewal or growth of programs government-wide.
Mr. Chair, we would be happy to answer your questions on the items I have discussed as well as other items in these supplementary estimates (C).