Government Operations Committee on Nov. 27th, 2012

[The Chair, NDP, Pat Martin]

Good morning, ladies and gentlemen.

We'd like to convene the 65th meeting of the Standing Committee on Government Operations and Estimates. Today we will be examining the supplementary estimates (B), with witnesses from the Department of Public Works and Government Services. Even though they don't have any representation directly or any supplementary estimates (B) to submit for examination or votes, we'll look forward to questioning them on other reports, etc.

We will also be having as witnesses representatives from the Privy Council and the Transportation Safety Board of Canada. We're beginning, though, with the Department of Public Works and Government Services. I believe Mr. Andrew Treusch will be giving opening remarks.

Perhaps you could introduce your panel as well. You are welcome, and you have the floor, sir.

[Andrew Treusch, Associate Deputy Minister, Department of Public Works and Government Services]

Thank you very much, Mr. Chair.

Good morning, everyone. My name is Andrew Treusch. I'm the associate deputy minister of Public Works and Government Services Canada.

I am pleased to be here along with my colleagues, Alex Lakroni, who is our Chief Financial Officer, John McBain, Assistant Deputy Minister of our Real Property Branch, and Pablo Sobrino, Associate Assistant Deputy Minister of our Acquisitions Branch.

I'm here today to speak about our 2011-12 departmental performance report, our 2012-13 supplementary estimates (B), as well as our achievements under the deficit reduction action plan.

I understand the committee is interested in the fact that we are not requesting any additional funds through supplementary estimates (B). Departments table supplementary estimates primarily when approvals occur after main estimates for items such as new funding for existing programs, items announced in the federal budget, or reallocations of funds between appropriations. Like other government departments, PWGSC is not obligated to ask for funding through supplementary estimates if we have sufficient cash on hand through existing appropriations to cover any additional program requirements. This principle is at the heart of responsible spending and sound financial management. I want to emphasize, however, that the supplementary estimates are a normal part of the government's budgetary procedures and will remain a part of our department's fiscal cycle.

PWGSC is the government's principal common service organization, providing government departments and agencies with services in support of their programs.

Our main services include procurement, office accommodation and facilities, architectural and engineering services, construction, maintenance and repair of public works and federal real property, translation and related services, and pay and pension.

The minister of PWGSC serves as the Receiver General for Canada and has authority for the administration of pay services for federal employees. The minister is also responsible for maintaining the Public Accounts of Canada.

PWGSC's vision is to excel in government operations, by delivering high-quality services and programs that meet the needs of federal organizations while ensuring sound stewardship on behalf of Canadians.

We play an important role in the daily operation of the Government of Canada as its principal banker/accountant, central purchasing agent, linguistic authority, and real property manager. We manage a diverse real estate portfolio that accommodates some 269,000 federal employees in 1,819 locations across Canada, including these Parliament buildings; we purchase more than $16 billion of goods and services annually, representing some 54,000 contracts through government procurement; we prepare the public accounts; and we manage a cashflow of more than $2 trillion each year.

We translate more than 1 million pages of text on behalf of federal organizations, and provide translation and interpretation services for Parliament and its committees.

For 2012-13, our total gross budget, as approved by Parliament, is $6.1 billion. Our department is heavily revenue-dependent, with 56% of our expenditures, or $3.4 billion, covered by revenues from client government departments. This, therefore, leaves us with a net appropriation of $2.7 billion.

Our operating vote totals $3.3 billion, and this has two basic components. First, $0.9 billion is required to deliver on our core programs, such as central purchasing and banking, public accounts, payroll and pension services, and our own internal services. The second part, $2.4 billion, is required to pay for rent, fit-up, and utilities for government-wide accommodation, Receiver General functions, like payment and related overhead, and translation services to Parliament.

We also deliver a number of other services to federal departments, such as real property project management and translation, and these, again, would be on a full cost-recovery basis.

Finally, PWGSC has a capital vote of some $518 million, primarily to invest in Government of Canada buildings and infrastructure.

Last year PWGSC made significant progress on several major initiatives. I will outline a few of these.

The 2011 announcement of the shipyards selected under the National Shipbuilding Procurement Strategy was an important milestone. We are proud to have delivered a fair, open, competitive and transparent approach for the largest procurement arrangement in Canadian history.

I am particularly pleased to note that in recognition of our work on the NSPS, the department received a 2012 Public Service Award of Excellence, as well as the 2012 bronze award for Innovative Management from the Institute of Public Administration.

The Public Policy Forum declared this strategy the 2011 top public policy story of the year. I know my colleague, Tom Ring, appeared before this committee in recent days to discuss this work.

Our Canadian innovation commercialization program has helped Canadian businesses demonstrate their innovative products and services while also meeting the needs identified by federal departments and agencies. We are continuing on the renovations of the Parliament Buildings, with 15 projects delivered on time and on budget. Planning for the rehabilitation of the buildings in the parliamentary precinct is proceeding, including work on the East Block, the West Block, and the Sir John A. Macdonald Building.

My colleague, Pierre-Marc Mongeau, will appear before you on December 13 to provide you with an update on these projects and associated costs.

We are working to bring 21st-century business solutions to government, by modernizing pay and pension services. More specifically, we are consolidating pay administration services for public servants into a single pay centre in Miramichi, New Brunswick. This initiative consists of replacing the government's outdated 40-year-old pay system with more efficient and modern technology and will generate millions in annual savings.

In addition, we have put in place a department-wide client service strategy aimed at bringing a more consistent and disciplined approach to the provision of our wide range of services to client departments, big and small, across the government. As part of our commitment to transparency, I am pleased to say that these service standards are now publicly available through our website.

I would note that PWGSC has good results in the annual management accountability framework, or MAF. These are the assessments carried out by the Treasury Board. MAF is a key performance management tool that the federal government uses to support the management accountability of deputy heads and to improve management practices across government. Last year, of the eleven areas for which Public Works was assessed, we scored either acceptable, “green”, or strong, “blue”, in ten areas, with one area where an opportunity for improvement was noted.

Our most recent departmental performance report contains 27 performance indicator targets. Here I am excluding the three that are developed by the procurement ombudsman. We substantially met or exceeded 24 of them.

We are pleased to have accomplished this while building the reputation as a department to recruit and retain the workforce of the future. Our department was named one of the national capital region's top employers and one of Canada's best diversity employers in a single year.

Last night we took the Chair's Cup in the Government of Canada's annual charitable campaign, for our contribution of over $1 million.

[Voices]

Hear, hear!

[Andrew Treusch]

Thank you.

PWGSC remains focused on fiscal prudence and ensuring that taxpayers' dollars are used as efficiently and effectively as possible.

In Budget 2012, PWGSC committed to $177.6 million of reductions over seven years as part of the deficit reduction action plan. Most of the savings are from the modernization of government workspaces.

PWGSC has shown leadership in the area of sound financial management and has instilled a culture of budget management excellence throughout the various program branches. The department's forecasting accuracy between December 31 and year-end for the last two years exceeded 99%. This demonstrates a level of financial management discipline that goes beyond government and industry standards.

In addition, we have strengthened our oversight role in all financial matters. Rigorous practices have yielded economies and resulted in moneys returned to the fiscal framework. We have in place a number of strong policies, processes, and procedures to support fair, open, and transparent business practices. This is a continuous approach to ensure the highest level of accountability in the Government of Canada's procurement and real property systems.

We introduced in July an integrity framework to ensure we are doing business with organizations and individuals that respect the law. This is another step to increase our due diligence, reduce the opportunity for fraud, and better manage the reputational risk to the procurement and real property system.

Internally, we have a strong audit and evaluation function, and we launched a PWGSC Code of Conduct in April 2012, concurrent with the release of the new Values and Ethics Code for the Public Sector.

I'm pleased to say that we have accomplished all of this while providing comprehensive support to our employees as we reduce the size of our workforce. Our department totalled around 12,200 employees in 2011-12. We experience considerable mobility, including some 500 of our employees who retire each year. Overall some 95% of the employees affected by the first and second year of the strategic review have secured alternate employment or have left the public service, typically for retirement. For the employees affected by the April 2012 implementation of the deficit reduction action plan, some 88% have already been placed or have left the public service, typically for retirement.

We have accomplished this largely through the efforts of our departmental priority placement process.

Thank you for your attention. My colleagues and I would be very happy to answer your questions.

[The Chair, NDP, Pat Martin]

Thank you very much, Mr. Treusch. We appreciate that.

Now we will have questioning, beginning with Linda Duncan of the official opposition, the New Democratic Party.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thank you, Mr. Chair.

Thank you for appearing before us today.

My first question follows on your comment about the policy of fiscal prudence. We note that despite that, since 2006, the advertising expenditures for your department have done nothing but escalate. There are rumours that the department is considering reverting back to pre-Gomery and farming out to outside parties delivery of the advertising. I wonder if you could speak to that and to whether there is in place a fiscal prudence strategy that will soon be revealed on spending on things such as the economic action plan.

[Andrew Treusch]

I don't think Public Works and Government Services Canada actually has an advertising campaign. I think the honourable member is referring to the Government of Canada's advertising campaign. Public Works does indeed have responsibilities here, so I well understand the question.

First of all, we're responsible for the media buy, and centralizing the media buy is a more cost-effective way for the government to achieve its publicity objectives. So we do have that responsibility. We have a second responsibility, which is to prepare an annual report on the Government of Canada's annual advertising campaign.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I noticed in your 2012-13 report on plans and priorities—and this keeps coming up in your reports—that on page 8 you talk about the role of Public Works in implementing the federal sustainable development strategy, part of which is greening government buildings. That effort is commendable, and our committee is looking forward to delving into that in greater detail a little later on.

One thing that puzzles me is that PCO has established its corporate management advisory committee to which departments can come and explain both the fiscal side of what they're doing and the legislative and policy implementation, but there have been some concerns in the audits of PCO that departments are not bringing in sufficiently detailed information about things, including costing.

I'm wondering if you could outline—and perhaps that's part of the problem—why your reports show no savings to the deficit resulting from a move to retrofit and make government buildings and facilities more energy efficient.

[Andrew Treusch]

We're quite proud of our leadership in green government operations under the umbrella of the government's sustainable development program. There is a theme, theme IV, on the greening of government operations. Public Works plays a lead role in the plans there. Our major efforts are focused on government buildings, along with fleet management, because government buildings account for about 80% of overall greenhouse gas emissions from the government sector.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I understand the program, sir. I'm asking, though, why there's no mention in the main estimates, the supplementaries, or the report on plans and priorities of any calculated savings from investing in greening those facilities.

[Andrew Treusch]

Our new buildings are built to LEED gold, and we also are able, in our major refits and in renovations as well, to extract energy savings and reduce greenhouse gas emissions there.

We're also reducing travel.

I will, if I may, now ask John McBain to elaborate on the answer. He is our ADM for real property.

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

Thank you for the opportunity.

We haven't identified a separate number in our reports; however, the savings that are realized from our greening operations are reflected in our annual ask for the operation of our inventory. As you know, part of our requests every year reflect changes in the costs of heating, cooling, and maintenance of our buildings, so each year it shows up more as something not asked—it is a cost avoidance. But it is not specifically targeted and carved out as a saving arriving from the implementation of these initiatives.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks, Mr. McBain.

Would it be possible to provide to the committee an overview over the last five years, say, and projected into the next five, of the energy savings that you forecast with the retrofit strategy?

[John McBain]

I will ask the branch and the various sectors to pull together the numbers that we can provide with respect to savings from our initiatives.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks.

[The Chair, NDP, Pat Martin]

Thank you very much, Ms. Duncan.

Thank you, Mr. McBain.

For the Conservatives, Mr. Jacques Gourde.

Five minutes, please, Jacques.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you, Mr. Chair.

I wish to thank the witnesses for being with us this morning. It is always a pleasure to have you here.

On page 6 of your presentation, you said, “PWGSC has put a number of strong policies, processes and procedures in place over the years to support fair, open and transparent business practices.”

Could you expand on this statement?

[Andrew Treusch]

There are two things.

First, we are the major agent for the Government of Canada in procurement, so the lion's share of procurement runs through our department. Also, of course, we are the custodian of office buildings for the Government of Canada, so certainly we've always had integrity provisions associated with acquisition. We have, in the summer of this year, strengthened our integrity provisions to ensure, to the extent possible, that we are not engaging in business with companies that have serious criminal convictions.

We extended the list of offences that would render a company or an individual ineligible to bid on a contract to include money laundering, participation in criminal organizations, income or an excise tax evasion, bribing officials, and drug trafficking. These measures are now in effect, and we've extended them—they apply not only to our contracting, but to our major real property functions as well.

Finally, I would note that on contracting we also have introduced and have made great use of fairness monitors to oversee the major procurement. There is a third party outside the department, but contracted by us, to provide an outside assurance that a contracting procedure has been fair, open, and transparent, and to provide a report at the end of the process to attest to that.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

You also stated that there had been 500 retirements annually at the department in recent years and a restructuring in order to deal with our deficit. From what you say, many positions and people were moved within the department. Some left and others lost their positions, but it remains that your placement rate is quite remarkable, that is, between 88% and 95%. So many people must have been able to find positions within or outside the department.

What did you do to ensure special attention for those people who had skills and who had lost their position, but whom you wanted to keep within the public service? It is important, when a lot of people are displaced, to keep those that have been trained over the years. Their skills have to be preserved. Tell me how you went about it.

[Andrew Treusch]

I appreciate the question and this important opportunity to clarify something on which I can see there's some confusion in certain quarters.

It's very important that positions are eliminated under these restraint exercises. Under strategic review, and most recently under the deficit reduction action plan, we have eliminated positions. In the most recent exercise, 163 positions were eliminated.

In terms of the people occupying those positions, these people are called “affected” in the human resource jargon of government. We put in place a job placement team for these people, whereby we have offered them every possible opportunity to find gainful employment within our department, within the government, or, of course, if they're at retirement, to take advantage of retirement. They have other opportunities as well. I'm only highlighting the key ones.

Our management team focuses on these affected people every week. Every week we review the people we've placed and the people we've not placed, until we've worked it through.

Turning back to the strategic review and the statistics I mentioned, 95% of the people affected in those positions that were eliminated have been successfully placed: the majority within the department, many across other government departments, and some have taken retirement. I spoke about, and you quite rightly referenced, attrition. As our workforce turns over, as people go into retirement, it opens up 400 or 500 jobs each year, so we certainly have flexibility to move people in a way that respects the requirements of the position.

In the most recent round, which is the DRAP, we're getting close to having placed 90% of the 163 people who were in those affected positions.

[The Chair, NDP, Pat Martin]

Thank you, Jacques. That concludes your time.

Next for the NDP is Jean-François Larose.

[Jean-François Larose, NDP, Repentigny, QC]

Thank you, Mr. Chair.

I also wish to thank our guests for being with us today.

You often talk about strategy. I do not find this situation at all reassuring. I do not see any strategy in it. I see objectives and constraints that you have been saddled with. You do what you can in the circumstances, but the reality is that there is a lack of planning.

According to the government’s news releases, the reductions under the 2012 budget should theoretically come from internal services. However, I note throughout the government and within your department, an increase in the estimates for program activities in the case of internal services. In light of the strategic review of the 2011 budget, the business review of the 2012 budget and the transfers to Shared Services Canada, I would have expected to see a reduction in such program activity.

Can you explain this increase to us?

[Andrew Treusch]

If I may, I'll answer this partly, and then I'll turn to the chief financial officer. Thank you very much for the question.

The reduction proposals under the DRAP process are generated by the department. They are submitted to our minister. She in turn takes them to cabinet and they're approved. Although financial targets are set by the government as a matter of government policy, the proposals are generated by us.

Our draft proposals largely fall into three large areas, and I'm accounting for almost all the reductions: first, modernization of the workplace; second, moving from cheques to direct deposit over the coming years; and third, reductions in internal services. Those three areas account for well over 90% of our whole package. It's fairly straightforward that way.

We've made many reductions in our internal costs. Our travel is down by millions of dollars. We have reduced the number of printers and computers per employee. We've taken software applications off our systems. We've reduced our hospitality expenditures. We've found a lot of small economies, which, while small, in total are important to the taxpayer.

If I may, I'll ask Alex to address our internal services.

[Alex Lakroni, Chief Financial Officer, Finance Branch, Department of Public Works and Government Services]

If I may, I would like to refer you to the DPR, page 8, where we have a performance summary for internal services. You will note that the actual spending in 2011-12 is $338 million, which, if you compare it to 2010-11, is almost at the same level, because in 2010-11 we spent $337 million.

One note I would add is that in the actual spending of 2011-12 it includes two things: it includes $25 million for severance pay and parental leave that the government decided to pay to public servants who elect to receive their severance pay, and it includes $20.5 million for the operating budget carry-forward.

I would like to say a few things about why the operating budget carry-forward is in our internal services. It is there as a cushion, because as Mr. Treusch mentioned, the department is heavy in terms of revenue dependence, and we have to carry an amount of money from year to year should the revenue decrease. So all in all, I think our internal services are at the right level.

If I may add as a last comment, we did an analysis in terms of where Public Works fits in comparison to the rest of government, and we figured that our internal services average 8%, in general, of our gross spending, while the rest of the government is at 13%. So I think we are a fairly efficient organization from the internal services perspective.

[The Chair, NDP, Pat Martin]

Thank you.

One more minute, Jean-François.