Government Operations Committee on April 30th, 2013

[The Chair, NDP, Pat Martin]

Thank you, Madame d'Auray.

Now we'll hear from Liseanne Forand, from Shared Services Canada.

[Liseanne Forand, President, Shared Services Canada]

Thank you, Mr. Chairman.

I'm pleased to be here today to discuss the main estimates and the report on plans and priorities for Shared Services Canada for 2013-14.

I'd like to begin by introducing the officials who are here with me today at the table. Gina Rallis is the senior assistant deputy minister and chief financial officer, and Benoit Long is the senior assistant deputy minister for transformation, service strategy, and design.

First with respect to the main estimates, I would note that the main estimates for Shared Services Canada for 2013-14 represent a total of $1.398 billion. This is a decrease of $121 million, as compared to the 2012-13 estimates to date, which amounted to $1.519 billion. That decrease is attributed to reductions of $89.6 million as a result of budget 2012 expenditure review savings, as well as further net adjustments to and from various partnering departments in support of Shared Services Canada's mandate.

As members of this committee know, Shared Services Canada was created in August 2011 with a mandate to consolidate, standardize and streamline the delivery of Government of Canada email, data centres and network services. The report on plans and priorities sets out the priorities we have established in order to make progress on that mandate in 2013-2014.

The organization's very first report on plans and priorities was tabled in 2012. It included four broad priorities and 42 plans for meeting these priorities. With the support of all its employees, and in consultation with partner departments and other stakeholders, Shared Services Canada was successful in meeting its goals for the 2012-13 fiscal year. We maintained operations across the extensive IT infrastructure, supporting approximately 2,100 mission-critical systems, and also reached the planned milestones in our transformation of the government's e-mail system, data centres, and telecommunications networks. We implemented internal management processes to deliver lean corporate services, including collaboration with other departments to establish our financial and HR systems.

I'll be pleased to respond to any questions about those results, but first I would like to take the opportunity to describe briefly the highlights of our plans for this coming year.

The first priority I'll mention is to maintain and improve the delivery of IT infrastructure services. IT infrastructure is critical to the delivery of the government programs and services upon which Canadians and businesses depend every day. SSC has the responsibility to make sure that infrastructure is as reliable and as secure as possible.

In our second full year of operations, we will be seeking to move beyond the status quo operational models that we inherited from our 43 partner departments in order to bring greater horizontal alignment to service and support. We will place a particular focus on identifying the ways in which taking a government-wide approach can enhance IT security.

Mr. Chairman, the second Shared Services Canada priority is the renewal of the Government of Canada's IT infrastructure.

The email transformation initiative is the most advanced of our renewal strategies. After extensive preparatory work and consultation with government departments as well as the information and communications technology sector, we are in the final stage of a procurement process that will result in the implementation of a single government-wide email system by 2015.

We will work closely with partner departments and our own employees through the coming year to plan and manage a transition that is as smooth as possible for our partners and the Canadians that they serve.

The plan to consolidate the Government of Canada's data centres and to transform our network services is also taking shape. We have conducted a comprehensive analysis of the current state of our operations and assets, and have engaged extensively with partner departments and the private sector to identify our future business requirements and to learn from the experience of other organizations that have undertaken similar efforts. As a result of this work, we will be in a position this year to finalize a transformation plan and to begin its implementation.

In addition, as announced in economic action plan 2013, Shared Services Canada will dedicate $20 million of our existing funding to improve the government's capacity for telepresence and other comparable technologies to support measures to replace travel with remote meeting alternatives. As part of this initiative, SSC will monitor the use of the government's video conferencing facilities and work with the Treasury Board Secretariat to ensure that the facilities are used to the greatest extent possible.

The third priority for Shared Services Canada this year is to promote effective engagement with partner departments. Sound governance and effective engagement are critical in any shared services' initiative and particularly so when the initiative involves changes in processes, services, and technology that will have an impact on organizations and employees.

Shared Services Canada has established structures and mechanisms that provide for information sharing, consultation, and involvement at all levels of our partner organizations, from working groups that contribute to the planning of individual initiatives to bilateral meetings with deputy heads of departments and agencies.

The value of this engagement is not limited to the planning and execution of our own transformation initiatives. It is equally important for Shared Services Canada to participate in the project planning that is under way in partner departments to make sure that we are able to provide the IT infrastructure support that their own initiatives and investments will require.

SSC's fourth priority is to ensure that we have efficient and effective business management processes and services. In the first 18 months of its existence, Shared Services Canada built a new department from the ground up. That work continues, Mr. Chairman. As indicated in our report on plans and priorities, our plans in support of this priority extend across a wide number of areas of responsibility, including human resources and financial management, procurement, accommodation, auditing, and evaluation.

With respect to human resource management in particular, we're implementing a workforce management strategy that focuses on ensuring that our employees have the skills to contribute as our priorities and operations evolve. Through this strategy and other business systems and processes that we are implementing, we aim to ensure that Shared Services Canada performs efficiently, effectively, and with the necessary management rigour.

In conclusion, Mr. Chair, I would like to emphasize that the plans and priorities that have been established for Shared Services Canada in 2013-2014 will enable the department to continue to deliver effective and efficient IT infrastructure services to its 43 partner organizations, even as it plans and executes the consolidation and modernization of the government’s email, data centre and network services.

Thank you, Mr. Chairman. My colleagues and I look forward to answering the questions.

[The Chair, NDP, Pat Martin]

Thank you, Ms. Forand.

That's very good.

We'll begin right away with the official opposition, the NDP, and Linda Duncan is the critic for Public Works.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thank you, Mr. Chair. I appreciate the full gamut of officials that we have here today. We're obviously very disappointed that the minister has not attended, but we look forward to your fulsome answers.

Madame d'Auray, in last year's estimates, you forecast $2.3 billion total and a reduction of almost $400 million from the previous year. But according to this year's report, you overspent by almost that amount. So I wonder what assurances you can provide us that the similar forecast reduction in spending will be met this time.

[Michelle d'Auray]

Thank you for the question.

When we look at the main estimates, we also look at the comparison of total estimates throughout 2013. When main estimates are produced, they often don't take into account in-year changes or increases. So during the course of the year in 2013, we did get a number of increases to our appropriations, as I mentioned in my remarks, for example, for the parliamentary precinct. So in terms of our expenditures against our appropriations and our authorities, they are well within that for 2012-13.

With regard to 2013-14, we have been able to reflect in the estimates the total in-year supplementary estimates and the appropriations that we receive, so what you get in 2013-14 is our planned appropriations, taking into account what we also received last year.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Okay. Thanks.

Your report on plans and priorities, which we're grateful to receive simultaneously to the budget, makes our scrutiny much more effective.

In that report, the minister claims to have significantly reduced the average time for major procurements, yet we continue to witness significant delays and botched processes in the outfitting of our military in a mounting list of major procurements: military jets, the integrated soldier system project, the $2 billion close combat vehicle program, and projects to purchase army trucks.

The report on plans and priorities claims the department will make progress on its purported smart procurement by simplifying and streamlining the process, and yet in the procurement for the $300 million integrated soldier system project, apparently you've had to completely repeat it, because that system didn't work.

Can you tell us if the bidders will likely find it necessary to up their prices because of the fact that they've had to prepare that bid twice for this major procurement? As well, do your estimates this year take into account the fact that you're having to redo that procurement process?

[Michelle d'Auray]

Thank you for those seven questions.

[Voices]

Oh, oh!

[The Chair, NDP, Pat Martin]

You have one minute.

[Michelle d'Auray]

With regard to the issue around complex procurements, the ones that are the most challenging often get the most attention. We do quite a few large procurements quite effectively, within a 24-month to 36-month procurement timeframe. We complete them and not a lot of people know about it because they happened and there were no process issues or elements around them.

With regard to a number of the procurements and some of the aspects, as we are learning, when we engage industry very early on in the process it looks like the lead time up front is longer, which it may often be. But it allows us then, when we get into the actual requests for proposals and the evaluation of those proposals...it makes it a lot faster, because the long lead time to get the industry perspective and the views on what the components are, what the capacity elements are, what the criteria are, and also what the evaluation mechanisms are—

[Linda Duncan, NDP, Edmonton Strathcona, AB]

May I just ask how that new process improved the integrated soldier system project? It didn't seem to work there.

[Michelle d'Auray]

One of the elements with that particular procurement was that a number of the technical requirements were not met. It is not that the process in and of itself was not understood. We have been able, in the refresh of that procurement, which was done fairly quickly, to offer an opportunity for the procurement officers to contact the companies and require additional information on technical elements so that we are not faced with this situation.

[The Chair, NDP, Pat Martin]

Linda, perhaps you have a short question.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Contrary to what you're suggesting, we've actually heard a number of complaints from potential bidders that there is less consultation and there is less openness to consultation up front. Additionally, there are complaints from the small and medium-sized industries, for which your report on plans and priorities suggests there is greater opportunity. They say that because of that they are actually losing out in this new consolidated bidding process.

I wonder if you could rationalize your new smart bidding process, which is supposed to be helping small, regionally based companies and is supposed to be providing for more openness and transparency.

[Michelle d'Auray]

We have pointed out on a number of occasions all of the industry activities. We put them out on all of the forums that we have. We do a fair amount of industry consultation on every procurement that we run.

We have also done a huge number of industry engagements with small and medium-sized enterprises, and we can certainly provide you with the information in relation to the outreach activities and the engagement we do, because I think it would support the statements and our commitments to that effect.

[The Chair, NDP, Pat Martin]

Yes, I think that might be helpful, Madame d'Auray. We can stay in touch on that issue.

Next, for the Conservatives, we have Bernard Trottier.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Thank you, Mr. Chair.

Thank you, guests, for being here this morning for the important business of supply.

We know that we're here to talk about the 2013-14 main estimates, but as a practice in this committee we've found that looking at things like RPPs is very helpful, because it gives a context of three years back and three years forward. We get a sense of what's going on with the longer-term trends with the financials. Some of the performance metrics you have in there are also an interesting contribution of the reports on plans and priorities, because those are drivers of some of the expenditures.

On page 13 of the RPP for Public Works and Government Services Canada, there is an interesting performance indicator. You talk about what percentage the Government of Canada spent through procurement instruments such as standing offers and supply arrangements, and you have a target of 15%. There is a balance of procurement that's done through competitive bidding processes, and the target there is 70%.

Can you talk about that target of 15% and why that is important? Also, is that something you'd like to see increased or decreased in the future?

[Michelle d'Auray]

The target was set because we wanted to make sure that people were using the instruments that we were establishing. This is based on volume and practice. We've given ourselves a bit of a stretch goal. At 15%, it may not seem to be significant to have all of that done through the supply arrangements and the standing offers, but we thought that was a fairly significant stretch for us to achieve, because these are pre-competed instruments that allow and simplify the processes government departments and agencies use.

Not all of these are mandatory. That's one of the reasons we set this target. In terms of the proportion of total contracted value awarded competitively, this is a goal that we set because we are of the view that having a competitive process gets best value for the government. These are the targets we have set, recognizing that in some instances, competing is not necessary because the suppliers are unique, because of the time constraints, or because of national security requirements.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

With these two targets, 70% and 15%, 85% are being tendered whether it's a competitive bid process or these instruments. Would both of those numbers be looking up in future years? Ultimately, it would be 100%, a difficult target to attain. Could you describe what the thinking is with these targets?

[Michelle d'Auray]

I don't think we would consider 100% to be achievable. There are a number of requirements or situations where there is a sole supplier, a national security requirement, or an operational requirement. Achieving 100% competitive would not be practicable under those circumstances.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Thank you for that. It helps to understand what's driving some of the expenditures.

I want to talk about accommodation and real property services. In the main estimates, you have net expenditures of $1.978 billion, and I see that planned spending in the RPP is $2.117 billion. There's a delta of about $140 million. Could you explain the difference between what's in the main estimates currently and what's in the planned spending for 2013-14?

[Michelle d'Auray]

I will ask my chief financial officer, with your permission Mr. Chair, to take that question.

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

For real property, there are several factors at play. Number one, we have the reduction of the commitments for budget 2012. That explains, primarily, the reduction from 2012-13 to 2013-14.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

I'm just interested in what's in the main estimates for 2013-14. There's a planned spending for 2013-14 in the RPP, and it's about $140 million higher for that year.

[Alex Lakroni]

The difference is $138.9 million. It includes the manège militaire, $4.8 million; engineering assets, $63 million; and long-term vision and plan, $38.1 million. The rest is quasi-statutory items for fit-up and for two buildings, 22 Eddy and 30 Victoria.