Government Operations Committee on Nov. 27th, 2014

[The Chair, NDP, Pierre-Luc Dusseault]

Good morning.

There are more of us than usual around the table today. We're continuing our study of supplementary estimates (B) 2014-15.

We are fortunate to have with us today officials from the Department of Public Works and Government Services, and Shared Services Canada.

We look forward to hearing from you. You each have 10 minutes, and then the committee members will no doubt have many questions for you. So let's get right to it.

We'll start with the Department of Public Works and Government Services, represented by Mr. Lakroni, Mr. Mongeau, Ms. Chahwan and Ms. Caloren.

Over to you, Mr. Lakroni.

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

Thank you.

Mr. Chair and members of the committee, I am pleased to be here today on behalf of Public Works and Government Services Canada, or PWGSC, to discuss the department's 2014-15 supplementary estimates (B) and its 2013-14 departmental performance report.

With me today are Nancy Chahwan, Assistant Deputy Minister of the Parliamentary Precinct Branch, Claire Caloren, Associate Assistant Deputy Minister of the Acquisitions Branch, and Pierre-Marc Mongeau, Assistant Deputy Minister of the Real Property Branch.

With responsibilities that range from preserving the heritage buildings here on Parliament Hill to issuing every payment for the Government of Canada, PWGSC provides services that support parliamentarians, public servants, and departments and agencies in the delivery of their mandate to Canadians.

For these supplementary estimates (B), the department is requesting $136.3 million to cover accommodation requirements in Crown-owned buildings and leased space.

This request represents a continuation of annual program funding and is consistent with real property portfolio management practices in previous years.

Of this amount, $80 million will provide a stable source of funding for the fit-up of PWGSC's accommodation portfolio. This amount will supplement the departmental existing fit-up budget and allow PWGSC to implement a 20-year fit-up cycle for its accommodation inventory.

The new fit-up budget is ongoing and replaces the annual request for incremental in-year funding.

There is $56.2 million for increases in non-discretionary expenses associated with crown-owned buildings and leased space, and is allocated as follows: $31 million to provide stable funding for PWGSC's office space inventory and to replace funding that had previously been sought annually to address accommodation fluctuations, and $25.2 million to cover the cost of inflation associated with PWGSC's real property portfolio.

The inflation rate for 2014-15 is estimated at 1.6% on an operating budget of $1.6 billion.

This funding request is consistent with those of previous years and will cover the increasing cost of utilities, security, rents, and property taxes.

PWGSC is also reimbursing a net amount of $11.1 million to other government departments, mainly for reductions in their accommodation requirements.

With the aforementioned items, the net amount sought in the supplementary estimates (B) is $125.2 million, which would result in a net appropriation of $2.9 billion.

Mr. Chair, I would like to turn to PWGSC's departmental performance report.

This report highlighted that in 2013-14 the department launched the defence procurement strategy to provide the Canadian Armed Forces with the equipment it needs in a timely and cost-effective manner, while creating jobs and economic growth for Canadians.

It supported Canadian small enterprises through the build in Canada innovation program by awarding a total of 77 contracts to support the testing of innovations at the pre-commercialization stage.

Last, PWGSC continued to work on the rehabilitation of the Parliament Buildings.

The department did all of these things while achieving, in 2013-14, cumulative planned budget savings of $154.7 million, which underscores its commitment to sound financial management in all of its operations.

We have been able to find efficiencies in every sector of the organization. For example, over the last four years, PWGSC has cut its travel expenditures by half, while leveraging the use of technology.

In keeping with the government's priorities of job creation, economic growth and long-term prosperity for Canadians, the department supports the consistent delivery of high-quality services to Canadians, while providing measured value for the dollars with which it is entrusted.

Thank you, Mr. Chair and committee members.

My colleagues and I would be pleased to answer your questions.

[The Chair, NDP, Pierre-Luc Dusseault]

Mr. Lakroni, thank you for your presentation.

Without further ado, I will now turn the floor over to Ms. Tromp, Acting Senior Assistant Deputy Minister for Corporate Services and Chief Financial Officer at Shared Services Canada.

You will also have a maximum of 10 minutes to give your presentation.

[Elizabeth Tromp, Acting Senior Assistant Deputy Minister and Chief Financial Officer, Corporate Services, Shared Services Canada]

Merci, and good morning everyone.

I'm here today to talk about the supplementary estimates (B) 2014-15 as well as the newest departmental performance report, 2013-14, for Shared Services Canada. I will present the key results we've achieved to date as well as outline some of the next steps on the road ahead for SSC.

Joining me today are my two colleagues from the department. Peter Bruce is the senior assistant deputy minister of Projects and Client Relationships. He is available to answer questions about IT transformation and projects. Also with me is Manon Fillion, the deputy chief financial officer.

Mr. Chair, just over three years have passed since Shared Services Canada was created. In August 2011 SSC was given the mandate to both operate and transform the IT infrastructure that supports the programs and services delivered by 42 departments and agencies.

The objectives are clear: consolidating, standardizing, and transforming the delivery of Government of Canada e-mail, data centres, and network services. Simply put, SSC is planning and managing the IT infrastructure for the Government of Canada with a view to creating savings and efficiencies and eliminating duplication. SSC is securing systems and building a modern IT platform that will better support departments in delivering benefits for Canadians. It is about applying solutions across the government that are modern and sustainable.

As detailed in SSC's most recent departmental performance report, we are making progress against these objectives. SSC has already generated savings of $150 million annually by consolidating contracts, modernizing telephone services, and keeping internal overhead low. In addition to this, SSC will be saving $50 million by moving government departments to a single outsourced e-mail service. SSC is also achieving $8.7 million in savings by consolidating workplace technology procurement.

There are four key activities where big changes are going to mean major improvements, better value and greater security.

First, there is email. SSC is taking 63 legacy systems from all across government and replacing them with one secure, robust, modern system. As you may have heard, there have been delays in how the rollout has progressed.

SSC continues to work with our suppliers to address the challenges and deliver a consolidated email solution for the Government of Canada. We are taking the time to do things right and ensuring that the system will be secure.

The second activity involves data centres. Two enterprise data centres are now up and running. At the same time, we have closed 18 legacy data centres. Once we're done our transformation, our footprint will shrink from 485 to 7 enterprise data centres. Enterprise data centres will be secure and modern so they can provide the Government of Canada with the technology it needs to be effective in the era of big data.

Third is cutting the cord on 20th century phones. As part of the Government of Canada's economic action plan, SSC launched the cost-effective telephone services initiative. To date over 37,000 land lines have been removed in favour of voice-over IP and cellular services with the objective of generating over $28 million in annual savings beginning in 2015.

SSC is also upgrading video conferencing systems to offer efficient remote meeting alternatives and to provide alternatives to travel.

Fourth is user devices. Another way SSC is cutting costs is by consolidating and standardizing the procurement of workplace technology devices. Budget 2013 announced this consolidation and standardization. Workplace technology device software includes operating systems software and basic desktop applications such as word processing software. The government spends about $660 million a year in this area. SSC is negotiating new contracts and now buys these essential tools in bulk, saving $2.1 million last fiscal year and $8.7 million this year.

As you can see, this work is a major undertaking. SSC is taking every action to deliver efficiently and to ensure that the work done today can be sustained in future. Right now, we maintain 24/7 IT service delivery to 43 federal partner organizations. That includes maintaining 2,100 different mission-critical systems for the Government of Canada.

SSC is responding to issues quickly and efficiently, even as we grow and take on more responsibilities. For example, problem reports closed over the last year consistently kept pace with new ones. That's meaningful because this was occurring as we were taking on so many new tasks. In cases where there's been a service disruption, 75 were the result of an SSC planned change. The balance was the result of a partner planned change.

SSC also strives to create a secure, centralized communications infrastructure that directly supports Canada's cyber security strategy. We work closely with the Communications Security Establishment and other partners to maintain supply chain integrity through coordinated response to issues such as Heartbleed, the incident at the National Research Council and, more recently, Bash.

With these considerations in mind, let me turn to the details of SSC budgetary matters for the 2014-15 fiscal year.

Supplementary estimates (B) for SSC represent an increase of $58.6 million in SSC's reference levels. That increase is attributed to $18.1 million in new funding and $40.5 million in net transfers, broken down as $38.6 million in net adjustments required from partner departments in support of SSC's mandate, and $1.9 million for various projects and initiatives.

The new funding of $18.1 million consists of $10.8 million to provide IT infrastructure for the 2016 census of population program with Statistics Canada, $5.1 million as part of the revitalization of Canada's weather services with Environment Canada, $1.8 million for activities to support the CRA implementation of programs identified in the budget implementation acts of 2013 and 2014, and $400,000 for a new express entry solution with Citizenship and Immigration Canada.

The $40.5 million in net transfers from partner organizations includes items such as transfers to support IT positions and missions abroad, and adjustments as a result of the creation of Shared Services Canada.

Thank you, Mr. Chair.

My colleagues and I would be pleased to answer your questions.

[The Chair, NDP, Pierre-Luc Dusseault]

Thanks to both of you for your presentations.

The members will now ask their questions.

Ms. Day will start us off. She will have five minutes.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

Welcome to the committee. You're a good-sized group, so I hope you will be able to answer our questions as they will be fairly detailed.

For 2014-15, PWGSC has requested authorities of $1.16 billion in relation to capital expenditures, including the amounts requested through supplementary estimates (B) for 2014-15. According to PWGSC's departmental performance report for 2013-14, the actual spending for 2013-14 in relation to the parliamentary precinct was $364.6 million, compared with planned spending of $320.6 million.

Can you tell us which parliamentary precinct projects are considered high priority?

[Alex Lakroni]

Thank you for your question.

I'm going to ask Ms. Chahwan to answer that.

[Nancy Chahwan, Assistant Deputy Minister, Parliamentary Precinct Branch, Department of Public Works and Government Services]

Thank you very much for your question, Ms. Day.

The projects stemming from the long-term vision and plan are moving along quite well. We are even further ahead than planned at the beginning of the year. That is why actual spending for 2013-14 was $364 million.

As for the projects considered high priority, I would say they are all high priority. The government approved the long-term vision and plan precisely so that our heritage buildings on Parliament Hill could be restored and upgraded quickly.

Of course, we strive to complete the most pressing work, that which addresses health and safety concerns, first. To that end, a re-capitalization program is also in place to fund projects in the immediate term.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

I have a more specific question.

In 2012, a piece of stained-glass window fell on MPs' desks. The incident posed a serious risk to MPs, visitors and reporters.

According to an internal PWGSC report, water damage has loosened the glass in all the stained-glass windows, and will likely cause the glass to become dislodged from the frames. Architectural firm Watson MacEwen Teramura was commissioned to inspect the Parliament buildings and estimated that the necessary repair work would cost $5 million.

Is that project one of your priorities?

[Nancy Chahwan]

Thank you for your question. It gives me a chance to address the matter.

The report in question was commissioned by the Department of Public Works and Government Services precisely to determine the most pressing issues. The report focused on six areas and revealed that two elements required more immediate attention, one being the stained-glass windows. The repair work is under way, and three windows have already been fixed. A plan is in place to complete the work on the remaining windows.

The same is true of any other area identified as needing more immediate attention. I can assure you that the buildings and grounds of Parliament Hill are entirely safe for both visitors and those who work there.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

What measures have been taken to ensure the safety of visitors, reporters and parliamentarians in locations where the stained-glass windows have not yet been repaired?

[Nancy Chahwan]

The report you referred to mentioned the stained-glass windows in the Centre Block, where the House of Commons is located. Three of the windows have been removed for conservation purposes, in advance of the Centre Block overhaul set to begin in a few years. The windows have been replaced with very securely installed replicas.

In the interim, we have put up safety nets below the other windows. As we conduct installation safety tests, we will remove those nets.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

In September 2013, when we toured the building currently being restored, all the asbestos had been removed and only the walls remained. We were given assurance that the deadlines and cost estimates would be respected and that the work was under way.

What is the reason for the cost overrun today?

[Nancy Chahwan]

Ms. Day, when you say cost overrun, what are you referring to exactly?

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

I am referring to the building being restored as we speak.

[Nancy Chahwan]

The restoration of the West Block is on budget and on schedule. The project is progressing nicely.

If you take a look at the figures you mentioned a moment ago, you will notice that we spent $44 million more than planned last year. But that was not a cost overrun. It was simply a matter of the investments being made faster than planned at the beginning of the year.

The explanation to your question regarding the West Block is this. At the beginning of 2013-14, we expected 30% of the work to be completed. By the end of the year, however, 34% of the work had been completed. So the cost did not go up; the work simply progressed more quickly than expected.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you, Ms. Day.

We will now move on to Mr. Trottier for five minutes.

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

Thank you, Mr. Chair.

Thank you for coming this morning to discuss supplementary estimates (B). It's a large portfolio, and it's fairly complicated.

Mr. Lakroni, you talked about the accommodation inventory in your remarks. Canadians might be surprised that the Government of Canada runs accommodation. Could you explain what the accommodation inventory is, please?

[Alex Lakroni]

For that I will turn to Mr. Mongeau, the ADM of real property.

[Pierre-Marc Mongeau, Assistant Deputy Minister, Real Property Branch, Department of Public Works and Government Services]

Thank you.

Mr. Chair, in English, we use the word "accommodations". That is part of our mandate. When it comes to real property, PWGSC's mandate spans a number of regions.

We deal with fit-ups and leases, so everything that makes it possible to provide thousands of public servants with a place to work every day. In fact, we provide 272,000 public servants with work environments. Our portfolio includes nearly 7 million square metres of space used for various purposes.

The biggest part of our real property mandate is providing office space to most government employees. This office space can be property that we lease or property that we have bought and own.

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

Thank you.

When I heard the word "accommodations", I thought it referred to housing. Now I understand it refers to office space.

I notice also in the departmental performance report an increase in the cost per square metre. It's higher than expected, I suppose, as I note that, on page 31 of the report, the actual came in at $332 per square metre when the target had been about $323 per square metre for office space.

Now, I understand there are many locations across Canada. Could you describe what's happening with office space across the country? Is there inflation with regard to office space? What's going on with office space that you're not able to hit those targets?

[Pierre-Marc Mongeau]

Thank you for the question.

The performance indicators we use tell us where we stand vis-à-vis the market and the situation in the private sector. They are based on previous year trends, as well as on the leases that we sign, including those signed in the past few years.

We also work with companies, allowing us to prepare forecasts of the real property portfolios of various companies. That enables us to determine pricing. As for the target of $323 per square metre, after looking at last year's results, we realized that we were actually at $332. In other words, we ran slightly over the target.

What factors contribute to such an increase? The markets, first of all. As Mr. Trottier mentioned, markets are up in some regions and down in others. In Toronto, Vancouver and Calgary, prices tend to rise more quickly. Our year look-ahead projections are not always an accurate reflection of the reality a year or a year and a half down the line, come budget time. So lease prices can be much more expensive in certain cities, and fit-up costs can be higher than anticipated, depending on the market. So that is how we can end up with such figures.

I should point out, however, that the $8 or $9 difference per square metre is not huge. It means that we came reasonably close to our target. What we will keep trying to do in the coming years is improve results through our negotiating. Bear in mind that our goal is full occupancy of our buildings. The vacancy rate hovers between 2.5% and 3% every year. So we perform very well when it comes to occupancy, but in some big cities, our performance is tied to the market. That is the reason that we ran slightly over our target. Be that as it may, we are already considering strategies to bring down our actual results. But I would just like to reiterate that $8 is not a huge difference.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you.

Thank you, Mr. Trottier. Your time is up.

It is now over to Mr. Martin for five minutes.

[Pat Martin, NDP, Winnipeg Centre, MB]

Welcome to our witnesses.

I need to begin by saying, though, that as much as we appreciate and we benefit from the expertise around the table, and we don't question that we have the right people to answer very technical questions about the supplementary estimates, what's lacking here is the minister coming to speak to the supplementary estimates. I agree with the parliamentary secretary that it's a huge portfolio and I think he said it's very complicated, and it is. But the irony is that the only person who can actually grill the minister on this complicated portfolio is the parliamentary secretary, and he doesn't need to ask any questions of the advisers here today because he can talk to the minister any time he wants. We can't. I note the Minister of Health went before her standing committee to speak to her supplementary estimates. Minister Kenny went before human resources. Minister Rickford went before natural resources. Minister Glover went before Canadian heritage. Minister Valcourt went before the aboriginal affairs committee. Yet we don't have our minister to ask these complicated questions.

Every one of these people around the table can answer technical questions about the veracity of the documents that were delivered to us in the supplementary estimates and the departmental performance reports, but none of them can answer the questions about the big picture, about what the government is doing, why they're doing it, what they're seeking to achieve, and whether it could be done better. They aren't allowed to answer questions like that, so we're handicapped here. We're shackled. We're actually hobbled as a parliamentary committee because the minister doesn't have enough respect for our parliamentary committee to attend to ask for these hundreds of millions of dollars of spending in the supplementary estimates.

I have to voice my profound displeasure on behalf of the official opposition that our committee is being treated in this way. I say this with no disrespect to our witnesses, many of whom I know well, and I appreciate the technical expertise around the table, but it's the minister who should be here to defend his supplementary estimates. In the future, we hope that will be the case.

Perhaps because we have this bizarre situation of a parliamentary secretary leading the questioning on behalf of the Conservative members, you could convey that to the minister on our behalf, or perhaps the PMO's representative in the room could do that for us.

My question, if I have any time left, is very specific.

[A voice]

No.