Evidence of meeting #7 for Government Operations and Estimates in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was services.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Michelle d'Auray  Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services
Pierre-Marc Mongeau  Assistant Deputy Minister, Real Property Branch, Department of Public Works and Government Services
Pablo Sobrino  Associate Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services

3:30 p.m.

NDP

The Chair NDP Pierre-Luc Dusseault

Good afternoon, everyone, and welcome to the 7th meeting of the Standing Committee on Government Operations and Estimates.

As part of our study of supplementary estimates (B) today, we will hear from representatives of the Department of Public Works and Government Services: Michelle d'Auray, Deputy Minister and Deputy Receiver General for Canada; Nancy Chahwan, Assistant Deputy Minister, Parliamentary Precinct Branch; Pierre-Marc Mongeau, Assistant Deputy Minister, Real Property Branch; Alex Lakroni, Chief Financial Officer, Finance Branch; and Pablo Sobrino, Associate Assistant Deputy Minister, Acquisitions Branch.

Thank you for being with us. You will have 10 minutes to make your presentation in the first part of the meeting. Committee members will then ask you questions on it and on the supplementary estimates (B).

Without further ado, I thank you and invite Ms. d'Auray to take the floor.

3:30 p.m.

Michelle d'Auray Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services

Thank you, Mr. Chair, members of the committee.

I am pleased to appear before this committee on behalf of Public Works and Government Services to discuss the 2013-2014 supplementary estimates (B) and the 2012-2013 departmental performance report.

Since you have named the people joining me today, I will not do it a second time. Thank you for allowing us to finish before 5:00 p.m. We will be attending a late afternoon celebration for the Workplace Charitable Campaign. It will be an opportunity to celebrate the end of the campaign's government component. The employees of Public Works and Government Services have raised more than $1 million for the national capital region, and we want to celebrate that contribution.

For those committee members who may be unfamiliar with the department, we play a key role in the operations of the Government of Canada, serving, as we like to say, as its treasurer, accountant, real property manager, central purchasing agent and linguistic authority.

It is home to the Receiver General, which manages a cash flow of more than $2.2 billion a year and prepares the annual public accounts of Canada. For the 15th consecutive year, we received an unmodified opinion in the Auditor General's audit of the public accounts, an unprecedented event for a government organization of our size.

We also accommodate more than 272,000 federal employees in a diverse real estate portfolio involving over 2,000 leases and $1 billion in annual rental payments. We are responsible for more than 60,000 contracts, or 83% of the $21 billion a year the Government of Canada spends on acquisitions.

We also translate more than one million pages of text a year on behalf of federal organizations and provide translation and interpretation services for Parliament. That includes the people in those cabins right now.

The department has one strategic outcome, which is to deliver high-quality, central programs and services that ensure sound stewardship on behalf of Canadians and meet the needs of federal institutions.

In everything we do, we put a great importance on integrity. In July 2012, the department introduced new integrity measures that render potential bidders ineligible if they have been convicted of certain offences. Since then, Public Works has verified around 43,000 contracts and real property transactions, involving checks on almost 145,000 individuals, companies, and their board members.

Through the 2013–14 main estimates, the department asked for $2.6 billion to deliver core services related to accommodation, renovations, construction, procurement, translation, and industrial security screening.

We did not seek any appropriations through the earlier supplementary estimates (A). In this timeframe we are seeking $176.6 million in these supplementary estimates (B).

This request includes $69.7 million for real property functions, to cover non-discretionary costs in fit-up, payments in lieu of taxes, and municipal taxes associated with crown-owned buildings and leased space. Now, $38.4 million of this is for the fit-up for three new federal government buildings in Gatineau, which will consolidate a number of departments and reduce our need to lease space. Another $25 million is for office accommodation for departments and agencies delivering programs related to, for example, agriculture and border security. These office accommodation requirements flow directly from the funding requests made by departments and agencies for new or renewed programs.

The next amount is $37.4 million for the pay modernization project, to continue the planned work on system design and configuration, and for the implementation of the new service model.

We are also requesting $31.5 million to improve federal engineering assets such as dams, bridges, and crossings, including, for example, the Chaudière Crossing and the Timiskaming Dam Complex.

As well, $13.7 million is for the reinvestment of revenues from the sale or transfer of surplus properties that were sold at market value between December 1, 2012, and July 8, 2013. The funds generated from these sales are to be reinvested in federal office facilities and common-use assets to preserve or extend their useful life.

And $3.4 million is requested for the rehabilitation and reconstruction of the Manège militaire de la Grande Allée in Quebec City that was damaged by fire in 2008.

With these supplementary estimates (B), PWGSC's total gross budget would become $6.2 billion, broken down as follows: $2.5 billion for the rent, fit-up and utilities of government-wide accommodation, Receiver General and central compensation administration functions, and translation services to Parliament; $1.9 billion related to the provision of optional services to departments, such as real property project management and translation services, on a cost-recovery basis; $945 million to deliver core programs such as central purchasing and banking, public accounts, payroll and pension services; and $708 million for Government of Canada buildings and infrastructure. That is capital funding.

As PWGSC generates $3.3 billion in revenues, or 53% of its budget, from client departments, this results in a net appropriation of $2.9 billion.

Allow me now to tum to PWGSC's Departmental Performance Report for the fiscal year ending March 31, 2013.

Consistent with the government's priorities, Public Works and Government Services Canada has put considerable energy into innovation, cost saving, and making it easier for government clients and Canadians to do business with us.

The department's top organizational priorities for 2012-13 were and continue to be delivering efficient and effective services, transforming critical infrastructure, and ensuring sound stewardship and management excellence.

To deliver on our first priority, the department has adopted a smart procurement approach that leverages digital technology to reduce costs and process for clients and potential bidders. More importantly, this approach has led to enhanced engagement with suppliers. We engage with industry earlier and more often throughout our procurement processes. We make greater use of independent third-party advice and fairness monitors in complex procurements. And we apply robust governance to ensure continuous oversight. It is this approach that the Auditor General recognized in his chapter on shipbuilding in his report that was released earlier this week.

Our office of small and medium enterprises, OSME, helps demystify the government procurement process for businesses and manages our successful Build in Canada innovation program, which links federal clients with private sector innovators.

We also successfully modernized the government's pension administration systems and business processes. The new system, serving about 600,000 users, is the biggest in Canada. It was launched successfully in January 2013. Last night, the Information Technology Association of Canada, ITAC, awarded the project its first prize for large public sector IT projects and actually created a special prize to recognize this particular project for its delivery on scope, on time, and on budget.

In pursuit of our second priority, transforming critical infrastructure, the department made significant progress on its state-of-the-art real property information technology system.

And, as you heard from departmental officials who appeared before you last week, work on the Parliamentary Precinct is unfolding as set out in the long-term vision and plan.

In our effort to ensure sound stewardship and management excellence, our third priority, the department met its savings goals in 2012-2013 and strengthened its financial management through measures such as budget management excellence and renewed financial and materiel management system.

In addition, the transition to direct deposit at the Receiver General for Canada is on track and will save an estimated $17.4 million a year when it is completed in 2016.

As you can see, PWGSC is entrusted with a broad mandate and manages significant sums of money.

In providing other departments with a wide range of common services, we enable them to focus on their own mandates and priorities. As befits our stewardship responsibility, we seek whole-of-government solutions that are efficient and cost-effective while striving to deliver high-quality services to Canadians.

Mr. Chair, members of the committee, thank you for your attention.

My colleagues and I would be happy to take your questions.

Thank you.

3:40 p.m.

NDP

The Chair NDP Pierre-Luc Dusseault

Thank you for your presentation.

Without further ado, I will call on committee members to ask their questions.

Ms. Day, you have five minutes.

3:40 p.m.

NDP

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

Thank you, Mr. Chair.

Thanks to our guests for being with us here today.

We will get to the various points immediately because this is a big file.

We know that the number of full-time employees will be cut. That number will fall from 12,229 to 11,679 in 2012-2013. What programs will be hit hardest by this reduction in the number of employees?

3:40 p.m.

Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services

Michelle d'Auray

Thank you for your question.

Shared Services Canada was established in 2011. Human resource transfers were made and were reflected in our documents in 2012-2013. This means that part of the workforce reduction that you see here is a reflection of the transfer of our employees to Shared Services Canada. These are not just savings-related cuts but mainly cuts associated with the transfer of employees to Shared Services Canada.

Cuts were also made as part of the savings achieved as a result of the strategic reviews. Most of those savings came from programs that were terminated or simply from positions that were not filled or because people retired.

3:40 p.m.

NDP

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

Spending on the federal pay and pension administration program will rise from $46.9 million in 2010-2011 to $114.1 million in 2014-2015. What justifies that increase if the number of employees is being cut?

3:40 p.m.

Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services

Michelle d'Auray

We are in the process of transforming the pay system, which is more than 40 years old. That is what justifies the increase in spending on that program. The project involves two components. The first is the renewal of the IT system. We are finalizing planning for the system. The second component is the consolidation of pay functions, that is to say pay processing. We have consolidated the services that were in each of the departments. Those services are now at a single location under the management of Public Works.

3:40 p.m.

NDP

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

Thank you.

I believe that employees now receive their pay at home. Is that contracted out?

3:40 p.m.

Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services

Michelle d'Auray

No, it is not contracted out. These are direct deposits.

3:40 p.m.

NDP

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

They are direct deposits.

3:40 p.m.

Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services

3:40 p.m.

NDP

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

Under vote 1b, we have $38.4 million for increases in non-discretionary expenses—primarily for fit-up work—associated with crown-owned buildings and leased space. Staff is being cut and transferred to Shared Services Canada. How then do you explain the increase in property-related expenditures?

3:45 p.m.

Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services

Michelle d'Auray

The increase is necessary because we purchased three buildings so that we could consolidate the employees. This is part of the commitment we made to ensure there was a balanced distribution of buildings between Gatineau and Ottawa in the national capital region. We acquired or constructed three buildings. This amount is needed for building upgrades. In this case, we will move and consolidate employees from various departments, which will enable us to terminate leases and save money. So this is not an increase in the workforce but rather an investment so that we can consolidate further and terminate leases that we have around the region.

3:45 p.m.

NDP

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

So we will be paying more to cut spending

3:45 p.m.

Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services

Michelle d'Auray

This is an investment that will help us save money in the long run and reduce expenses incurred under existing leases.

3:45 p.m.

NDP

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

Starting in what year do we expect to achieve savings?

3:45 p.m.

Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services

Michelle d'Auray

I will ask my colleague Pierre-Marc to answer that.

3:45 p.m.

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

Thank you for your question, Ms. Day.

Generally speaking, we were able to consolidate several departments that had offices in the three buildings you mentioned. A number of those departments significantly cut the number of square metres they had been using. The consolidation also means a reduction in the space the departments will use. Based on that space reduction, we can calculate the savings we will generate over the next few years. By moving we will save an average of $3 million in rental expenses a year and thus be able to recoup our investment in 8 or 10 years.

We will also keep the buildings and the departments will occupy them for 25 years. Our savings will start in the 8th, 9th or 10th year, depending on the building, and will be significant. Although there are initial fit-up costs, we believe the rental cost reduction will enable us to achieve greater long-term savings.

3:45 p.m.

NDP

The Chair NDP Pierre-Luc Dusseault

Thank you.

Ms. Day, your time is up.

Mr. Trottier, you have the floor for five minutes.

3:45 p.m.

Conservative

Bernard Trottier Conservative Etobicoke—Lakeshore, ON

Thank you, Mr. Chair.

Welcome to the government operations committee once again.

In your remarks you talked about the Build in Canada innovation program, which is of interest to this committee. We did a study two years ago, but in those days it was called the CICP, the Canadian innovation commercialization program.

This program was really designed to help smaller businesses deal with the federal government, to give a leg up. Could you talk about some of the progress that's been made in the last two years with this program, from its original inception as the CICP to its current incarnation?

3:45 p.m.

Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services

Michelle d'Auray

I'll speak briefly as an introduction and turn to my colleague, Mr. Sobrino, who was responsible for the pilot and now for its current permanent manifestation.

It's a procurement program. The federal government, through this program, actually purchases the services or products that companies provide in order to meet the need expressed by a government department, a program, or an activity.

It is a competitive procurement process. Needs are identified by departments. The selected products and services are matched with the departments and their needs, and the payments are made, essentially because we are buying a service or product. By giving companies a first leg up—often it's their first big sale—so that they can say they have sold to the Government of Canada, it then allows them to market that product and that service to other clients, both in Canada and abroad.

Pablo, maybe you can give us an overview of the number of projects and the types, if that's okay.

3:50 p.m.

Pablo Sobrino Associate Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services

Thank you, Deputy.

Just to give a little summary, as of last March we had 61 contracts that had been signed with different innovators across Canada, mostly for goods and for some services, up to a value of almost $500,000. They ranged from as little as $30,000 up to almost $500,000.

We've gone forward. The government announced the extension to the Build in Canada innovation program. It is a bit of an evolution of the program. One of the things we discovered as we were managing this program was that there is a lot of interest in innovation in the defence industry space. Those innovations tend to require a little more investment, so we are looking at a program whereby part of the money will be set aside for military innovation, working with the Department of National Defence and the Defence Research Establishment to identify products that would be of use and worthy of investigating through the needs of defence.

The interesting thing about the program and its success so far—and it's largely anecdotal at this point, because we have to get enough products out to market—is that those whose products manage to make that first buyer piece and who use that in their promotion of their own business are able to sell abroad. That's generally the pressure we receive from small businesses. We have what they've invented, and they've invested in R and D, etc., but they need to make the first sale before they can actually commercialize that product.

I believe that when I spoke with the committee previously on this.... We've had a lot of success in those companies actually getting that product out to market. We can say now that a number of companies actually have incredibly good sales internationally, based on the fact that they were able to sell to the Government of Canada. That was one of the big pieces in our cross-country consultations. Small businesses want to have the government buy their things. This approach allows them to compete, to demonstrate that they are top of class, to have a government department test, and to help them finalize their product so it can go into a commercial market.

3:50 p.m.

Conservative

Bernard Trottier Conservative Etobicoke—Lakeshore, ON

Thank you.

Now, outside of the innovation program, are there some other means? I know that the Public Works Department has put some measures in place to make it easier for small businesses to do business with the federal government, such as things like buyandsell.gc.ca and the procurement ombudsman. I know that those have been successful.

I've talked to some small business people in my own riding and some stakeholders. They've talked about how they've successfully gained contracts with the federal government, but one of their criticisms is that the federal government is actually the worst payer. It's really hard to get paid by the federal government at times, compared to other entities they deal with.

I don't see any measures or metrics, and I suppose it's good for the taxpayer and good for the treasury to squeeze small businesses, but ultimately it's not good for the small businesses. Some of them have to lever up just so they can finance doing business with the federal government. Is Public Works doing anything to make the federal government a better payer, especially for smaller businesses?

3:50 p.m.

NDP

The Chair NDP Pierre-Luc Dusseault

Your time is up, but I will let you answer the question.

3:50 p.m.

Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services

Michelle d'Auray

I should say that there are some metrics for us. The Treasury Board Secretariat has very precise metrics of the number of days that it takes us to pay. I have to say that at Public Works we actually meet the metric. It does happen that other government departments do not, because we are not the only ones who procure, so we do work with other organizations.

I also meet with small businesses, and this is often a comment that I hear. In fact, when I get those comments and I try to find out what's happened, what I find is that more often than not it's another department. By asking us and by creating the opportunity through OSME, the office of small and medium-sized enterprises, it gives businesses an opportunity for a place to go to ask the question.