Government Operations Committee on Nov. 28th, 2013

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

Since implementation of this program requires the involvement of the provinces and employer associations, I would like to know whether it has been implemented or is about to be and, if it has not, when it will be. Has provision been made for it in the budget?

[Michelle d'Auray]

Mr. Chair, since that is not my responsibility, I must ask that the question be put directly to the department concerned, which is Employment and Social Development.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you for that clarification.

In that connection, I will ask that the questions asked relate directly to the Department of Public Works and Government Services.

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

The figures provided to us, stated in millions of dollars, on the expenditures of the Department of Public Works and Government Services indicate that increases are expected in five of the nine existing programs in 2013-2014. I can name them for you, but I believe you already know them. On the other hand, reductions are forecast for 2014-2015. As you know, 2015 will be an election year.

Why are increases estimated now and decreases for the following year?

[Michelle d'Auray]

Could you clarify which programs you are talking about?

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

They are accommodation and real property services—you gave a partial answer for that—the Receiver General for Canada, federal pay and pension administration, linguistic management and services and procurement ombudsman.

[Michelle d'Auray]

Thank you for that clarification.

Accommodation expenditures always fluctuate, and there are increases and decreases over the years. The inflation rate and lease expenses also increase. Consequently, costs will rise.

We also expect cost reductions as a result of approximately $240 million in savings that we will generate. The total amount of those reductions will begin to apply in 2015-2016 and 2016-2017. That will also enable us to consolidate the departments and reduce space, as Mr. Mongeau mentioned earlier. So there will be significant reductions in that area.

We talked about pay administration earlier. There is an increase and a decrease because the implementation project will be completed in subsequent years. The reduction under the Receiver General program is attributable to the direct deposit program, which will result in savings.

Costs have already been cut in the linguistic management program because it is a temporary program that we have not renewed. We plan to change the operating model gradually. As for the ombudsman, this is simply a matter of estimates based on stability of the amounts. It does not really have an impact, except on the forecast stability, which ultimately represents a proportionate decline if the amounts do not increase.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you.

Ms. Day, your time has elapsed.

Now we will hear from Ms. Ablonczy. You have the floor for five minutes.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

I want to get back to the program to use the procurement of the federal government to support and encourage small businesses. This is something we've been talking about for a long time.

One of the things we noticed is that the same suppliers always got the contracts and there was never any effort to include new, and exciting, and start-up businesses. So I'm just delighted that this is happening.

However, as in most things, there's a bit of a moral hazard built into this, in the sense that companies can become complacent, or dependent, or feel that they don’t really have to adhere to world-class standards because, you know, the government is going to nurse them along a little bit.

I know you probably had a lot of anxious discussion about where the right balance is. Could you talk to us about your observations?

How do you intend to manage the process so that it helps, so that it doesn't enable a lack of excellence?

[Michelle d'Auray]

The specific program of building innovation in Canada is actually designed to give companies that first leg up into a contract with the Government of Canada. We will be adding a new component to it, the military procurement component, in order to be able to give companies that opportunity. The neat thing about this particular program is that it is not meant to be a recurring procurement. It is a one-time procurement for an innovation or a product or service. It is to be able then to demonstrate that the use of that... It has to serve a need. It has to be able to respond to a specific need of a government department or agency.

For example, there was a procurement recently with Fisheries and Oceans for a kind of sonar for its boats, for the Coast Guard for fisheries monitoring. Once its use has been demonstrated, it can in fact be used as a proof of the concept and can then be resold to other countries or to other organizations that have similar needs.

So it is in fact a very neat program that gives that opportunity to new companies or to companies with new products. It's not just for new companies. It's also for companies with new products, innovations, or services.

With regard to the ability of companies to compete and our ability to vary the base of suppliers from which we choose, this is where the work of the office of small and medium enterprises is critical. Not every organization or company understands the requirements of competing and selling to the Government of Canada. While we do recognize that it is a complex process, it is one that we have established in order to ensure the integrity and the fairness of the process. We have found that through OSME and its outreach activities—it is very much web-based, face-to-face, and it has a fairly significant outreach program—companies are getting a better understanding and are in fact applying and competing in situations where they would not necessarily have thought to offer their services or goods to the Government of Canada.

It's not something that gets solved overnight. OSME has been in operation, Pablo, for how long?

[Pablo Sobrino]

Since 2005....

[Michelle d'Auray]

So it is progressively encouraging and reaching out to companies and facilitating their interaction with the government.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Can you give us some idea of the take-up?

[Pablo Sobrino]

In terms of small business, of all non-military sales, so all other procurement, 70% to 75% of procurement goes to SMEs, small and medium-sized enterprises. So there's good uptake there. In the military area it tends to be a bit smaller. It's in the neighbourhood of 40% of small and medium-sized enterprises doing business with us.

I don't have the figures with me right now but we do have a turnover of new companies.

I would just say that the key piece to finding new service providers and new goods providers is to engage with industry early about our requirements. The smart procurement approach is that early industry engagement. One of our roles at Public Works is to challenge the client department when it comes up with a requirement. They need something but we challenge the requirement because we don't want a requirement that specifies the result, we want one that specifies their need. So you can tell me that you need a red Chevrolet with four wheels and it has to have winter tires, but I'll ask what you need it for. You need it to drive. That means I can procure a car, with limits on it.

That's the challenge.

In a simple way that is exactly what we do with each procurement. The early engagement is with industry and with our client departments. It opens up the playing field for new opportunities, for new businesses to come up with new ideas on how to approach services.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you.

Ms. Ablonczy, your allotted time is up.

I now hand the floor over to Mr. Byrne for five minutes.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you, Mr. Chair.

I want to follow up again on the issues of integrity measures and the public procurement.

Deputy Minister, I think we can both agree that there are some constraints to this process that should be identified, to prevent a false sense of security. Some of those constraints would be that convictions actually have to be against contractors who were engaged in contracts with the federal civil service, as opposed to relationships with private sector companies. They would actually have to have been convicted in a criminal court for a previous past dealing with the federal government.

Is that correct?

[Michelle d'Auray]

Mr. Chair, that is not correct.

It's a list of infractions, some of which are against the government but others of which involve participation in activities of criminal organizations, income and excise tax evasion, and offences in relation to drug trafficking. I didn't read through the whole list of infractions and convictions but they are not just about prior business with the Government of Canada.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

I used the example of Accenture, and I don't think it's a stretch for anyone's imagination. There was some big trouble there that came down with Accenture and the whole Enron scandal. Accenture flowed from Arthur Andersen as a company that basically reinvented itself and simply reincorporated itself. Now Accenture has some significant dealings with the Government of Canada.

Do the rules reflect the reality that sometimes companies whose principal officers are criminally charged and convicted can sometimes simply reinvent themselves through renewed incorporations?

[Michelle d'Auray]

There are two elements, Mr. Chair, that I would address. One of the elements is that if a company has been convicted in another country, conviction in another country does not apply in Canada. So that's one aspect of the question.

If the company and its affiliates or its directors—even if the directors find themselves on another board—have been convicted, we actually exclude them on the basis of that conviction. So it's not just the company but it's also the directors of the company.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

I understand. Thank you very much for that information.

On the flip side, companies can also sue or take legal action against the federal government. Accenture is a company that's known to be very aggressive about that. In addition to providing this committee with a portfolio of contracts that have been awarded to it, knowing its own past would you also be able to provide the committee with a description and a portfolio, as it were—and if need be, I can give you further description of that—of how many times Accenture has actually engaged in legal action against the federal government because it felt the federal government did not fulfill its contractual obligations or it has received an out-of-court settlement from the federal government?

[Michelle d'Auray]

Mr. Chair, I would have to check back to see if we can actually find that information. In some instances it may be a matter of public record and in some instances it may not be. It is a question for us. With your permission, we would look into it and get back to the clerk of the committee.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Would it be fair to say that since it's a single company I'm referring to and it's well known to the federal government that it may not be very difficult to do that research?

[Michelle d'Auray]

I would prefer to say that we will look into it and get back to the committee clerk if that is okay with the chair.

[The Chair, NDP, Pierre-Luc Dusseault]

Yes, that is possible. To be in a better position to answer the question, you should refer to the study of supplementary estimates (B).

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you, Mr. Chair, but I do note, however, that the witnesses actually raised in their presentation to us—and I will quote from the Deputy Minister of Public Works and Government Services that:

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.

I think it would be fair, Mr. Chair, for you to acknowledge that since it is the witnesses who raised the issue of integrity of the contracting process, it would not be inappropriate in the least to raise that issue here at the committee with the witnesses within my exchange.