Evidence of meeting #165 for Government Operations and Estimates in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was irving.
A recording is available from Parliament.
Conservative
Kelly McCauley Conservative Edmonton West, AB
I challenge the chair constantly.
In fact, it's funny, but I was reading the blues the other day. I didn't need the Toronto Star's $355,000 to provide this summary for me. I just read the blues, which I have right here.
I remember challenging the chair—seeing as someone brought it up—as follows:
Mr. Kelly McCauley: I want to quote for you. This is from the commander of NORAD—
The Chair: You have about 10 seconds.
Mr. Kelly McCauley: That's [great]. Actually, I have 37 seconds.
I was actually recording it on my computer.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Then you said, “No, you have 12, 11, 10....” I will note that you added 20% to the time, going from originally 10 seconds to 12 seconds.
Then I thanked the gentlemen, and I think—
Conservative
Kelly McCauley Conservative Edmonton West, AB
Well, it's not noted here, but I do recall some catcall of, oh, don't challenge the chair. But that's regardless.
This continues by saying that the government has ensured the practice, but we've always had that practice. I'm not sure why you're bragging about something that continues and that always has been done.
This says, “In addition, the House of Commons adopted a motion that enables Parliamentary Secretaries to be non-voting members of committees, ensuring that they can no longer vote on committees that fall within their minister's mandate, helping assure the freedom and independence of House of Commons standing committees.” Well, that's wonderful when you already have a majority to pass that, but again, we've still seen the parliamentary secretaries come in and give directions on how to vote. I'm not criticizing that specifically, because I know that previous governments have done it and that future governments will do it. It's just about the hypocrisy of patting yourself on the back as if it is anything special or anything different.
It also says, “The current government has put an end to the control the previous government had on parliamentary committees....” Again, other governments have done it and other governments will continue to do it. It's about the pure hypocrisy; there's no secret anywhere. I don't think anyone in Canada, not even at the Toronto Star, which we're laughing about, believes that the justice committee, or the seven members there, said, yes, it's time to move on; we've had enough. Actually, one of our own committee members, I think, said that when calling for an adjournment before there was even a discussion on it.
Then the final question—
Conservative
Kelly McCauley Conservative Edmonton West, AB
I thought Mr. Drouin.... He's not even here to hear that, so I won't tease him much about it.
The final question was, “(d) what is the total number of government employees whose job involved, in whole or in part, monitoring parliamentary committees?” This was quite an odd answer: “The Privy Council Office has 0.5 full time equivalents whose time is dedicated to monitoring parliamentary committees.” I find it very odd that it's just 0.5 out of the Privy Council.
One of the big issues on this thing, besides the fact that they're giving a sole-source contract to what everyone knows is a Liberal-friendly mouthpiece.... Frankly, if roles were reversed and we had given, say, $355,000 to, heaven forbid, the Rebel or the National Post, I'm sure there would be an equal outcry about that. If the $355,000 had gone to Canadian Press, maybe, but the Toronto Star...not exactly.
I think it's important that we have the procurement ombudsman come and join us again. If anyone has read his annual reports—I'm a geek, so I like to—he really has a lot of great stuff in there. He presents a lot of concerns. He's been at our committee a couple of times to discuss things. One of the issues is sole-sourcing. Correct me, anyone, if I'm wrong, but I believe it's about $50,000 that we're not...that governments should not be sole-sourcing contracts without a specific reason. Now, there are legitimate reasons when it's something like Microsoft. The product's not available for anyone else, or there's only one company available to do business, etc. But again, I have to question, of all the news media outlets out there....
One person we've all met is Kathryn May. She worked for the Ottawa Citizen covering government business and the Phoenix issue. Then she took a buyout and joined iPolitics. Kathryn May was one of the victims of the Toronto Star purchase and was laid off. I have to wonder why we would sole-source the Toronto Star to do this work when there are private media people out there who could very easily have done that, who could very easily have bid on it. We all saw Kathryn May here time after time, covering the whistle-blowers, Phoenix and other issues. She peripherally comes to mind, especially because she used to work for iPolitics.
I think we need to have him here to look at the sole-sourcing. A couple of years ago we did an OPQ on sole-sourcing, asking how many sole-source contracts had been awarded above the $50,000 measure over a one-year period. This goes back to the Phoenix debacle with IBM's involvement, and also partly I think with our small business review. It may have been in our small business review that it came up that small computer companies, IT companies, were not getting a chance to bid. IBM was getting sole-source stuff because IBM was considered safe. I think the comment we heard was that no one ever got fired in the public service for hiring IBM. That certainly was the case with Phoenix hiring IBM and then messing it up. I don't think anyone got the boot for that.
We put in the OPQ and it actually came back. I think it was 28 pages of about 50 listings per page of sole-source contracts given by the government. One of the interesting ones we found repeatedly was the same total of $89,086, repeatedly, for building maintenance, but for different companies and different cities—Quebec City, Ottawa, Gatineau, again and again and again; different companies. One of the companies that actually got the money was SNC-Lavalin for building maintenance. You know, I laugh about the government's claim of the 9,000 jobs at risk with SNC-Lavalin, which of course has proved to be a lie. One of the things SNC-Lavalin does, and it's actually linked to this committee, is work for Canada Post. For anyone who has the community mailboxes in their neighbourhood, guess who does the snow removal for Canada Post around the community mailboxes? Anyone? Come on. I'm leading up to it. It's SNC-Lavalin.
The reality is that if SNC got banned from bidding on government business, such as with Canada Post, someone else would get the job. Bee-Clean or someone else would still get the job. It's the same with the building maintenance. Again, I have to wonder why there were so many $89,086 sole-source contracts.
In a previous life, when I was in the hotel business, one of the tricks we would play—one of the tricks management working for us would play—is that if they had a dollar limit for which they could sole-source something without getting competing bids, usually we'd get three. If it was $2,000, they would find the same company to do three bids at $1,950. I'd sign off on the PO, or they could sign their own PO for up to $5,000, so they'd sign multiple ones at $4,500. If we're ever trying to catch someone who is knee-deep in kickbacks and stuff like that, that's one of the places to look. We should probably be looking at that for our friends with SNC.
That's one of the things that come up. When we have put in requests, we've never had an answer to what is it about building management that so many different companies—SNC and different companies—all get sole-sourced exactly the same total? It's not that this work could be done only by SNC, for example. You can't just give them a sole-source contract that way. It's not that these companies were the only ones available or with intellectual property attached to building maintenance, if there are all different companies. Again, why is there so much sole sourcing?
In software we saw multiple sole-source contracts for the same software but from different companies, again listed as their being the only people available. If you're buying Microsoft, I understand, but you can't sole-source a $50,000 or $80,000 contract from Best Buy and then do the same from Office Depot and say, well, Microsoft is the only software available. Why are they sole-sourcing the same software repeatedly? Actually, it was PeopleSoft. It's funny that it was PeopleSoft software—which, of course, is linked to Phoenix—but repeatedly, it was the same software. Maybe SNC-Lavalin should be hired to fix Phoenix. The same software was purchased repeatedly, sole-sourced to different companies for the same type of software.
If we have to buy PeopleSoft, because that's the existing software and we have to upgrade it, why is it through different companies that this is happening? We saw multiple things, again, sole-sourced contracts for photography. Again, in Ottawa alone, there have to be, if you look through the Yellow Pages—if such a thing exists anymore—or on Google, multiple companies doing photography.
I have to wonder. There was a scandal recently—I think it was Paris for COP or whatever the most recent environmental junket was. Maybe it was Czechoslovakia. The Minister of the Environment spent tens and tens of thousands of dollars for a private photographer to follower her around and snap pictures of her. Surely there have to be a lot of people in Ottawa who do that. Again, why are we sole-sourcing photography? We actually sole-sourced bands to play at events. I have to wonder, again, why we are sole-sourcing bands.
When we started the greening of government, we had people in from different departments, and the subject of buying new cars came up. The government said, “Well, we're only going to buy hybrid cars, electric cars”, but none of those were purchased for the RCMP for the G7. When I asked why they were choosing those cars, they said that those ones were available. Again, it goes back...and then we need to have further investigation and procurement. We've seen that the bureaucrats are not even following their own orders. We asked if the rule was to buy a hybrid car like a Prius. They said that they couldn't find one for an SUV. But there are hybrid SUVs. They bought a bunch of Nissan Rogues. Surely if you can fit four people into into a Rogue, you can fit four people into a Prius or a hybrid Hyundai Tucson or a hybrid Camry. I'm wondering, again, if we are going out sole-sourcing from these companies, maybe we should be buying Chevy Volts to keep GM in Canada.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Is it made in Canada? That should be the rule. We should be focusing on that.
Why are the government people going out on their own and possibly violating government rules? Again, we have 28 pages and 50 lines per page of stuff. Some of it was neat. General Dynamics is in there. We sole-source missiles with General Dynamics, which is pretty cool. It lists which ones. There are bullets, rockets, cannon shells and stuff like that.
I want to move on to the sole-sourcing. One of the things that worries me very greatly is the whole larger procurement thing that's going on. We've asked repeatedly to have a procurement study here. That's been shut down continually. I'm not really sure why. Procurement goes back.... Procurement was a problem in the previous government. It was a problem under Chrétien; there were scandals then. There were problems under Martin. This is a non-partisan thing that we need to fix not only for taxpayers, but also for our military and the Coast Guard.
Leonardo was recently in the news. If you don't know what Leonardo is, it's one of the companies that was bidding on the fixed-wing search and rescue plane. There were 18 of them. This goes back to a previous problem with procurement that was made famous because the original RFP that someone delivered was I think 3,700 pounds. It was in the news because there was so much paper in the RFP that it took a delivery van to deliver it. Why it has to be delivered by paper and not just burned onto a CD or put onto a Zip drive, I'm not sure. When you think about it, a 3,700-pound 10,000-page RFP was submitted.
Leonardo bid on it. Airbus bid on it, and they got the contract. Leonardo sued the government. It turned out that Airbus had overbid by a billion dollars and actually added components and features to the bid that were not asked for. They won with a $4-billion bid on a $3-billion cap. You have to wonder. At 3,700 pounds and 10,000 pages, what the hell could they have possibly left out such that Airbus found an extra billion dollars' worth of features? You'd think that with 10,000 pages of an RFP you would cover everything possible, not only for fixed-wing search and rescue, but tanks and surface combatants.
Anyway, Airbus got the deal. Surprisingly enough, part of the Airbus deal was a big contract for PAL in Newfoundland, in Judy Foote's riding. Of course, Judy Foote was the procurement minister at the time. Heaven forbid that there be pork-barrelling.
Leonardo sued the government. The government of course denied it, but then out of the blue Leonardo dropped their lawsuit, and lo and behold, guess what Leonardo got? A $5-billion sole-source contract from the Government of Canada. We have Airbus, which was playing footsies with Bombardier at the time and bailing Bombardier out. We've seen the government give $300 million to Bombardier, with which they promptly gave I think $30 million for bonuses.
Money has been poured into Bombardier like it's going out of style. They're in trouble. They can't sell the C Series. I think they had orders for two of them. In walks Airbus, with a non-compliant bid of a billion dollars over, while at the same time they're negotiating to bail out Bombardier. They get the deal—it's probably just coincidence—for a billion dollars more. Leonardo sues us, and the government says it was just a coincidence that they got a $5-billion sole source contract.
Again, that goes back to issues with procurement. There was a recent scandal, and I want to touch on this because I think it goes back to the sole-source thing. When we met with DND officials for a briefing about the combat ships that eventually went to...Irving eventually chose the T26 design. One of the things they told us was that Irving, as the general contractor, could sole-source to itself without government oversight. I asked how that was possible. Their comment was that Irving is so large that they are sometimes the only supplier.
I'm going to again loop back to when I was in the hotel business in order to use an example. When we bid on the Vancouver Olympics, in order to avoid price gouging, the hotel association had to get together and commit a certain percentage of rooms.
They can only charge, basically, inflation added onto the current price. So, you're bidding 10 years out. If the average rate in Vancouver, for the sake of argument, is $200 right now and they're bidding for the Olympics 10 years from now, they're only allowed to add a small percentage on top of the existing one. It stops price gouging from setting rates after the announcement.
You would think the government would have that set up with Irving. If Irving is the only one that can do the business and they'll sole-source from themselves, there has to be some proof that this is the normal rate they offer everyone else, and that they do not just charge what they want. But it turns out the government has no oversight on this. The comment from PSPC—and to this day, I find this just dumbfounding—was “Irving has given us their word that they won't do that.”
Now, I'm pretty sure every oligarchy through time has always been upfront and honest about charging government when they have a monopoly. Sure, you can have people thinking the point of having a monopoly is to gouge people and charge what you want, but I think when you look at the government and Irving, it's just, well, you know, “They've given us their word, so it's not a problem.”
I actually sat down after that with the head of Irving and asked him about that, and he actually denied that. So Irving or PSPC, one of the two, is either incompetent or lying about it. Hanlon's Razor says to never attribute to malice what you can attribute to incompetence, so maybe Hanlon's Razor is in effect here, and one of the two is incompetent. But there is that blurring of lines between where the government ends and where, perhaps, the interests of Irving begin and where the interests of PSPC, the bureaucrats, are.
Of course, we all know of the Admiral Norman issue, in which our friends at Irving were quite involved, SNC-style, in discussions with the former Treasury Board president, Mr. Brison. That's quite remarkable they would go after Admiral Norman, even though Admiral Norman wasn't in the meeting in which the leak occurred. I think he was ten time zones away in Europe at the time.
Conservative
The Chair Conservative Tom Lukiwski
For clarity and for the record, are you referring to Vice-Admiral Norman?
Conservative
Conservative
Kelly McCauley Conservative Edmonton West, AB
Vice-Admiral Norman, in my understanding, was in Europe at the time this happened, but what's remarkable is that there was someone from ACOA who was at the cabinet meeting. You have to wonder why someone from ACOA was there. Funnily enough, also at that cabinet meeting was none other than Gavin Liddy, who was one of the main principals of the Phoenix scandal. It was remarkable. Two of the main characters of Phoenix were also at that same cabinet meeting.
Now, cabinet meetings are known to leak like sieves, and DND is the biggest sieve. Actually, I don't even think that DND can be considered a sieve. I think it's more like a basketball hoop, where everything just goes right through. They're well known for that. As for why they targeted Vice-Admiral Norman, it seems to be because he was the one most favouring the Asterix, getting the Asterix out the door to serve the men and women in the Canadian Navy.
It's quite remarkable that out of all the procurement that's been done in the last decade, the only one that's been on time and on budget has actually been the Asterix. Funnily enough, as one of the people who was investigated—and it only came out because of Vice-Admiral Norman's lawyer—a gentleman at ACOA apparently has been named as the person who leaked this information. His lawyer was in the news recently in a David Pugliese article a couple of days ago, complaining that he's been under investigation for two years now, but he hasn't been fully charged, I understand.
What's remarkable about this gentleman is that he was transferred from ACOA to PSPC about two years ago, at about the same time that the RCMP started investigating him. PSPC and the government would have known this. I have to wonder if he was transferred from ACOA to PSPC after the investigation started or before. If it was before, why would they transfer him? If it was after, I wonder why he was transferred from ACOA to PSPC in the first place.
Now, this leads to a different story from Mr. Pugliese, and again brings up the worry about sole-sourcing. Again, it goes back to Irving being able to, I'm told, sole-source to themselves.
We don't know what, as general contractor, Irving is allowed to charge as their markup. Generally, if you're the general contractor building a house, it's 10% above or 5% or 14%, whatever you negotiate above the cost of your subs. Now, I've heard stories that the AOP ships are on fixed price and the CSCs are on cost-plus. I haven't received a straight answer from anyone. No one seems to know. I have been told that it's working on a half a per cent markup, which is an extraordinarily high markup, but again, if you think about it, and if it's true.... If it's not, I'd love to have PSPC come to make a statement that it's not true, that they were wrong in their briefing to us, if the example used was tugboats. Apparently, Irving is the only one that has tugboats in the area where they're building the CSCs, which is funny enough. You can look at the supplementary (A)s. I think they got about a $500-million sole-source contract from DND for their tugboat company.
Think about it. They can subcontract to themselves at any rate. If it's a $100,000 regular job, they can subcontract to themselves at half a million, and then add their 14%, 12% or 20% above that price. They can overinflate the price that they want, and then add their contracting fee on top, just for contracting to themselves without any oversight.
I want to loop back to that gentleman who had been charged with leaking that information, who had been with ACOA and then PSPC. Not the last time but the time before—two times ago—when we had the ministry here for the supplementary (A)s, we asked about the gentleman and when he had been suspended, and they were, like, “Oh, we don't know when he was suspended.” I find it quite remarkable that somebody who you know has been under an RCMP investigation and has been suspended from PSPC.... How they didn't know that? They said, “Well, we'll get back to you.”
They actually followed up several times with our clerk, but I think it took four months for the government to actually finally answer, and it makes me wonder again: what is PSPC trying to hide or why is PSPC trying to protect the government or protect someone from the scandal? Why do they not know? Why not be open about when the suspension was? Even if they didn't know at the time, it seriously would take only 30 seconds for a text or a quick phone call and a response to the committee. The fact that it took four months makes me wonder what PSPC is up to.
That leads into this next thing. I want to read this article from David Pugliese, which just came out on March 18. The headline is “A reporter asked the government about a Navy ship—then got a call from an Irving president”. Again, this goes back to where the line is between where Irving ends and the Liberals begin, and where that ends and PSPC begins. We've seen repeatedly in committee ADMs and others not being forthright with information, but seeming to be protecting either Irving or Seaspan or the government from being open with Canadians and taxpayers.
This is a non-partisan thing, whether it's Conservatives who may have messed it up and it's currently being messed up under the Liberals or whatever. I know everyone around this room wants what's best for taxpayers and what's best for our men and women in uniform—which is the same with all 338 people in the House. Why we don't expose this incompetence and get it fixed is beyond me.
Again, there is this headline, “A reporter asked the government about a Navy ship—then got a call from an Irving president”. The article states:
Ninety minutes after Postmedia reporter David Pugliese submitted questions to two government departments about a possible issue on a navy ship, he received a phone call from the president of Irving Shipbuilding.
Ninety minutes—if you think about it, when you make a phone call.... It took us about four months to get an answer about when someone from the government was suspended, and yet they act like the Road Runner on steroids when it's Irving. The article continues:
Pugliese was following up on a tip about potential problems with the welding on the new Arctic patrol ships that Irving is building for the Royal Canadian Navy. He submitted his questions to the Department of National [Defence] and [PSPC].
But instead of receiving a response from the federal government, he received a phone call from Irving Shipbuilding president Kevin McCoy, followed by an email from the company threatening to sue.
It's 5:00 p.m. now, so I should be getting my phone call at about 6:15 with the way it's going. The article continues:
The defence department has confirmed it contacted Irving and informed them of Pugliese's identity, and says it is investigating whether this violates the Privacy Act.
They're not saying that it's wrong, that it's disgraceful, or that it's an attack on our free press. They're only investigating whether this violates the Privacy Act. Here we have DND acting not on behalf of openness, not on behalf of transparency, not on behalf of taxpayers or the men and women who have to be in those ships with the faulty welding. They're acting on the behalf of Irving. The article continues:
“Regardless of that outcome,” the department [says]...“this is a matter we [take] extremely seriously... we have already issued interim direction to anonymize media requests pending further information.”
Again, they don't say they will stop passing the information on to Irving or Seaspan or Davie or anyone else. It's just, “We will fink out the reporter, but we will hide their name.” This I find incredibly frightening, that the free press wants to put in a question to the government, and the government's response is, “We'll pass it on to a private industry to threaten to sue you, but don't worry; we'll hide your name.” Postmedia has one reporter covering national defence. If it's not Pugliese, it's Murray Brewster. It's not hard to find out who's making the questions.
Irving Shipbuilding did not respond to a request for comment. Pugliese, who wrote about the ordeal for the National Post, spoke with As it Happens guest host Helen Mann. Here is part of their conversation:
She asked:
You have had a few days to absorb what happened—what is top of your mind...?
He said:
Well, I guess the question that I've got—and it still hasn't been answered—is what's the level of co-ordination between this company, Irving, and the federal government?
So, again, it's not just me who worries about the blurring of lines between SNC-Lavalin and the government, or Irving and government, or Irving or DND; it's a very well-respected press man who has been covering DND issues for decades.
Conservative
The Chair Conservative Tom Lukiwski
Once again, my apologies, Mr. McCauley.
Colleagues, even though bells will start ringing in about 12 minutes and I understand, Mr. McCauley, that you have far more material you'd like to share with the committee, since we do not have any officials before us who I could call, even if you concluded your remarks immediately—and I'm just saying this out of patent obviousness—I don't think it would be untoward of me to say that I think we've perhaps heard enough and we can all agree to adjourn.
Conservative
Kelly McCauley Conservative Edmonton West, AB
—but I will take your counsel instead of challenging the chair.
Conservative
