Evidence of meeting #73 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 procurement.
A recording is available from Parliament.
9:45 a.m.
Conservative
The Chair Conservative Tom Lukiwski
We're out of time, Mr. Peterson, but we will have another round of questioning.
Mr. McCauley.
9:45 a.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Ms. Robertson, you mentioned that a lot of your procurements are covered. What percentage generally—not photocopy paper, but CSIS-specific procurement— do you cover under NSE? Is it a large amount?
9:50 a.m.
Assistant Director, Finance and Administration, Canadian Security Intelligence Service
Actually, we invoke the national security exception for 100% of our procurement and for very good reasons. We're very concerned about the security of Canadians, which includes our employees working domestically across the country and in many of your ridings, but also those who are posted abroad. Therefore, due to the heightened threat environment right now, we invoke NSE on every transaction.
Our budget is large. I'm responsible for finance, so I take the stewardship function very seriously. I don't take it lightly. Our total budget is half a billion dollars. We have 3,200 employees, so the majority of our expenditures go toward salaries, which is not in procurement but still, we take the procurement budget we have seriously. I have a very capable procurement team that ensures our procurement process follows the government contracting regulations.
9:50 a.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Really, when you're taking out your salary levels, it's a very small amount though, in the grand scheme of things.
9:50 a.m.
Assistant Director, Finance and Administration, Canadian Security Intelligence Service
It's not very small. It's still over $100 million, but it's a very small amount of the government's total procurement budget, yes. I acknowledge that, but we take it very seriously and my procurement officers realize they are spending taxpayers' money, so we compete everything to the extent possible. I'd just like to make one other comment because it's come up a few times. When I talk about the supply chain, or when my colleagues do, we vet every single supplier for criminality, bankruptcy—that connects to the honourable member's question—as well as links to hostile actors, so it's a very thorough process.
9:50 a.m.
Conservative
Jacques Gourde Conservative Lévis—Lotbinière, QC
I have a question for all the witnesses.
Who has the power to invoke the national security exception? Is it the deputy ministers, assistant deputy ministers or anyone in the government who needs that program?
9:50 a.m.
Assistant Deputy Minister, Marine and Defence Procurement, Department of Public Works and Government Services
Thank you for the question, Mr. Gourde.
Usually, in the departments, as you have seen, the assistant deputy ministers have that responsibility. We follow the Treasury Board guidelines, which indicate that the most senior person in charge of procurement has that responsibility.
In the case of Public Services and Procurement Canada, it is my colleague Arianne Reza and I. I specialize in defence and marine procurement, and she handles the rest of the procurement. Basically, it's the people at the top in the departments.
9:50 a.m.
Conservative
Jacques Gourde Conservative Lévis—Lotbinière, QC
If there was a trial on one of the procedures, could you invoke the exception to avoid participating?
9:50 a.m.
Assistant Deputy Minister, Marine and Defence Procurement, Department of Public Works and Government Services
I think that national security exceptions really have to do with the procurement process. However, we can talk to you about the process and about application, as I am doing today.
As I was saying earlier, the idea is really to protect the supply chain integrity so as to help Canada protect its national interests. That does not mean we cannot publicly discuss the process and the work we are doing.
9:50 a.m.
Conservative
Jacques Gourde Conservative Lévis—Lotbinière, QC
For example, let's say that, in a $100-million program, only a significant portion of $2 million—or 2% of the budget—should benefit from the national security exception. Would the exception be applied to the entire program or only to that portion?
9:50 a.m.
Assistant Deputy Minister, Marine and Defence Procurement, Department of Public Works and Government Services
The application is very targeted. As you heard, certain procurements are quite targeted. We are really trying to use them only when there is a real need.
So, for example, if the Department of National Defence needed non-military equipment, the national security exception would not apply. There are no national security issues when the department needs paper or office supplies. In such a case, the measure would not apply.
On the other hand, for other procurements—such as our warships—the national security exception applies throughout the process because we are talking about warships.
9:50 a.m.
Conservative
Jacques Gourde Conservative Lévis—Lotbinière, QC
Can the measure be abused? Can the national security exception be used to conceal certain budgets?
9:50 a.m.
Assistant Deputy Minister, Marine and Defence Procurement, Department of Public Works and Government Services
My colleagues and I feel that we protect ourselves against such abuse through stringent procedures that constitute a challenge at every step. By the time all the steps of the process get to our level, we have made sure that the national security exception has not been applied excessively and that it really exists for the purposes of this process. We comply with our trade agreements.
Moreover, as I have already said, competition is very important to us. We ensure that the process is competitive even when the national security exception is invoked.
9:50 a.m.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
Thank you, Mr. Chair
Ms. Robertson, you're off the hook, so it was easy with me.
I understand why CSIS and RCMP would invoke NSE. You are security organizations, so I completely understand.
Ms. Campbell and Mr. Breton, help me understand. When sole-sourcing a contract, there are a few conditions. If they are under $25,000, you can do that. If nobody else in the business can claim that they're doing that, you can issue an advance contract award. Then, if it's deemed in the national interest, you can invoke the national security exemption, which allows you to sole-source, but it doesn't mean that you have to sole-source.
9:55 a.m.
Assistant Deputy Minister, Marine and Defence Procurement, Department of Public Works and Government Services
National security exceptions have nothing to do with competing or non-competing out. If there's anything we can achieve today, I really want to leave the committee with that. It's an important message that we all want to convey.
I'm looking now at the government contracting regulations. Our default is competition in Canada. We will always compete. There are certain exceptions, which are the needs of pressing emergency in which delay would be injurious to the public interest. This is a very high test. There's jurisprudence on this that cannot be abused.
Next is that the expenditure doesn't exceed $25,000, or $100,000 where it's for architectural engineering. There are certain different financial limits if it's Privy Council and the rest of it. The nature of the work is such that it wouldn't be in the public interest to solicit bids, so there are some where there's a lot of national security interest in play, and it has to be justified, or where there's only one person capable of performing a contract. You mentioned an advanced contract award notification, ACAN. We issue those often just to make sure there is no other person who can do it.
As I said, directed sourcing or sole-sourcing is rare for us. Our default is competition also when a national security exception is applied, so they are two distinct things. National security exceptions are applied, and we go ahead and compete, and I've given you many recent instances.
9:55 a.m.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
What happens in the organization when you've decided to invoke an NSE or move towards that? What happens with procurement officers? What goes on in the department versus perhaps a procurement that wouldn't invoke an NSE?
9:55 a.m.
Assistant Deputy Minister, Marine and Defence Procurement, Department of Public Works and Government Services
For NSEs, again, we do industry engagement, and a client department may start to form the opinion that, because of the nature of the procurement, because of what they're buying, because of concerns about national security, they may want to invoke a national security exception.
Our lawyers are involved. We have a group dedicated to reviewing these requests, to looking at precedents, and to making sure that this is in line with government policy. They look at the Treasury Board guidelines and they will challenge it all along the way. If they are satisfied that the request is valid, it will go all the way to the assistant deputy minister or equivalent in that organization who will then write to me and make the request, setting out all of the reasons for it and seeking my permission to invoke.
I will also then do my own challenge function and, if satisfied, I will invoke the NSE.
To answer your question about a request to sole-source, that is also challenged very vigorously. If a government department wishes to sole-source, they have to provide a rationale to us that is challenged very vigorously. In many instances, we will go back to industry and say that there are other business solutions out there, and this should be competed.
9:55 a.m.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
On the supplier side, what happens when you invoke NSE versus when you don't invoke it?
9:55 a.m.
Assistant Deputy Minister, Marine and Defence Procurement, Department of Public Works and Government Services
We will tell suppliers during industry engagement. This is a common feature for us now, because we do industry engagement often for years in advance. They're aware of it. They're used to it. They're increasingly used to having to prove the integrity of their supply chains and really make sure that the vendors who are coming to us meet Canada's national security standards and also help us meet our international obligations through NATO and other security agreements.
9:55 a.m.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
I know Shared Services had supply chain integrity as well on contracts that I don't think had NSE. It's a good thing to prove that, yes, your product or your software is being produced or created in a place where we don't have security issues. I'm just trying to understand. What is the difference, and what is the impact on suppliers when NSE is invoked? What extra steps do they have to do?