Government Operations Committee on March 20th, 2024

[The Chair, Conservative, Kelly McCauley]

I call this meeting to order.

Before we start, I require unanimous consent from the committee to continue, because we have the bells ringing.

[Some hon. members]

Agreed.

[The Chair, Conservative, Kelly McCauley]

Wonderful.

We'll start. This is a very quick welcome to meeting 111 of the House of Commons Standing Committee on Government Operations and Estimates.

Pursuant to Standing Order 108(3)(c), the committee is meeting to commence consideration of the supplementary estimates (C), 2023-24. We have votes 1c and 5c under PSPC, vote 1c under the PCO, vote 1c under Shared Services and votes 1c, 15c, 20c and 30c under the TBS.

Keep your earphones away from the microphones. It causes feedback and potential injury.

We are very short on time.

We're going to turn things over immediately for an opening statement from the minister. I think we'll probably just have one opening round of about four minutes before we lose the minister.

Minister Duclos, welcome back. Please, go ahead, sir.

[Jean-Yves Duclos, Liberal, Minister of Public Services and Procurement]

Just to be certain, when do we expect the vote to start?

[The Chair, Conservative, Kelly McCauley]

We have about 20 minutes. We'll have your opening statement and probably about four minutes for each party.

Go ahead, sir.

[Jean-Yves Duclos, Liberal, Québec, QC]

Thank you, Mr. Chair.

As you know, we are gathered on the traditional, unceded territory of the Algonquin Anishinaabe people.

As Minister of Public Services and Procurement Canada, or PSPC, and Shared Services Canada, or SSC, I thank everyone for giving me the opportunity to present our requests within the framework of the 2023‑2024 Supplementary Estimates (C).

To summarize, PSPC is asking for a net increase of $263 million for its expenditures budget, while SSC is asking for $53 million.

Allow me to position some of these requests within the context of our priorities.

First of all, modernizing procurement includes simplifying our processes and improving access to public contracts for SMEs and suppliers from historically under-represented groups, namely indigenous peoples.

A second priority is to invest in quality care for Canadians, resolve pay issues for public servants and move forward with the Next Generation Human Resources and Pay System.

A third priority involves supporting our government’s response to the housing crisis. To do so, we are accelerating the conversion of surplus federal properties into affordable and accessible housing. This year alone, through agreements with developers, the Canada Lands Company will enable the construction of more than 2,800 housing units. Furthermore, over the next five years, the Company plans to build over 26,000 new homes on its properties, at least 20% of which will be affordable housing units.

Of course, our fourth priority is to continue working in close collaboration with several key partners to implement the Canadian government’s new Canadian Dental Care Plan. To date, over 1.5 million seniors have become eligible for the plan, and oral health care providers have started signing up.

Allow me to briefly update you on the work done by PSPC officials to answer questions about the Canadian government’s procurement processes.

First, I want to say that we are very proud and grateful for all the work accomplished by public servants, who worked diligently to protect Canadians’ health during the pandemic. Whether it be by ensuring the supply of vaccines, rapid tests or personal protective equipment, the work of these public servants and all Canadians helped save thousands of lives and protect thousands of jobs.

I want to reassure the committee that the findings of improper behaviour, including fraud, are unacceptable.

In November 2023, PSPC suspended all delegated authorities for professional services-based task authorizations in order to implement additional controls to strengthen IT procurement and the management of contracts.

That same month, PSPC suspended all GC Strategies contracts with the Canada Border Services Agency. Since that time, I can confirm that every active contract with that company has been terminated across the government and that the company is ineligible for any new contracts.

Following further investigations, both PSPC and Shared Services Canada have also recently suspended Dalian and the Dalian-Coradix joint venture from current and future contracts.

We also have to have more tools that can protect our supply chains from bad actors and respond to evolving threats. That is why, earlier today, I announced the establishment of the office of supplier integrity and compliance. That new office will enable PSPC to better respond to misconduct and wrongdoing and further safeguard the integrity of federal procurement.

I also provided an update on investigations by PSPC that uncovered several fraudulent schemes undertaken by subcontractors working on federal professional services contracts between 2018 and 2022. The department has revoked or suspended the security statuses of these subcontractors and is taking steps to recover illegitimate amounts billed to the government. These cases have also been referred to the RCMP.

In closing, Mr. Chair, all of this work is part of the reinforced efforts of PSPC and all other departments to keep strengthening federal procurement and hold bad actors accountable for wrongdoing.

I would be pleased to answer any questions the committee may have.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We have about 13 minutes left, so we'll start with five minutes and then five minutes. We'll suspend for the vote and come back with five minutes and then five minutes for the opening.

Go ahead, Mrs. Block, please.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Mr. Chair.

Thank you to our witnesses and the minister for joining us today.

Earlier today, Bill Curry reported that “An internal review of federal contracting has found that nearly $5 million in fraudulent billing by three private subcontractors”. You, of course, confirmed this, and you held a press conference earlier today where you announced that “three information technology subcontractors fraudulently billed on contract work across a number of separate federal departments, agencies and Crown corporations”. The total of these illegitimate payments is, as I've said, almost $5 million.

Your officials mentioned that five to 10 more cases are being looked into. Can you tell me how much money is involved in these additional cases?

[Jean-Yves Duclos, Liberal, Québec, QC]

I'm very pleased to note that you did both follow the story this morning in the newspaper and quote, importantly, the press release that I gave with the President of the Treasury Board, Anita Anand.

Three things we announced briefly. First, the—

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Excuse me, Minister. As you noted, I followed the press conference. What I'd like to know is how much money is involved in these additional cases. Do you know, yes or no, and if you do, how much is it?

[Jean-Yves Duclos, Liberal, Québec, QC]

I'll cut that into two pieces.

First, there is the announcement this morning, the $5 million that, as you will have understood, is under investigation by the RCMP. All appropriate attempts will be made to recover those dollars.

Second is the fact that, as you also mentioned, there are other cases under investigation. When more is known, appropriate measures will be taken.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much for that.

Are these investigations expanding to any of the companies involved in the ArriveCAN scam?

[Jean-Yves Duclos, Liberal, Québec, QC]

These are separate cases. The reason we are able to talk about them today is that since 2018 and, more importantly, since the pandemic, a large number of procurement contracts are now electronic. We have invested significantly in electronic procurement, so we're able to use data analytics and the considerable amount of data that has been accumulated to proceed to the identification of these cases and to eventually prosecute them in court.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

What does your department define as “fraudulent payments”? For example, were subcontractors paid for work they didn't do?

[Jean-Yves Duclos, Liberal, Québec, QC]

These cases are different from the ones you have in mind, different from the ArriveCAN cases on which you have spent considerable time over the last few weeks. These are separate cases, and as you would understand and as would be appropriate, we can't talk about them in public since that would undermine the important RCMP efforts that are currently under way.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

You can't identify the companies, but can you identify which departments are involved with these contractors and the fraudulent payments?

[Jean-Yves Duclos, Liberal, Québec, QC]

There are many of them. I think it's a bit more than 30 of them, and all of them are co-operating, as they should be doing, with PSPC to find out what went wrong and how we can prosecute those cases and recover the dollars that were fraudulently provided to them.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Are the public servants who were involved with these contractors and these payments being investigated at all?

[Jean-Yves Duclos, Liberal, Québec, QC]

The information that I have... Again, we need to be very careful, because we wouldn't expect and we wouldn't want politicians to become involved in RCMP investigations, so that information remains far from political interference. We have high-level information that suggests that there's no wrongdoing on the part of public servants at the moment as we're speaking, but that is obviously under investigation as well.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

What about the public service? Are there any individuals in the bureaucracy, in the departments, who may have been working with these contractors being investigated?

[Jean-Yves Duclos, Liberal, Québec, QC]

As we just said, everything is obviously under scrutiny, but as we speak now, the RCMP is investigating outside subcontractors that have fraudulently billed the federal government.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

You said earlier today that there is no evidence that the fraudulent payments were a result of mismanagement. I guess I would then ask if you are aware of whether these subcontractors provided proof of work, or did departments simply pay without seeing that proof?

[Jean-Yves Duclos, Liberal, Québec, QC]

As we just said—

[The Chair, Conservative, Kelly McCauley]

I'm sorry. I'm going to have to intervene, because we're very short on time. That is our time. Perhaps we can get back to it in the next round, or in writing.

We'll have Mr. Bains for five minutes.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. Chair.

Thank you, Minister, for taking the time to join us today, and, of course, thanks to all of your department officials.

My question is regarding the construction industry and how it plays an essential role in Canada's economy, employing nearly 1.5 million people. As you know, the region I'm from—Richmond, British Columbia, and the greater Vancouver region—has a large segment of this construction industry.

In December of last year, PSPC introduced the Federal Prompt Payment for Construction Work Act. Can you briefly explain the importance of prompt payment for the industry and how this legislation will achieve that? I hear from a lot of construction industry associations on this matter. It's very important to them.