Government Operations Committee on Aug. 20th, 2024

[The Chair, Conservative, Kelly McCauley]

Good morning, everyone.

Welcome to meeting number 134 of the House of Commons Standing Committee on Government Operations and Estimates, or, as we all know it, the mighty OGGO.

I'd like to welcome everyone.

I would like to quickly remind everyone to keep their earpiece away from their microphone at all times so that we avoid the feedback that harms our very valuable interpreters, whom we cannot operate without.

Before we start, if you will oblige me, colleagues, I want to pay tribute to three members of Parliament who have passed recently and who were integral in getting OGGO operating years ago. They are MP Marlene Catterall, who was from Ottawa West—Nepean; Mr. John Williams, who was from Edmonton—St. Albert; and Chuck Strahl, who was from the Chilliwack area of B.C.

The three of them saw a need for better oversight of government spending in the estimates process, so they started the process back in a joint report to PROC in 1998, recognizing that “the vast sums of money spent by government are subjected to only perfunctory parliamentary scrutiny.” They got a report through to PROC, and then Mr. Strahl managed to get it tabled in PROC and passed, which led to the creation of what has become the mighty OGGO.

I want to take a moment to thank everyone for recognizing the passing of our three valued colleagues, who were so important in the service of Canada. Thank you very much for that, colleagues.

To the families of Ms. Catterall, Mr. Williams and Mr. Strahl, we'd like to pass on condolences from the members of OGGO, the staff, the clerk and, I'm sure, the analysts as well.

Thank you very much.

We're starting off with five minutes from Ms. Tattersall from TBS, and then we will go online to Mr. Quinlan.

Just quickly, at an hour and a half, we will take a short break for the witnesses and the staff to attend to issues.

Go ahead, Ms. Tattersall. The floor is yours for five minutes.

[Samantha Tattersall, Assistant Comptroller General, Acquired Services and Assets Sector, Office of the Comptroller General, Treasury Board Secretariat]

Thank you, Chair.

I would like to start by acknowledging that I am speaking from the traditional unceded territory of the Algonquin Anishinabe people.

My name is Samantha Tattersall. I am the assistant comptroller general for the acquired services and assets sector in the office of the comptroller general at the Treasury Board Secretariat.

First, I'd like to take a moment to outline the role that the Treasury Board Secretariat plays in supporting the management of investments and, specifically, real property.

The Treasury Board sets the administrative policy framework for the management of investments, including real property, through the Directive on the Management of Real Property.

Custodian departments, of which there are 28 across the federal government, including Global Affairs Canada, are responsible for the management of their real property. Deputy heads of these organizations are accountable for ensuring that real property is managed in a manner that enables operational outcomes while demonstrating sound stewardship.

Consistent with Treasury Board policy, custodian organizations must have a senior designated official responsible for the management of real property who is accountable for establishing, implementing and maintaining a department-wide real property management framework. This framework should include effective governance and oversight mechanisms to effectively enable the management of real property that supports the delivery of their respective departmental mandates.

When entering into a transaction, whether that is to lease, acquire or dispose of real property, Treasury Board approval is required when the value exceeds a department's transaction limits. All custodian departments have general limits, and eight have special limits that are reflective of their operational requirements. This information is available online at Canada.ca.

In the case of Global Affairs Canada, the department can acquire an official residence property outside of Canada for an amount of up to $10 million Canadian. This means that the property in question was acquired within Global Affairs Canada's authority. The Treasury Board did not review the transaction in question.

Regardless of whether the transaction is within or above a department's limits, it needs to be transacted in a manner that is consistent with the directive on the management of real property. This includes validating the need for an acquisition based on the department's programs; supporting it with the appropriate due diligence, including a full life-cycle analysis; doing it in a fair and open manner that's aligned with commercial real estate practices; and obtaining an appraisal from the chief appraiser of Canada in advance of the purchase.

With that, Mr. Chair, I'm pleased to answer any questions from the committee members about the Treasury Board directive on the management of real property.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mr. Quinlan, go ahead, please.

[Mark Quinlan, Assistant Deputy Minister, Real Property Services, Department of Public Works and Government Services]

Thank you, Mr. Chair.

My name is Mark Quinlan. I'm the senior assistant deputy minister for real property services at Public Services and Procurement Canada, and I'm pleased to discuss our limited role in the transaction process for the Canadian consul general's residence in New York City.

In order to comply with the Treasury Board directive on the management of real property, real estate practitioners from custodian departments are required, as part of their due diligence process, to justify the amount paid for acquisitions and disposals in relation to market value.

Specifically, according to the procedures set out in appendix B to the directive, practitioners must obtain at least one appraisal from the chief appraiser of Canada before acquiring or disposing of real property, except: when there will be an open solicitation of offers and the total value of the real property interest is anticipated to be less than $500,000; in this situation, obtain at least one current estimate of the market value.

Amélie Bouchard, who is accompanying me today, is currently serving as the acting chief appraiser of Canada following the retirement of the previous chief appraiser. Ms. Bouchard has been assistant chief appraiser since 2017.

Also accompanying me is Linda Jenkyn, director general of real estate and national capital area investment management.

The role of the chief appraiser of Canada, in any transaction, is limited to providing an independent and impartial appraisal, supported by market evidence, to assist in making informed real estate decisions. As such, the chief appraiser monitors the quality of third party appraisal reports, assuring adherence with standards and best practices.

According to the same Treasury Board directive, they have to segregate transaction and valuation responsibilities related to real property transactions. The separation of valuation and transaction responsibilities means that the individuals or entities that provide an opinion of market value of a property are different from those that handle the sale or purchase of the property. The separation ensures that the valuation is impartial and reliable, while transactions are conducted with dedicated negotiators, thus ensuring integrity and transparency in the transactional process while minimizing the risk of conflict of interest.

For the transaction in question today, for which the value is above the $500,000 threshold, there was a mandatory requirement for Global Affairs Canada to commission an appraisal report from the chief appraiser of Canada via PSPC appraisal and valuation services. PSPC's role in the purchase of the consul general's residence, therefore, was limited to providing appraisal services. PSPC provided these appraisal services through a third party—John C. Monaco of National Valuation Consultants—and was not involved in the cost-benefit discussions regarding the replacement of the previous residence.

The chief appraiser of Canada's role is not to confirm the merit of a transaction, nor is it to reinforce the fact that a custodian department has made a good decision by achieving a given real estate transaction; the role is simply to provide an independent appraisal on the value of a property.

The segregation between the appraisal responsibilities and the transaction responsibilities—which, in this case, rest with Global Affairs Canada—is highly important and allows for an impartial step in the overall transaction process.

Thank you, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We'll start with six minutes with Mr. Barrett, please.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

We're asking these questions today in the context of living in Canada, with housing prices and rents having doubled. We have one in four Canadians saying they're going to be relying on food banks this fall.

At the same time, we have the Prime Minister's media buddy getting a well-paid government appointment in New York City, and the existing multi-million dollar condo is deemed not good enough, so a $9-million luxury condo is purchased for his exclusive use.

I'll start with you, Ms. Tattersall.

Who signed off on the decision?

[Samantha Tattersall]

As I said in my opening remarks, the decision was taken under the authority of Global Affairs. Whoever signed off would have followed the delegation instrument within Global Affairs.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Okay. From your department, who is the most senior person who touched the file?

[Samantha Tattersall]

Nobody touched the file at the Treasury Board Secretariat because the transaction fell within the limits—

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

—of $10 million.

[Samantha Tattersall]

—of $10 million, so the decision was at Global Affairs.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Mr. Quinlan, you're an assistant deputy minister. Who was the most senior person in your department who signed off or touched this file?

[Mark Quinlan]

Thank you, Mr. Chair.

The chief appraiser, in this case, Madam Bouchard, who's accompanying me today, was the most senior person to deal with this file.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Okay. We have a 3,600-square-foot three-bedroom-plus-studio with four and a half bathrooms, a pool, his and her salons, a paddle court and a golf simulator.

Madam Bouchard, was this purchase, in the context that I mentioned about the cost-of-living crisis that Canadians are facing, flagged for the minister? As the most senior person in your department who touched the file for this opulent purchase, was this not something that merited the awareness of the minister?

[Amélie Bouchard, Acting Chief Appraiser of Canada, Real Property Services, Department of Public Works and Government Services]

Thank you for the question.

It is actually not in the mandate of the chief appraiser of Canada to judge the merits of a transaction or the decisions to acquire or dispose of an asset. My mandate for a given address is limited to providing an appraisal report that is produced according to the rules and the standards of the profession.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Who is responsible for deciding the value that Canadians get for the purchase? You decide the value of the asset, but who is responsible? I'm not sure if Treasury Board or one of you folks would like to respond. Who ultimately is responsible for the value that workers in western Canada, in the Prairies and in Ontario, Quebec and the Atlantic provinces get for this $9-million luxury suite for Justin Trudeau's buddy? Where's the value for Canadian taxpayers here?

He was living in a house paid for by the taxpayers.

[Samantha Tattersall]

If it's helpful to the committee in the examination, I can talk through the principle of best value that sits within the Treasury Board policy.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Okay. When we're talking about best value, I'm not looking for chapter and verse on what the policy says. What I'm looking for is the practical application of that.

It falls below a threshold of $10 million and, therefore, doesn't trigger the need for a Treasury Board review, which I think is wild in this respect when multi-million-dollar estates do not trigger the review of Treasury Board.

We've seen at this committee and others before where Liberal members have said that, “Well, you know, these decisions are all up to bureaucrats and there are absolutely no ministers who are responsible for any of the tens of millions of dollars that get spent.”

This is a condo on Billionaires' Row in Manhattan. We have government facilities available to the appointee to host meetings that aren't next to his bedroom, so what is the value that Canadians get for this $9-million purchase in Manhattan?

[Samantha Tattersall]

If it's helpful, I can explain that you only hold real property to serve a program purpose. There are two aspects, I think, to the questions you may have, one of which is: What are the programmatic mission requirements that would drive the decision to have an official residence in a specific area? Those are driven by Global Affairs, and I think in the submission to the committee they referenced their policy that drives those requirements—so real property exists for requirements.

Then, when they go to acquire, what I would expect to see, and what I think this committee would want to hear from Global Affairs about, is whether they undertook a full life-cycle cost analysis of the different options. Did they look at keeping it and making the upgrades? Did they look at what the full cost would be of acquiring something new, either through a purchase or through a lease? What were the results of that analysis, and did it show the value?

That's what the Treasury Board policy sets out, and there are two aspects to that.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Thank you, ma'am.

[The Chair, Conservative, Kelly McCauley]

Thanks very much, Mr. Barrett.

Mr. Jowhari, go ahead, please.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

Once again, I welcome all the officials back to OGGO.

I'm going to start with Madam Tattersall.

Actually, the line of questioning I want to go down is very welcome.

You talked about program needs, which, based on what you said, are determined by GAC and are outlined in the document that GAC has provided. You also talked about the fact that TBS lays out a set of requirements and they review from a completeness point of view rather than a comprehensive-and-quality point of view. They look at it to find out whether there was a cost-benefit analysis and whether a cost appraisal was done. Also, they want to know if the value of the new acquisition outweighed the value of the lease or the alternative.

In your opening remarks you also talked about the directive on the management of real property. You touched on a couple of key points under section 4.2.23 to 4.2.27, I believe, which is on validating the need for acquiring the real estate property based on the program needs and on the real property portfolio strategy.

Very briefly, do you believe the procedures that are highlighted by TBS under the directive on the management of real property, in section 4.2.23 to 4.2.27, were met?

[Samantha Tattersall]

Thank you for the question.

I have to start with the premise that this transaction was not reviewed by Treasury Board, so I can't confirm what GAC did on this transaction. I know officials will be here tomorrow and they will be able to confirm that.

What I can say is that I understand that they undertook a financial analysis of the life-cycle cost, and I think that is something this committee may want to ask GAC officials about tomorrow. What might be helpful for this committee in talking with GAC officials is to understand what due diligence they undertook. We know they undertook an appraisal, and I understand they've undertaken a financial analysis. They should set out any additional due diligence.

I believe—and I'm reading the information they submitted to this committee—that in terms of the open aspect of the requirements they engaged a broker to look at a list of properties. From the submission to the committee, I understand they've undertaken some things, but I can't confirm that. That is something that GAC officials will have to confirm to this committee when they appear.

[Majid Jowhari, Liberal, Richmond Hill, ON]

I've highlighted a policy, and you pointed to some of those policies. Because the threshold was there and it was below $10 million, am I right to understand that there was no need for the review?

[Samantha Tattersall]

That's correct.

GAC has had special transaction limits since 1993, which get updated with inflation and market valuation adjustments, and which, within their authority, they have full authority to transact, but as I said in my opening remarks, they should still be consistent with the Treasury Board policy.