Government Operations Committee on Nov. 27th, 2023

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Maybe to save time, is it worth asking, would there be unanimous consent to deem the motion adopted in its current amended form? That would save us some time.

[The Chair, Conservative, Kelly McCauley]

You can't move a motion on a point of order.

We don't have consent anyways, I'm afraid.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Was that a Liberal member?

[The Chair, Conservative, Kelly McCauley]

Yes, it was.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Sousa was...? Okay.

[The Chair, Conservative, Kelly McCauley]

We're going to continue with our order.

It's Ms. Kusie for six minutes.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair.

Due to the limited oversight of the Government of Canada's subcontractors, how do you ensure these companies are fulfilling their obligations under the integrity regime?

[Arianne Reza]

Thank you very much for the question.

I'm glad to be here for the second hour, because I'm hoping I'll be able to provide some of the senior officials here some clarity on some of the questions they've asked.

In terms of the integrity regime, we have Canada's registrar with us. She will describe some of the various elements that tie together for increased vendor performance, awareness, training, fraud, detention and prevention.

[Catherine Poulin, Assistant Deputy Minister, Departmental Oversight Branch , Department of Public Works and Government Services]

I want to thank the member for her question, Mr. Chair.

Our department has a broad framework for addressing wrongdoing. Our framework seeks to prevent, detect and address wrongdoing when we become aware of it.

We have measures in place to prevent fraud, including internal controls. We run employee awareness campaigns and provide mandatory fraud prevention training. We explain to employees the expectations regarding ethical behaviour through the code of conduct for employees or the procurement code for suppliers.

We're actively involved in fraud detection. We know that tip lines are one of the most effective ways to detect fraud. We work with the Competition Bureau and Royal Canadian Mounted Police to obtain information on federal contracts or any other department activity. We have a line for employees to report wrongdoing under the Public Servants Disclosure Protection Act.

We use data analysis a great deal. We can identify certain types of fraud by analyzing anomalies in large databases. Once we're informed of possible allegations, we pass the information on to a special unit in the department called the special investigations and internal disclosure directorate. This unit has the authority to conduct administrative investigations for the department.

The department can call on a team of forensic accountants to help us identify the financial components of certain acts of wrongdoing. If allegations are deemed founded after a thorough internal investigation, we can refer these cases to the Royal Canadian Mounted Police for investigation.

We can implement other resources or corrective measures. We can stop work, as in the case of the Canada Border Services Agency. If appropriate, security clearances can be revoked. During the investigations, if we determine that money has been misappropriated or overcharged, we can recover the costs.

This is our framework for providing oversight and for addressing the risk of fraud that the department may encounter.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much.

As I understand it, the integrity regime is used to ensure that the government reduces instances in which Canada enters into contracts or real property agreements with suppliers who have been convicted of or charged with an offence listed in the policy linked to unethical business conduct.

The review process covers only contractors and first-tier subcontractors, which are the subcontractors with which they directly communicate. So, according to the current processes, Botler AI would not have been reviewed by the integrity regime.

Is there any discussion to include, beyond first-tier subcontractors, sub-subcontractors with respect to compliance with the integrity regime?

[Catherine Poulin]

Under the integrity regime, the prime supplier is checked first. However, the prime contractor must ensure that the subcontractors aren't disqualified under the integrity regime. The prime contractor must verify this. If the subcontractor isn't disqualified, the prime contractor can do business with the subcontractor.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you for your response.

Would you have any statistical information as to the percentage of contractors who use sub-suppliers beyond the first year?

[Arianne Reza]

I don't know if we have that level of visibility. There are a couple of different pieces in this question that need to be answered.

All of our commodities have different relationships from the prime to the sub, so we don't necessarily have all the visibility, but we have some tools to govern it. And based on the work of this committee, we're certainly reviewing them hard because there's a code of conduct that the supplier signs with Canada. In it they certify that what they are providing to us is honest and ethical. We put in various pieces around forced labour, fair wages, criminality and integrity.

Now this question about how many levels of subs there are—

[The Chair, Conservative, Kelly McCauley]

We're basically out of time.

Can you finish up really quickly in a couple of seconds.

[Arianne Reza]

Let's just say we will have to come back on the levels of subs. I don't think we have it across various commodities.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

Thank you, Chair.

[The Chair, Conservative, Kelly McCauley]

Thank you.

Mr. Powlowski, for six minutes, please.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

I'm pleased to see so many officials from the Department of Public Services and Procurement.

I want to ask you a question about a statement in the fall economic statement, which is pretty pertinent to your department. It says, “going forward, Canada will consider reciprocity as a key design element for new policies, including”—blah, blah—“federal procurement”. “This includes reciprocal procurement to ensure that countries that do not provide Canadian goods and services with a similar level of market access do not unfairly benefit from access to Canada’s markets.”

I'm quite interested in this, particularly being from Thunder Bay, and the given fact that every subway train ever in Toronto has come from Thunder Bay. Right now TTC is looking to procure more subway cars, and some of the companies that were in the running were from South Korea, China and Japan.

This would seem to affect what would happen to procurement there. Could someone comment on how this is actually going to become reality. Is there going to be some statute or law to put in this requirement of reciprocity, or is this going to be an unwritten rule the departments follow?

[Arianne Reza]

I'll kick it off. We have been looking at the trade agreements and what the chapters say in those agreements related to federal procurement opportunities. We've been trying to fuse that with what we want to do with Canadian SMEs to make sure there is a level playing field so that they have more access, and that also limits more broad access to federal procurement opportunities.

In terms of whether or not it will be supported by a regulatory regime, or guidelines or policies, I think that's still being shaped, but perhaps Michael has more information.

[Michael Mills, Assistant Deputy Minister, Procurement Branch, Department of Public Works and Government Services]

That's correct, Mr. Chair, in that we are working with Global Affairs to determine what's the proper approach in understanding which markets are open to our SMEs, and which ones aren't, and making sure that there is fairness in the opportunities that are afforded to Canadian SMEs versus what are afforded to SMEs in other countries.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

I think you have already referred to what was my next question. Wouldn't such a requirement of reciprocity be contrary to the WTO agreement on government procurement?

[Arianne Reza]

Thank you, Mr. Chair.

That is exactly what we're doing. We're working through the fine print on that to ensure that we're able to have a framework that is going to meet the needs of Canadian SMEs.

To that effect, one of the things we have done under our trade agreements is create a CanadaBuys platform, which is an opportunity for all levels of government to have one common tender platform. That increases the visibility of Canadian SMEs to the opportunities that exist across jurisdictions—again as a way to lever what we're trying to do with reciprocal procurement.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

What would happen if a country doesn't have, or hasn't announced or made public, any policy that requires them to procure from a company from their own country? It's not out there publicly. However, if you just look at the history of government procurement in that country, you will see that contracts have never gone to Canadian companies. Again, it has never been stated. It's not a formal policy.

Would that be the basis for Canada then perhaps taking a position regarding, for example, South Korea, which has never procured anything from a Canadian company, and that we should perhaps not be procuring anything from South Korea?

[Arianne Reza]

I think that question is best answered by Global Affairs colleagues.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

Do I have any time left?