Evidence of meeting #9 for Government Operations and Estimates in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was office.
A video is available from Parliament.
Conservative
The Chair Conservative Kelly McCauley
Just to interrupt there, we do have a policy in the committee that anything promised is received within 21 days.
Thanks very much.
Conservative
Harb Gill Conservative Windsor West, ON
Did your office consider escalating this matter to Parliament or another oversight body when this request came in? Did you find it troubling or not so much?
Procurement Ombud, Office of the Procurement Ombud
We wanted to be transparent in what's happening, so we reflected their response back, and we reflected that our decision was to include that section of the report, which I believe speaks to what you're asking about, which is the transparency component, so their language is included in the report. Our response was to include the language in the report. I think, had we not included the language in the report, you wouldn't have even been aware that there had been this dialogue.
Again, I think the issue that is so important is that this consequence to small and medium-sized businesses should be tracked, right? That's what we're asking for: to bring as much spotlight to this issue as possible. I think, in that sense, it's been effective in doing that.
Conservative
Harb Gill Conservative Windsor West, ON
Given that 76% of ArriveCAN-related contracts involved personnel who never performed the work, do you believe this reflects negligence, wilful disregard or lack of capacity within PSPC to enforce compliance? Earlier, you mentioned that the controls were not leveraged. Why not?
Procurement Ombud, Office of the Procurement Ombud
It's a fair question.
In ArriveCAN, just to clarify, regarding that 76%, they were looking at slightly different things. When we did the ArriveCAN review, we weren't looking for bait and switch. What we identified in ArriveCAN was that, in 76% of the instances, some or all of the resources proposed did not perform work under the contract. To us, that was a shockingly high number, but we didn't have metrics underneath that overall percentage to be able to identify whether these were legitimate replacements. Even if you accept the fact that they're legitimate replacements, then something is not working in the system when the designed process results in a 76% replacement rate. That was, in fact, the genesis of the report you see before you today.
In the report you see before you today, we were able to unpack or lift the hood on what is really happening. There are a number of reasons that resources might be replaced, some of which are legitimate and some of which are unknown or illegitimate. Concerning the illegitimate—again, not to repeat myself—there are two variants to this. There's what I would describe as “bait and switch lite”, which doesn't include intent, and then bait and switch with intent, which equals fraud. We did not see the bait and switch with intent, which equals fraud, but we did see the bait and switch that could impact the ultimate successful supplier in the procurement process.
Conservative
The Chair Conservative Kelly McCauley
That is our time. We're past our time.
Go ahead, Ms. Sudds, please.
Liberal
Jenna Sudds Liberal Kanata, ON
Thank you, Chair.
Thank you both for being here and for the report.
I have one quick question based on this last line of questioning, before I move on to what I had intended to ask.
Is it, from your experience, improper or unethical for departments to suggest or ask for revisions in reviewing your work?
Procurement Ombud, Office of the Procurement Ombud
Because it forms part of the procurement ombudsman regulations to provide departments the opportunity to comment, I don't think there's anything inappropriate about the opportunity to comment. The requested removal of the report was a request made by the department that we thought important to transparently show in the report, and we reacted with our further justifications, which were, we believe, supported not only with the text in the report but also with information we gleaned during that same period while the report was being written.
Is there anything inappropriate about the department coming back to make a request? No.
Liberal
Jenna Sudds Liberal Kanata, ON
Thank you. I appreciate that clarification.
I would like to go back to some of the recommendations previously made to the government and ask specifically about your assessment of the work that's happened since those recommendations were made.
Procurement Ombud, Office of the Procurement Ombud
This question speaks to many of the procurement practice reviews we've done. What I will say, without elaborating too much, is that we did 17 departmental deep dives, in which we looked at the highest-spending value and volume departments in federal procurement and did an individualized assessment. We did follow-ups with almost all of those, many of which are in train now, so you'll see all of that reflected in our annual report, and there are report cards.
To directly answer your question of what we are seeing, we're actually seeing implementation of the recommendations. One positive—and I would describe this as a huge positive for us—is that we also tracked the top 10 issues year after year. One thing I used to really be upset about was that, year after year, those same issues reflected themselves almost verbatim. It meant we weren't making the course corrections necessary to address those long-standing static issues.
One of them was overly restrictive criteria, and that was, typically, number one. Through these 17 reviews, we made sustained efforts to make recommendations associated with removing overly restrictive criteria. This year is the first time restrictive criteria has fallen out of the top three. It's number five, so it's not as if it doesn't still exist as a problem, but that's a significant...I don't want to say “win”, but it really is, in the sense that it demonstrates that sustained commitment in recommendations can have a positive effect.
Again, I'm not foolish enough to believe that we alone achieved that outcome, but we certainly played a part in highlighting this issue and making it highly relevant for all departmental actors to be acutely aware of the need to not create opportunities that were overly restrictive and limited participation.
Liberal
Jenna Sudds Liberal Kanata, ON
Thank you. Obviously, it's great to see the ongoing progress.
I want to ask, using a specific example that was in the report, about the changes PSPC made to the master level user arrangement. Can you explain to us what this change means and what the impact of that is?
Procurement Ombud, Office of the Procurement Ombud
Kelly can jump in to correct anything I'm saying.
The biggest change was that large task-based contracts with multiple resources could no longer assess the individual characteristics of the resource but would now evaluate the corporate entity and the past experiences and performance of that corporate entity. That's probably the most significant change. You'll see that part of the report in this section actually speaks to definitions. When you use the term “large”, what does “large” equate to? We were probing each department that was subject to the review to say, “How have you interpreted 'large'? Have you mitigated the concern?” In three of the five instances we found appropriate mitigation measures that would align themselves with this shift, and two were still working through this definition of “large”. You'll notice one of the recommendations we made was for PSPC to actually define this term and to provide for standardization.
If I may get on the pulpit for one more second, standardization is also something that is sorely lacking in procurement. There are two schools of thought about individualization versus standardization, but I can tell you that suppliers often don't just sell to one singular department: They sell to multiple departments and jurisdictions, so the more standardized the process, the more cost-effective the whole process is, meaning they don't have to spend inordinate amounts of time preparing their proposal, because certain terminology is static and they know what to expect. When they have to hire a proposal writer or a legal adviser in order to facilitate responding to a federal opportunity, that immediately limits the pool of available suppliers that are likely to participate in that process.
Conservative
Conservative
Jeremy Patzer Conservative Swift Current—Grasslands—Kindersley, SK
Thanks again.
I want to build off that, even, a little. On recommendation two, which is that you want them to write in their replacement resources, qualifications and experience that meet or exceed those obtained from the originally proposed resource, PSPC disagrees with you. I'm just wondering, why would they disagree with you on that? It seems that one of the best ways to prevent bait and switch from happening would be to require them to match the qualification they originally bid for.
Procurement Ombud, Office of the Procurement Ombud
For this one, I think there is a relatively straightforward answer. What they were pushing back against was the location where this change should be implemented.
When we originally drafted this recommendation, we wanted it done at the master level, meaning at the master-level user agreement level. They pushed back by saying that it's inappropriate to include it within the master-level user agreement itself, but it should be a part of all the templates that are part of that master-level user agreement. They didn't disagree with the substance; it was just in terms of the structure and design.
We ultimately agreed with them that it was better positioned as part of a template and not as part of the user agreement itself.
Conservative
Jeremy Patzer Conservative Swift Current—Grasslands—Kindersley, SK
Within your mandate, do you actually have the ability to definitively and concretely say that something is fraud if you find an instance of it?
Procurement Ombud, Office of the Procurement Ombud
No, because again that has criminal implications. If we were to see fraud, what we would do is alert the RCMP, and they would ultimately take over whatever investigation was necessary to make that determination.
Conservative
Jeremy Patzer Conservative Swift Current—Grasslands—Kindersley, SK
Okay. You put out the possibility of fraud, but how are we supposed to take the next steps to fully investigate it?
I know you just said you'd refer it to the RCMP, but are there more measures that your office could be taking to kind of advance the ball further down the field?
Procurement Ombud, Office of the Procurement Ombud
There is an opportunity for departments to request confirmation that the resources themselves have certified their availability. If we had seen instances in which the department had asked for that certification but it had not been provided, I think that would have raised the red flag for us. That would have been a circumstance that would have caused concerns in line with the fraud that you're indicating.
Kelly Kilrea Senior Risk Advisor, Office of the Procurement Ombud
If I may, I just wanted to mention as well that the new master-level user arrangement has also now incorporated that term—that all resources proposed, outside of large tech authorization-based contracts, must provide a digitally signed proof of consent with their bid. That should also help mitigate that issue.
Conservative
Jeremy Patzer Conservative Swift Current—Grasslands—Kindersley, SK
How close have you come to identifying fraud in this? If 41% didn't meet requirements, that obviously gives you a pretty big amount of substance to look at. Surely to goodness, some of these were close to being cases of fraud. If it's that rampant.... I don't want to directly imply intent here, but if there are that many of them, obviously a systemic issue does exist. Would you not agree with that?
Procurement Ombud, Office of the Procurement Ombud
What I would suggest is that these aren't the same suppliers in each circumstance. Each one of these is a unique supplier. This 41% isn't instances of the same supplier doing the same things. Also, we're looking at different departments. I believe you previously asked which departments were implicated, and there were some that were implicated more than others.
However, in terms of the considerations we're looking for, it's things like timing: When were the resources replaced? Were they replaced immediately? Was it a replacement of one or all of the resources? Were reasons provided? Were reasons requested and not provided? Were reasons required and not provided? Each one of those would provide indicia.
Plus, there's the factor that I identified, which is what the department asked for, and then the suppliers themselves attest to the fact that the resources provided are available. Did the department go back and ask for proof of those attestations? That's something we didn't find. As I said, that would have been the red flag.
The other factors I identified are what I think you are probing on: What indicia would we be looking for to walk us down that path?
Conservative
Jeremy Patzer Conservative Swift Current—Grasslands—Kindersley, SK
Yes, that's it exactly. It feels like there's a loophole that might be in existence here. Is there a loophole that exists, and if there is, can it be closed?
Procurement Ombud, Office of the Procurement Ombud
I'm not sure I fully understand in terms of the reference to the loophole, but what I would say is that we're certainly open to having a meeting with the RCMP, should they have interest in looking at whether any of the instances that we have identified require additional investigation on their part.