Health Committee on Feb. 7th, 2007

[Pat Martin, NDP, Winnipeg Centre, MB]

But it was really Health Canada that gave the contract, and Public Works did the paperwork for you.

Wouldn't it be interchangeable to put the words “Health Canada” where “Public Works” appears in the paragraph? That's who really awarded the contracts to the bidders, is it not?

[Sheila Fraser]

If I could, Madam Chair, it really is Public Works who managed the contract awarding process. In many cases, there is an interdepartmental team that will work on the evaluation, the criteria, and all the rest of it. But Public Works is the contracting authority, and they had the responsibility.

I'd refer you to paragraph 16, in chapter 10, where they said there was an independent team that looked at this. I think legal services and people thought it was okay.

But there was certainly little in the files that indicated this mandatory requirement had been met. Given that it was a new company, one would have expected a lot more care in assessing the financial stability before giving a contract that would represent some $2 billion of flow-through of funds.

We were critical and said none of them should have received the contract. We'll look next time, when the contract's awarded, and hopefully they will have more due diligence around ensuring that mandatory requirements are met.

[Pat Martin, NDP, Winnipeg Centre, MB]

That's fair enough. Thank you.

[The Vice-Chair, Bloc, Christiane Gagnon]

Thank you.

Mr. Fletcher, over to you.

[Steven Fletcher, Conservative, Charleswood—St. James—Assiniboia, MB]

Thank you, Madam Chair.

I found the testimony today very interesting, to say the least. I've had the opportunity now to have worked with many of the people who are presenting today, and I have to say, I've been impressed with the dedication that many of the Health Canada officials have in ensuring that Canadians receive the best health care possible.

I am concerned that for seven years there were significant challenges, even mismanagement, on this file. Madam Fraser, in your experience, should not the political ministers have taken action once mismanagement was identified?

[Sheila Fraser]

Madam Chair, the department conducted a review in 2003, I believe, and then began to take corrective action once they became aware of this. I can't, obviously, comment on whether ministers were even aware of this; we look at the work of the public servants. There was a review, and they did start to take corrective action, and the problems are now resolved to our satisfaction.

[Steven Fletcher, Conservative, Charleswood—St. James—Assiniboia, MB]

So you're pleased with the process under Canada's new government. The process is satisfactory.

[Sheila Fraser]

I'm pleased with the actions that have been taken by public servants to resolve the issues.

[Steven Fletcher, Conservative, Charleswood—St. James—Assiniboia, MB]

And the public servants have done an excellent—I've certainly been very impressed with them, although the issue of ministerial responsibility comes into play, again.

I'll ask the question again. When did the political people in the previous government become aware, what did they know, and when did they know it?

[Sheila Fraser]

I'm afraid I can't answer that, Madam Chair. I will say, though, that we completed our audit work in January 2006, and much of the corrective action had obviously taken place before that. It was worked on by public servants.

[Steven Fletcher, Conservative, Charleswood—St. James—Assiniboia, MB]

Who was the minister responsible for Public Works at the time?

[Sheila Fraser]

I don't have that information. I'm sorry.

[Steven Fletcher, Conservative, Charleswood—St. James—Assiniboia, MB]

Was it former Minister Gagliano?

[Sheila Fraser]

I don't have that. We could probably find out, but I don't have that information.

[The Vice-Chair, Bloc, Christiane Gagnon]

Mr. Fletcher, your time is up.

[Steven Fletcher, Conservative, Charleswood—St. James—Assiniboia, MB]

Okay.

[The Vice-Chair, Bloc, Christiane Gagnon]

Ms. Bennett, over to you.

[Carolyn Bennett, Liberal, St. Paul's, ON]

I think it's great that you're here. I think what we're always trying to do is figure out how we get these learning cycles back. I know that the Auditor General's office has often thought that the way to go would be to ask the department what they learned this year that they're going to do differently, because nobody can do everything perfectly. And I think certainly the First Nations and Inuit Health Branch learned a lot after “cruise-boy”, or whatever we called him.

What would a department do if you only had three bidders and none of them qualified because of financial stability or all of that? What are we supposed to do, especially when we're trying to encourage aboriginal companies to set up, and they aren't going to have—? It's sort of like the question, where's your Canadian experience? There is this thing. Sometimes the rules are pretty tough. And how does Public Works or Health Canada or anybody make a decision that now people can't go to the dentist because there's nobody to manage the bills?

[Sheila Fraser]

I agree, especially with the new corporation, that perhaps the specific requirements that were being asked for may not have been applicable. On the other hand, there were other measures or other kinds of indicators that perhaps could have been obtained. This corporation was also associated with a very large insurance company to deliver. Well, could there have been a guarantee? Could there have been bank guarantees given?

There are other ways I think to ensure financial stability before you contract with a corporation that's going to have a flow-through over the period of the contract of over $2 billion. I think Canadians expect that you would ensure that the corporation is financially sound. We would have expected to see some demonstration in the file as to how the department assured itself that it had met this requirement for financial stability, and that wasn't there.

[Carolyn Bennett, Liberal, St. Paul's, ON]

That's very helpful. Thank you.

[The Vice-Chair, Bloc, Christiane Gagnon]

Mr. Batters, go ahead.

[Dave Batters, Conservative, Palliser, SK]

Thank you very much, Madam Chair.

I just want to go back, because there are some important issues here regarding accountability. That's been an important buzzword around the Hill and around Canada lately. There's significant money at stake here. We're talking about $2.6 billion if we get into the NIHB issue and chapter 10 of the Auditor General's report.

I draw everyone's attention to paragraph 10.3 of the report. It talks about flagrant abuse and not following section 34 of the Financial Administration Act, really from the time the contract was granted to First Canadian Health Management Corporation until 2006.

I don't think either anyone in this committee or Canadians in general are that interested in hanging out public servants to dry. I think public servants do a great job under the leaders they have to follow and under the people who pass down those instructions. But the Canadian public and some people on this committee are very much into hanging politicians out to dry, so somebody has to account for this. This is a flagrant abuse of huge amounts of taxpayers' dollars.

I think it is interesting. The Auditor General stated that she wasn't sure who the Public Works minister was. She lays the blame at the feet of Public Works for giving out this contract. But Public Works has a minister, and the Minister of Public Works from 1997 until 2002 was a gentleman named Alfonso Gagliano. So maybe the things we're talking about don't surprise anyone in this room, and the fact is that the Auditor General is once again back before Parliament with flagrant abuses of taxpayers' dollars under political leadership.

I'd like your comments on that, first from the Auditor General and then from Ms.Cartwright.

[Sheila Fraser]

All I can say, Madam Chair, is that we saw no indication of any political interference in the awarding of the contract.

[Dave Batters, Conservative, Palliser, SK]

Ms. Fraser, if I may, when there was this kind of money at stake—$2.6 billion worth of money that's doled out—shouldn't there have been some political oversight in Public Works in terms of who was getting the contract, and then regular maintenance and ensuring that the job was being done correctly?

My colleague Mr. Dykstra said that if you recognize that there's a problem, then cancel the contract and re-tender it. This went on for seven years. You've pointed out in your report that there were significant problems here. Shouldn't the minister have been aware of what was going on?

[Sheila Fraser]

I sincerely doubt, Madam Chair, that the minister would have been aware of this contract or would have been involved. I'm not sure people would say it's appropriate that the minister would become involved in these sorts of things. A tendering process was done by public servants. They believed the conditions and the requirements had been met, and the contract was awarded on that basis.

Public Works handles the procurement of almost all the departments of government. We're talking billions and billions of dollars every year. We could have a very long philosophical discussion about this.