Evidence of meeting #37 for National Defence in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was boeing.
A recording is available from Parliament.
9:35 a.m.
Minister of Public Works and Government Services
That is correct. Would you like me to read the clause? It has just been summarized, Mr. Crête.
9:35 a.m.
Bloc
Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
I would very much appreciate it if you would read the clause.
9:35 a.m.
Minister of Public Works and Government Services
I know that it would make you happy, but you have to be in government, Mr. Crête. It's hard to accept, isn't it?
9:35 a.m.
Bloc
Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Sometimes the opposition has more clout than some ministers.
9:35 a.m.
Minister of Public Works and Government Services
I don't think that is what Mr. Marceau said in Quebec City, this week.
9:35 a.m.
Bloc
Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
I don't know what he said, but I can clearly see that the minister who is responsible for Quebec was forced to accept a clause that will be detrimental to the entire province.
9:35 a.m.
Minister of Public Works and Government Services
I am responsible for Montreal. Don't make me sound any more important than I am.
9:40 a.m.
Bloc
Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
There will be consequences for the entire province of Quebec because whatever happens in the aeronautics industry affects not only Montreal but every region in the province.
9:40 a.m.
Conservative
The Chair Conservative Rick Casson
Thank you very much.
Moving along, it's over to the government side, and then it's back to the official opposition.
Mr. Calkins.
9:40 a.m.
Conservative
Blaine Calkins Conservative Wetaskiwin, AB
Thank you, Mr. Chairman.
Minister, I'd like to talk a little about the single point of accountability that you highlighted in your speaking points. Others call it a total package procurement, whatever the case might be.
From my understanding, the rationale for this is such that if the company that's the supplier or the manufacturer of the good is also the company providing the maintenance, you don't have a manufacturer and a separate maintenance company playing off against each other over who's responsible or accountable for something when something goes wrong.
Are there any other advantages that we should be made aware of at this committee level for the total package procurement?
9:40 a.m.
Minister of Public Works and Government Services
I would say that we want more accountability, and I mentioned this in my speech. This is across the board. It's not only with respect to military assets; it's any and all assets.
If folks are going to subcontract behind, that's fine, but we want them to be accountable as a prime. If they subcontract a particular part of the contract to a third party and the third party is not meeting its obligations, we are making sure that the prime will be held accountable to us. We won't have to go behind the prime, which has been the case in the past, to seek redress from the third party who didn't sign a contact with us but actually signed a contract with the prime.
In our contracts, we're making sure that if the prime is not going to do 100% of the contract, that's fine, in cases where we agree it's fine. But if they're going to subcontract, then they're going to be responsible for the delivery of the services from that subcontractor.
9:40 a.m.
Conservative
Blaine Calkins Conservative Wetaskiwin, AB
For all of the legal fees for anything that might accompany it, if you had two companies playing off against each other in dealing with the prime, the government was probably forced into a situation where it had to take legal action against one or both of the providers of either the service or the goods. The responsibility would now shift to the prime who has subcontractors or whatever the case might be. As a single point of accountability, they would then factor into their costs, for the service provided to the Government of Canada, all of the costs they would have to bear.
From a cost perspective, are we any further ahead by going with this total package procurement?
9:40 a.m.
Minister of Public Works and Government Services
Most definitely, because picture us having to deal with a million subcontractors for one big contract. It's unmanageable.
9:40 a.m.
Conservative
9:40 a.m.
Minister of Public Works and Government Services
It's better.
I'm not suggesting this is what you were saying, Mr. Calkins. But to assume that the prime would then factor in all kinds of little premiums in case things go wrong, in the real world you have competition, you're playing people off each other, and these so-called discrete premiums disappear. I think it's a smart way to do business, particularly for large contracts, to have one person accountable to us so that we can actually seek redress from that person.
9:40 a.m.
Conservative
Blaine Calkins Conservative Wetaskiwin, AB
I couldn't agree with you more.
Public Works is responsible for the rules regarding the agreement on international trade, the articles in the agreement on international trade--is that correct?
9:40 a.m.
Deputy Minister, Public Works and Government Services Canada
Enforcing them....
9:40 a.m.
Conservative
Blaine Calkins Conservative Wetaskiwin, AB
I have a few questions on that, and if you don't know, that's fine. These are fairly specific questions.
There is an AIT threshold for goods and services. I think it's $50,000 for a good and $100,000 for a service. Does that sound familiar?
9:40 a.m.
Director General, Land, Aerospace and Marine Systems and Major Projects Sector, Public Works and Government Services Canada
I don't have them right with me, but that sounds—
9:40 a.m.
Conservative
Blaine Calkins Conservative Wetaskiwin, AB
How long has that threshold been in place? Has it been in there for a long time? And when can we open up or should we open up the agreement on international trade to change these kinds of things?
It seems to me that if you have to go to a competitive process for something that's $50,000, you can't buy much for $50,000 any more and you start up this whole process. I'm just wondering whether anybody has looked at the cost-benefit analysis of changing those thresholds, because while the competitive process can save you a lot of money on large purchases, it can also cost you quite a bit of money on small purchases or light purchases.
I'm just wondering, from your perspective, Minister, whether or not that's something that should be looked at.
9:40 a.m.
Minister of Public Works and Government Services
That's a good question you're asking. However, when we were elected and formed government, we had other issues at Public Works to deal with.
As you know, the government decided to table the FAA, among other things, to clean up government procurement. I think we need more transparency.
I think we're probably several quarters removed, to be very transparent with you, when looking at this issue. I think if you were to put the threshold even higher at this point, given some of the difficulties, as you know, with the ad scam and other procurement irregularities that took place before we showed up, to raise the level where you could actually go to somebody without competition is probably not in the cards.
From a pure value-for-services perspective, I think you have the beginning of a good argument. We should be looking at this.
9:45 a.m.
Director General, Land, Aerospace and Marine Systems and Major Projects Sector, Public Works and Government Services Canada
Perhaps I could just jump in here. The AIT threshold that I have is $25,000 for goods and services and construction is valued at $100,00, or greater. In terms of its application, AIT applies to 48% of our contracts, of defence agreements, and it is worth 84% of their value.
9:45 a.m.
Conservative
The Chair Conservative Rick Casson
Good. Thank you very much for that.
To finish out here, we'll go over to the official opposition, back to the government, to the official opposition, and we'll finish up with the New Democratic Party. And that gets us through the third round.
Your patience maybe paid off.
Mr. Coderre.