Thank you, Mr. Chair.
Allow me to introduce Liliane Saint Pierre, who is the executive director of operations at the acquisitions branch of Public Works and Government Services. As well, I'm accompanied by Christianne Laizner, the senior counsel to Public Works and Government Services.
Mr. Chairman and members of the committee, I would like to thank you for inviting us to discuss chapter 5 of the Auditor General's report entitled "Relocating Members of the Canadian Forces, RCMP and Federal Public Service."
The integrated relocation program provides a variety of administration and relocation assistance to federal public servants within the Canadian Forces and the Royal Canadian Mounted Police. It is a mandatory program for members of the Canadian Forces and the RCMP, public service executives, deputy ministers, Governor-in-Council appointees, and public service employees represented by unions. In fiscal year 2005-06, the program handled over 17,000 relocations. The total flowthrough costs of this program, Mr. Chair, are approximately $280 million annually.
Historically, each department has been responsible for administering and managing its own employee relocations in accordance with the Treasury Board relocation directive. In 1999, a four-year pilot program was initiated to consolidate all relocation services with one service provider. Following a competitive procurement process in April 1999, Royal LePage was awarded a contract to administer this pilot program.
Due to the success of this program, TBS approved making it permanent, and in June 2002, following a competitive process, PWGSC awarded a five-year contract to Royal LePage. For ease of reference this could be called the first Royal LePage contract.
Following a CITT complaint and allegations from an unsuccessful bidder regarding a potential conflict of interest, Public Works and Government Services decided in August 2003 to conduct a new procurement process. This competitive process resulted in two new contracts being awarded to Royal LePage in 2004, one for National Defence and one for the Government of Canada, as a whole, and the RCMP.
It is worth noting that both the first and the second contracts awarded to Royal LePage have brought significant benefits to the government in terms of cost savings of over 25% over previous costs, as well as improved services. In addition, some 15,000 small and medium enterprises benefit every year from some $150 million in business opportunities, which are dispersed in an open and transparent manner throughout towns and cities across Canada.
Mr. Chair, the roles and responsibilities for issuing contracts are complex. It is a joint effort between the department requesting the service and Public Works and Government Services. In this case, the Treasury Board Secretariat acted as the program authority.
When the first relocation contract was re-tendered, the team took several steps to ensure a fair and open process. The Auditor General has stated that due to an inaccuracy in one estimate in the RFP, namely, the expected business volume for property management services, the contract was not tendered in a fair and open manner. As such, the incumbent provider had an unfair advantage over other bidders. It is important to note the Auditor General also stated that in her opinion, this inaccurate estimate was due to a process issue and there was no evidence of malfeasance.
While we strive to ensure that our RFPs are free of inaccuracies, they inevitably arise from time to time. Our processes attempt to catch them or, at the very least, minimize their impact on the outcome. The Auditor General has reported that PWGSC followed its established processes in awarding the contracts.
In relation to the estimate for the RFP for property management services, it's important to note that this was only one of six elements on which bidders were being asked to provide pricing. The other elements were appraisals, legal services, real estate commissions, building inspection, and rental search services, which accounted for approximately 88% of the overall financial evaluation.
As well, the RFP called for the financial bid to account for only 25% of the overall evaluation, while 75% of the points were granted for quality of service being proposed. This structure was used to emphasize the value of service when employees are moved as well as to reduce any advantage an incumbent might have had in pricing its bid.
The project team also introduced additional features designed to open the RFP to as many new bidders as possible. A fairness monitor checked the technical elements of the bid, which accounted for 75% of the evaluation, and certified that the process was done in a proper manner. The Auditor General has also reported that this part of the evaluation was done in a fair manner.
When making financial bids, different bidders frequently propose different financial strategies. Some will bid higher than their competitors on one element and lower on another. It is hence not possible to isolate one element and speculate as to how a bidder may have reacted had this been the only element in the overall bid.
In our view, which we have expressed to the Auditor General, the process we followed, taken as a whole, sufficiently compensated for any error in the one element of the RFP information, and has resulted in a fair and open competition.
Having said that, we are open to examining our roles and responsibilities in conjunction with our clients and with the Treasury Board Secretariat to make improvements.
We thank the Auditor General for her recommendations, and we intend to implement them.
I'd be very pleased to respond to questions at this time, Mr. Chair.
