Thank you, Mr. Chair.
We thank you for this opportunity to present the results of chapter 5 of our November 2006 report. It's entitled “Relocating Members of the Canadian Forces, RCMP, and Federal Public Service”.
I am accompanied today by Ronnie Campbell, Assistant Auditor General, and Bruce Sloan, senior principal, who were responsible for this audit.
In 2005 the integrated relocation program handled the relocation of approximately 15,000 members of the Canadian Forces, the RCMP, and the federal public service, at a cost of about $272 million. Members of the Canadian Forces account for almost 85% of these relocations each year.
Our audit has raised a number of important issues regarding the integrity of the contracting process that led to the awarding of the two relocation contracts, and regarding the Department of National Defence's control of funds expended under the program. Our audit also raised concerns regarding the assessment of the program's effectiveness. Let me elaborate on these issues.
Government contracts should be awarded through a process that is fair, equitable, and transparent. We found that these contracts were not awarded through such a process, despite various warning signs. The request for proposal contained materially incorrect business volumes that gave an unfair advantage to the bidder who had the previous contract.
The request for proposal indicated that for each year of the contract, approximately 7,200 members of the Canadian Forces would use property management services. However, actual usage volumes provided by the Department of National Defence revealed that between 1999 and 2005, only 183 members, or approximately 30 members a year, used property management services.
It is essential to the integrity of government contracting activities that data contained in key contracting documents, such as the request for proposal, be complete and accurate. This is particularly important when one of the potential bidders is currently delivering the service under an existing contract.
The committee may wish to ask the Department of National Defence how it certifies the accuracy of data provided to Public Works for inclusion in requests for proposals. The committee may also wish to seek clarification from Public Works regarding how it verifies information provided by client departments when concerns are raised by potential bidders.
In our audit, we found that the Department of National Defence has inadequate financial controls in place for reimbursing the contractor for payments made on the government's behalf. The contractor is responsible for issuing advances to Canadian Forces members and payments to various service providers, such as realtors, lawyers, appraisers, and home inspectors. In 2005 these expenses were almost $180 million.
During the audit, National Defence indicated that it had begun to develop systems and processes that would strengthen its control over these payments. The committee may therefore wish to ask the Department of National Defence what steps have been taken to strengthen the department's control over these expenditures, and when this work will be completed.
In our audit, we also found that rates paid by the members of the Canadian Forces for property management services exceeded the ceiling rate established in the contract. Some Canadian Forces members paid amounts ranging from $800 to $8,000 for a service that the contract indicated would be provided at no charge. The committee may wish to ask the Department of National Defence what steps will be taken to ensure that these members are reimbursed the amounts that they paid for property management services.
A key objective of the Integrated Relocation Program is to provide members of the Canadian Forces, RCMP and federal public service with flexible relocation benefits that improve their quality of life. In our audit we found no evidence that the Treasury Board Secretariat, or the other departments, formally measure the program's performance.
The committee may wish to ask the departments what steps will be taken to measure the program's effectiveness in providing flexible relocation benefits that contribute to an improved quality of life.
Mr. Chairman, that concludes my opening statement. We would be pleased to answer your committee's questions.