Evidence of meeting #33 for Public Accounts in the 39th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bélair.
A recording is available from Parliament.
Liberal
The Chair Liberal Shawn Murphy
We have the two additional witnesses, Mr. Christopherson. We do our witness list from the recommendations of the Office of the Auditor General, and they weren't asked back.
NDP
David Christopherson NDP Hamilton Centre, ON
I'm sorry, Mr. Chair, but many of the questions we had are related to Treasury Board's responsibility for oversight, and some of it has to do with the armed forces providing information. Those are critical. I just can't imagine that somebody has decided bureaucratically that they are no longer required here. I certainly have questions that I expected to be able to get answers to. In fact, there was at least one question pointedly put to the rear admiral, and he committed to being here and providing either an answer or a legal reason why he wouldn't give the answer, and we hadn't even begun to get at Treasury Board yet.
Liberal
The Chair Liberal Shawn Murphy
It's just the way we do it, Mr. Christopherson, in conjunction with the Office of the Auditor General. They go over the witness list. They're not here.
We can always come back; there's nothing to stop the committee from coming back. We do have some other issues. Monsieur Laforest has an issue with the deputy minister that he graciously agreed to put off until the end of this meeting, and it wouldn't surprise me if we come back for maybe not a full meeting but a partial meeting.
Liberal
The Chair Liberal Shawn Murphy
It's entirely up to the committee.
I'm going to make a few other comments. I'm going to repeat the caution I made last week. We have with us two representatives from private competitors, one successful, one unsuccessful. Again I repeat, colleagues, that it's not our job to monitor the activities of the private sector. We're a committee of accountability to deal with government operations and whether taxpayers' money was spent wisely, prudently, economically, and efficiently. The chair will be watching the questions very carefully.
Go ahead, Mr. Williams.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Mr. Chair, perhaps you should also advise the witnesses that they're deemed to be under oath and the testimony given here cannot be used—and I emphasize cannot be used—in a court of law.
Liberal
The Chair Liberal Shawn Murphy
That's in my remarks, Mr. Williams. Thank you for reminding me.
Again, the chair will be monitoring the questions. Of course, the witnesses are deemed to be under oath.
Again, anything that's said in Parliament or in a parliamentary committee cannot subsequently be used in a court of law. I want to remind each and every member of that.
Colleagues, we have tabled the minutes of the steering committee, which was held earlier today, with the committee. We have two motions dealing with the leaks, and we have the internal inquiry, which is related to this and is being tabled by the Department of Public Works and Government Services.
Pursuant to the provisions of the Privacy Act, they asked that it be in camera, so for the last half-hour of this meeting, I'm going to go in camera to deal with all those issues.
Having said that, I don't believe there are any additional opening remarks from the witnesses, and I have concluded my opening remarks. So at this point in time, I will move to the witness list.
I stand corrected. I believe Mr. Bélair and Mr. Atyeo have opening remarks.
I haven't read them, but again, Mr. Atyeo and Mr. Bélair, all we're interested in at this committee are the operations of the government. We're not a committee of retribution nor a committee of adjudication of private interests. We're a committee of government accountability, so I would ask that you confine your remarks to government operations only.
Mr. Bélair.
Raymond Bélair Royal Lepage
I would like to begin by thanking the chair and the committee for your invitation to appear here this afternoon.
My name is Raymond Bélair and I am the Vice-President and General Manager of the Royal LePage Relocation Services. Our company has over 40 years of experience in the relocation business, and is Canada's largest relocation company. I am joined today by Graham Badun, President and CEO.
We currently employ approximately 450 Canadians, and administer approximately 10,000 to 15,000 government relocations and 5,000 corporate relocations each year. I personally have been in the relocation business for more than 25 years. RLRS is responsible for service delivery under the IRP contracts we have bid on successfully in 1999, 2002 and 2004.
This work involves two contracts for relocation services: one for the Government of Canada and the RCMP valued at $29 million, and one for National Defence valued at $125 million, both of which are over five years. It's important to note that this does not include flow-through costs, such as commissions for realtors, lawyers' fees, and property management. It represents only an administration fee per file, the only revenue RLRS receives under the IRP.
I would like to use my opening statement to clear up some issues that have been raised over the past week. With respect to property management, let me be very clear here. RLRS does not provide property management services. These services are provided under the IRP by property management companies in the marketplace, none of which are affiliated in any way with RLRS or its parent company. Property management fees are charged directly to transferees and reimbursed from their personalized envelopes. I will examine that more in a moment.
Royal LePage Relocation Services does not receive these payments, commissions, fees, or any other charges for these services. Further, RLRS does not make any money from administering property management services. In fact, we are specifically prohibited from receiving any moneys or revenues under the IRP, aside from our administration fees. Our role is to provide relocating members with information on relocation planning, marketing assistance, counselling, and reimbursement of allowable expenses as described in the client department's relocation policies. However, we listened to the committee's deliberations and we read the Auditor General's report, and we wish to take this opportunity to respond to the question that has been raised on this issue.
To understand property management, however, it's important first to understand how the IRP works. The IRP has what is called the core funding. This is a fund that covers administration fees and most flow-through costs. There is also a personalized envelope, which is a fixed formula that is paid to every transferee and is essentially based on salary. This envelope can be used by the transferees in any way they choose, either to move, for a move-related service, or for their own personal use. It is important to stress here that no matter how this money is used by the transferee, the expenditure to the Crown is the same.
Property management fees are paid from this personalized envelope. What this means is that no matter what rate a bidder includes in its proposal for property management services, it would have zero impact on the Crown's total expenditures. This is not a question of inside information or competitive advantage to the incumbent. Property management is described in the IRP, in the IRP policy, and in the contract, and in every case it is clear.
Quoting from section 12.6 of the RFP on page 90: “That Property Management Fees are a Personalized Benefit and are claimable only from the Personalized funds.” Every bidder had this information, so when RLRS prepared its bid for the IRP contract, we bid zero dollars for the service, and since it had zero impact on the Crown's total expenditure, any bidder could have—in fact, every bidder should have—bid zero. The Auditor General states in her report that she feels RLRS has overcharged for these services. On this point we respectfully disagree.
Since we've administered this contract, we have charged the Crown zero for these services. We have managed these services as stipulated by the RFP, the policy, and the contract, as a personalized benefit to the transferee from the personalized envelope.
Liberal
The Chair Liberal Shawn Murphy
[Inaudible--Editor]—and we are well past that.
I'm just going to go right now to Mr. Atyeo.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Can we have that attached to the record of the minutes, Mr. Chair?
Liberal
Bruce Atyeo President, ENVOY Relocation Services Inc.
Mr. Chairman, I'll try to stick to the five minutes.
Mr. Chairman, members of the committee, my name is Bruce Atyeo, president of Envoy Relocation Services.
As you can imagine, I have followed these proceedings with great interest. Last Tuesday, I listened via the webcast, and on Thursday I was here in person. I can't tell you how grateful I am to finally have an opportunity to discuss this matter with a group of government officials who obviously get it, and who at the same time have an interest in getting to the bottom of this scandal—and it is a scandal.
Based on your discussion last Thursday, I'm even more grateful today, knowing that it is unusual for a member of the private sector to be given this privilege. I assure you that I will restrict my remarks to your business.
This process started on April 11, 2005, when I first wrote to the chairman of the public accounts committee, who at the time was Mr. Williams, requesting that this issue be sent to the Auditor General for review.
Here we are today with the results of that review, confirming what Envoy has always contended: that these contracts were not awarded fairly.
At the risk of minimizing the excellent efforts of the Auditor General and her team, I think they—and now this committee—would agree that just about anyone looking at these events objectively would very quickly come to the same conclusion.
Unfortunately, it falls to me to tell you that what you have seen and heard so far is just the tip of the iceberg. The Auditor General and her team have done an excellent job of exposing serious flaws in the 2004 bidding process, as well as many of the contract management practices. You've been wrestling with these findings over the course of two meetings already. There is much more you should know.
On Thursday, you witnessed the same kinds of blank stares and non-answers that we, Envoy, have experienced from just about everyone, both bureaucrat and politician, over the past four years. However, today I will provide you with further insight into some of the mismanagement and the stonewalling that we experienced in both the bidding processes and contract management issues over the past four-plus years. This includes real answers to your questions, backed up with real data, information, and guidance.
If we were to level the playing field between Royal LePage and Envoy to the tune of $48.7 million, as suggested by the Auditor General, and take into consideration the 24 points awarded to Envoy by the CITT decision, Envoy won the CF contract, in spite of the biased method of the selection formula. In fact, it was so biased that in spite of being 94% compliant and almost $60 million lower in price, we're just barely able to squeak out a win because of that biased formula. However, we won the competition, and we expect to be awarded the contract.
As a bidder who has incurred considerable cost and wasted much time, during both the bidding process and subsequently in fighting for justice for our company, I look forward to providing you with real answers. There are individuals within the client departments, as well as within Public Works, who need to be sanctioned for serious mismanagement practices.
The contracts with Royal LePage need to be cancelled because there is evidence that those contracts have been breached in more ways than one. The contract should be awarded to the rightful winner.
You have my undivided attention for as long as you need it.
Thank you very much.
Liberal
The Chair Liberal Shawn Murphy
Thank you very much, Mr. Atyeo.
Thank you very much, Mr. Blair.
Before I turn it over to Monsieur Proulx, I want to urge the members to keep their questions short and relevant. Also, witnesses, please keep your answers brief, focused, and to the point.
Mr. Proulx, for eight minutes.
Liberal
Marcel Proulx Liberal Hull—Aylmer, QC
Thank you, Mr. Chair.
It's going to be very difficult to keep it brief. Most of us have spent all or at least a major part of the weekend trying to understand all of this. Then this morning we ended up with additional reading material at the last minute. But so be it.
Mr. Bélair, we know that your company had been awarded the pilot project, the first contract that we will call “contract No. 1” in 1999. In 2002, the contract that we will call “contract No. 2” was awarded to you. Following that, there were things like cruises, golf parties, all kinds of circumstances that made the government decide to annul contract No. 2 and put out a new invitation to tender.
Did your company have anything to do, directly or indirectly, with these cruises, golf parties or other advantages?
Liberal
Marcel Proulx Liberal Hull—Aylmer, QC
In what way was your company involved? Let me explain. I am not trying to crucify you, Mr. Bélair. I am trying to understand what happened internally, not in your company, but within the Department of Public Works and Government Services. Did anything happen to give the impression that there were irregularities in the methods used for evaluating the bids or awarding contract No. 2 in 2002?
Royal Lepage
To our knowledge, the government looked into this issue and concluded that there was no conflict of interest. There was a perceived conflict of interest. A group went on personal holidays, and they paid through a local travel agent who organized the group excursion. Each one paid his own way. These were personal holidays that I took with my spouse.
Liberal
Marcel Proulx Liberal Hull—Aylmer, QC
It is not because of your holidays with your spouse that the department decided to cancel the invitation to tender. Someone else must have been there too.
Liberal
Marcel Proulx Liberal Hull—Aylmer, QC
Perhaps someone else may have travelled with us by coincidence, thus creating a perception?
Royal Lepage
Among the members of the group, there was someone from the Department of Public Works and Government Services.
Liberal
Marcel Proulx Liberal Hull—Aylmer, QC
The presence of this person was enough for the government to withdraw its invitation to tender.
Royal Lepage
An investigation was carried out, and the government concluded that there was no conflict of interest, but that there was only a perceived conflict of interest.
Liberal
Marcel Proulx Liberal Hull—Aylmer, QC
Thank you.
Mr. Bennett, at our last meeting we discussed this investigation. Your original answer to my question was that there had not been a police investigation or that the investigation had not been referred to a police force. Then later on during the meeting you advised us you had been advised that, yes, the investigation had been referred to a police force. Is that right?
Ian Bennett Acting Assistant Deputy Minister, Acquisitions, Public Works and Government Services Canada
What I said, Mr. Chair, was that the RCMP was apprised of this investigation. The conclusion was that there was no criminal wrongdoing.