Public Accounts Committee on Dec. 12th, 2006

[John Williams, Conservative, Edmonton—St. Albert, AB]

Because Royal LePage bid zero, there was no opportunity for them to charge military personnel.

[Ronnie Campbell]

That's correct.

[John Williams, Conservative, Edmonton—St. Albert, AB]

So because they bid zero, that denied them charging the personnel money. Is that correct?

[Ronnie Campbell]

Yes, sir. Given the fact that they got another company to do it, the member was still subject to that ceiling price, which was zero.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Okay, Mr. Bélair, why did you bid zero, saying you were not going to charge the Canadian Forces and then turn around and charge the Canadian Forces?

[Raymond Bélair]

Again, there are a lot of complex issues in understanding this program. It's a large and complex program. Property management fees are paid from a personalized envelope. “Personalized” means it's their money. I can cash out that money and give it to them. It was clear in the RFP process that property management fees were a component of the personalized envelope and not a flow-through cost.

[John Williams, Conservative, Edmonton—St. Albert, AB]

I would like the Auditor General to comment on this, Mr. Chairman.

[Ronnie Campbell]

I think there are two issues. It was a personalized amount, but the companies bid a ceiling price on it. So some prices they bid were prices directly to the Crown and some were prices that were going to be paid by members. In this case, the bid was zero.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Williams.

Thank you, Mr. Campbell. Thank you, Mr. Bélair.

Monsieur Laforest.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Bélair, regarding the contracts that were awarded to you in 1999, 2002 and 2004, did you have to respect the market share of other real estate agents as far as relocations were concerned? When someone moved and you purchased a house or you were an intermediary in purchasing another house, in a given sector or province, did you have to respect a market share?

[Raymond Bélair]

No.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

You had no market share to observe. There was nothing in the contract whereby a certain percentage of the purchased houses had to be attributed to Royal LePage, and another percentage to ReMax in Quebec. There was nothing like this?

[Raymond Bélair]

Within this program, it is up to each relocated individual to choose their own broker. It is not up to us to decide. We have nothing to do with that, it is up to the person who is transferred.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Could you give us—we will verify this in the contract—all the data regarding the houses that were purchased? You said that the transferees chose their own brokers, but I would like to have all the data: from Quebec, from Alberta, from British Columbia, from Ontario, to see how many houses were bought through which real estate brokers.

[Raymond Bélair]

We can give them to you and break them down according to the locations where the houses were purchased.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Very well, you will supply us with that. But we will check the contract because this is not what I heard. I think that you have to keep to a certain share of the market.

Let me come back to the Auditor's report, which concludes—and she mentioned this to us several times—that this contract had not been awarded in a fair and just way. For me, these are the key elements. This is really fundamental, and several elements point to that. There was really an appearance of serious problems in Public Works and Government Services Canada. When she told us that there was only one evaluator for the financial aspect, I had some serious misgivings. We are dealing with a budget of nearly $1,280 billion a year. This is a serious matter and I will come back to it. The committee members will discuss it again later on, but I think that this is a fundamental element.

There are 75-25% proportions in the weighting that are not explained by any document. Why was the technical side given 75% and the financial side 25% in evaluating the bids? For contracts of this value, this is really unacceptable. The Auditor was unable to find any justification for this. We can find justifications for contracts below $100,000, but for a contract of this size, we find nothing. This does not make sense.

Mr. Atyeo, in the contract for which you made a bid, you were told that 60% of cases would involve real estate management. There was a great deal of discussion about this. We hear that your bid amounted to $48.7 million, whereas the bid made by Royal LePage amounted to zero dollars. Do you feel that you bid on the same invitation to tender as Royal LePage did?

[Bruce Atyeo]

Sometimes I wonder.

I'm not sure I completely understand your question, Mr. Laforest.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Here is my question. Royal LePage had bid zero dollars for an important part of the contract, namely real estate management. In 2004, the company had access to previous figures, because it had been awarded the contract in 1999 and in 2002. It had access to the real figures, whereas you, even after making many requests, were unable to get the true figures. You were told that it would be 60%, but Royal LePage knew that it was in fact 0.22% because they had had the experience.

Do you really feel that you bid on the same invitation to tender as Royal LePage did?

[Bruce Atyeo]

We bid on the same contract, but obviously we interpreted the RFP differently.

The fact of the matter is that if they bid zero, they bid zero; there should be no charge to the members. I don't understand how they could do that. It says very clearly that they were supposed to put in a ceiling price, and they didn't. That should make a bid non-responsive. That's not the same as bidding a price of zero. It's not, “Our price is zero.” They were told that they had to put in a price.

Now, I guess the only way they could say they would do it for nothing was because they knew there were only 30 files a year and they were prepared to absorb the cost.

What we were supposed to bid on, and told very clearly, was, first, assume that the member's house is rented for $1,000 a month. Property management companies charge a percentage of the rent on a monthly basis. That's typically the way the business works. So for argument's sake, let's just say it's 10%. The member would have to pay $100 a month, then, out of their personalized envelope.

By the way, the money for the personalized envelope somewhere along the line comes from the government. Not all of it comes out of the member's pocket.

[The Chair, Liberal, Shawn Murphy]

Mr. Laforest, it is over.

[Bruce Atyeo]

They must have assumed that they were going to absorb it.

[The Chair, Liberal, Shawn Murphy]

Mr. Christopherson, three minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

At least we're getting to the crux of the matter, although we're still a long way from who should have caught this.

The fourth point the Auditor General made the other day was this: “The request for proposal contained materially incorrect business volumes”--that's this issue of the 60%, the 0.22%—“that gave an unfair advantage to the bidder who had the previous contract.”

Mr. Bennett, why do you not agree with that?

[Ian Bennett]

I do agree with it. I agree that the business volumes were inaccurate. There's no question about that.

[David Christopherson, NDP, Hamilton Centre, ON]

Do you believe it gave an unfair advantage to Royal LePage?