Evidence of meeting #34 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 contract.
A recording is available from Parliament.
4:30 p.m.
Liberal
The Chair Liberal Shawn Murphy
Thank you very much, Mr. Danagher.
Mr. Rodriguez, you have eight minutes.
4:30 p.m.
Liberal
Pablo Rodriguez Liberal Honoré-Mercier, QC
Thank you, Mr. Chairman.
For a first meeting, this is quite light and entertaining. Is this always the way things go, at your committee? I'm trying to understand as we go along, but of course without any kind of introduction or presentation, it isn't easy.
I would like to go back to the issue of the $48 or $50 million, because this seems to be at the heart of the debate. My question is addressed to Mr. Atyeo.
According to you, is that the reason you lost the bid?
4:30 p.m.
President, Envoy Relocation Services Inc.
Yes, between the $48.7 million identified by the Auditor General and the technical points that were not awarded by the evaluation committee that should have been, the calculation shows that Envoy won the CF contract.
4:30 p.m.
Liberal
Pablo Rodriguez Liberal Honoré-Mercier, QC
Fine. So it wasn't just a matter of money. If there hadn't been this gap of $48 million, since 25 %, if I understand correctly, was allocated to the budget, would you have obtained the contract, or would it have been given to Royal LePage in any case?
4:30 p.m.
President, Envoy Relocation Services Inc.
We would have won the tender for the military contract.
4:30 p.m.
Liberal
4:30 p.m.
President, Envoy Relocation Services Inc.
Yes. That is the big contract. There are two contracts, one for the military and one for everything else. The military is the larger by far.
4:30 p.m.
Liberal
Pablo Rodriguez Liberal Honoré-Mercier, QC
Fine. If I understand what Mr. Badun said, in their mind, they did not want to bill twice. That is why they wrote in zero dollars. For your part, did you want to bill twice?
4:30 p.m.
President, Envoy Relocation Services Inc.
Actually, Mr. Badun and I don't interpret the RFP and the ensuing contract in the same way.
This is a very simple situation that has a big red herring flopped all over it. The fact of the matter is that the government said that if you don't sell your house, we save $6,000 worth of real estate commission, so we're going to give you a portion of that savings to use in any way you want. For example, you can pay a property management firm to look after the house you haven't sold. It's that simple. Instead of giving the money to a real estate broker, the government is giving it to the transferred employee; it's still coming from the government.
Who cuts the cheque to the property management company is totally irrelevant to this whole question. The employee pays the property management company, not Royal LePage, but the money still comes from the government. It's a red herring to say that government is being charged twice.
4:30 p.m.
Liberal
Pablo Rodriguez Liberal Honoré-Mercier, QC
Do you feel there are other reasons that explain why you did not get the contract?
4:30 p.m.
President, Envoy Relocation Services Inc.
Our proposals were evaluated incorrectly, as confirmed by the CITT decision, and we were penalized on the technical points at least with respect to 24 points and arguably with respect to 48 points. The CITT looked into it and agreed with us on that. When you add the technical points to what we were given, we were 94% compliant and almost $60 million lower in price.
4:35 p.m.
Liberal
Pablo Rodriguez Liberal Honoré-Mercier, QC
Ms. Fraser, in your report, you said: “We have concluded [...] that the contracts were not tendered in a fair and equitable manner”.
This is a very critical judgment you passed on the contract tendering process. Was it mainly due to the $48 million discrepancy?
4:35 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
There were basically two reasons. First, the business volumes indicated in the call for tender for services were significantly different from the real business volumes. In the call for tender for services it was indicated that a few more than 7,000 persons a year would need management services. In reality, there were about 30.
We pointed out that those who could have bid did not have the exact figures. Requests were made to have the figures clarified. For the benefit of the committee, I want to add that this is the first time today that we have obtained an explanation—the one which has just been given—as to the way in which the figures were determined. We worked for months with several departments to try to understand where these figures came from and we were never given an explanation.
We have a signature from the departments who recognize that the facts reported in our documents are accurate. So I find it off-putting to discover today that there seems to be an explanation for the figure of 7,000 persons which was put forward. The business volumes did not reflect reality. When the bidders asked questions they were told that the real volumes were not available.
4:35 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
Questions should have been raised about these figures.
4:35 p.m.
Liberal
Pablo Rodriguez Liberal Honoré-Mercier, QC
If you conclude that the contracts were not tendered in a fair and equitable manner, I presume that you also recommend that the process be redone. Is that correct?
4:35 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
Of course, it is up to the government to make that decision; it must take other aspects into account, assess what is important and what the consequences will be, as Mr. Marshall indicated.
4:35 p.m.
Liberal
4:35 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
The government decided to abide by the existing contract until it expires in 2009.
4:35 p.m.
Liberal
Pablo Rodriguez Liberal Honoré-Mercier, QC
Is that a common practice for a government to decide to respect a contract after the Auditor General has said that it was not tendered using normal criteria?
4:35 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
We have not had many cases like this one, Mr. Chairman, which is probably a good thing.
4:35 p.m.
Liberal
Pablo Rodriguez Liberal Honoré-Mercier, QC
So this is quite rare.
Mr. Marshall, do you agree with Mr. Atyeo, who says that had there not been this $48 million spread, they would have won the military part of the contract, which was a large part of it?
4:35 p.m.
Deputy Minister, Public Works and Government Services Canada
I do not agree with Mr. Atyeo on this point. The result would not have changed because of the $48 million we are discussing now. It would have required a whole lot of other speculative changes to have occurred at the same time, and that's not appropriate in a bidding process.