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.
January 29th, 2007 / 4:10 p.m.
Deputy Minister, Public Works and Government Services Canada
It's a big difference in number, but the impact was minimized by the weighting given to the pricing of the contract.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
I didn't ask about the weighting for the contract. I said, “Is that not a big deal?”
Deputy Minister, Public Works and Government Services Canada
Well, you have to understand: a big deal in relation to what? I'm taking this to mean a “big deal” in relation to the overall evaluation, and in that case it's not a big deal.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Well, I'm taking it as a big deal in that if companies want to bid on this contract, where they have to gear up for 9,000 houses to manage—all across the country, by the way—it's a huge undertaking, unless you have the infrastructure in place today to handle it. And you say it's not a big deal from a proposed bidder?
Deputy Minister, Public Works and Government Services Canada
Well, the bidders interpreted that in their own way, and the pricing came in, obviously—
Conservative
John Williams Conservative Edmonton—St. Albert, AB
No, I wasn't asking about how they interpreted it. You gave them the wrong information. You said there are 9,000 houses to be managed. There were only 33 houses to managed. Now, 9,000 houses to be managed all across this country is to me a big deal—a huge undertaking. Thirty-three is nothing. I could handle that myself—I used to be in the business.
Don't you think that was a serious misstatement of the facts?
Deputy Minister, Public Works and Government Services Canada
Well, Mr. Williams, the issue is whether or not that number had an impact on the overall evaluation, and it did not have a sufficiently large impact to change the result.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Okay, let me go back to my first question.
You all agreed that the employees should not have been paying for the property management services?
Deputy Minister, Public Works and Government Services Canada
Based on the zero remit, yes.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Royal LePage say they have a different opinion, and I would suggest that you go to court and get it settled.
Deputy Minister, Public Works and Government Services Canada
I have no doubt that we can settle it. This is a commercial dispute. We are aware that Royal LePage has already put some money in trust in order to refund it to the government, and I have no doubt that we will be able to resolve it.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Now, Mr. Badun, I'm going to ask you a simple business type of question.
President, Royal LePage
If I could correct you on the pronunciation, it's “Bad-OON”.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
My apologies.
Mr. Badun, I'm going to ask a simple business question. I used to be in business too. Thirty-three property management services is not a huge amount of money, given the size of this contract. Why don't you just pay it, get it over with, and then a lot of these problems brought here before this committee would likely be alleviated?
President, Royal LePage
This is a contract dispute, and it's a very minor element of a very large contract. We recognize that the money is important to the individual members. If in fact we've incorrectly interpreted, then by all means we will do that.
On a matter of principle, this is truly an interpretation difference. I think there are aspects to our interpretation, again referencing the different parts of the policies. It's very important to understand the whole aspect of all of the services and the reasons why we bid what we did in order to understand whether or not our interpretation has any merit.
We assert that the members have already been paid for this, and that's what this real estate incentive is. The money flows through from the government over to the members, and its sole purpose is to fund property management services. Our assertion is that to bid any more than zero would be to double-charge the crown.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
A point of clarification, Mr. Chairman.
Mr. Badun said to charge anything more than zero would be to double-charge for the services. Was there a concept of double-charging here? I'm lost here, and I need to have an explanation of this, Mr. Chairman.
Mr. Badun is saying that if you bill the government and bill the taxpayer, you get paid twice for the same issue. I thought the contract said to tell us how much the government has to pay for moving, and tell us how much you're going to charge the employee to manage the property. Am I right? Is that what the contract said?
Perhaps Mr. Badun can explain this double-billing concept to me.
Liberal
The Chair Liberal Shawn Murphy
Do you have anything to add very briefly, Mr. Badun?
I think it's pretty clear. You've given a ceiling rate, and the ceiling rate is zero. You felt you were able to charge the armed services personnel. Most people, at least around the witness stand, disagree with that assertion. Again, that's a commercial issue that will perhaps have to be resolved in another forum. Do you have anything to add to that?
President, Royal LePage
I think that's the heart of the matter. This is a commercial dispute, and contract law would dictate that you can't take any one provision of a contract and look at it in isolation. There are several other provisions that reference this real estate incentive and how it's funded. I think that's the proper way to look at it.
I'm not suggesting that anybody has to agree with me. I'm just suggesting that we have a very solid foundation for our interpretation of the contract. There was the same interpretation in 2002 and in 1998.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
I'm sorry, Mr. Chairman, I asked Mr. Badun to explain this double-dipping concept he was speaking about, not whether he justifies and believes he is right in the contract. As you say, that is another forum. It's the double-dipping that I don't understand. He is saying that if you bid more than zero to the government, you would get paid by the government and paid by the employee too. The government witnesses are saying that was not the contract. I need clarification. I can't understand it. Does the government suggest double-dipping?
President, Royal LePage
I'll do my best.
First of all, it's important to note that Royal LePage doesn't receive the funds for property management. The funds flow through third-party contractors. It comes back, very simply, to the total cost to the crown, which is the way we were instructed to bid. According to the policy, which is a supporting document to the RFP, property management services will be funded through this real estate incentive.
Simply put, the real estate incentive--and I understand you don't want to go there, but it's important to understand it in order to answer the question—is a function of the real estate commission that would have otherwise been paid to the member who sold a house. That goes to the individual in a personalized envelope, and it is to be used expressly for property management services, but they can choose to cash it out and do whatever they want with it. Our assertion, when we look at total cost to the crown, is that if we put anything more than zero in there, we are double-charging, because the crown has already been paying for it through this real estate incentive and then would be paying for it again through this thing.
Liberal
The Chair Liberal Shawn Murphy
Thank you very much, Mr. Williams. Thank you very much, Mr. Badun.
Mr. Christopherson, you have eight minutes.
NDP
David Christopherson NDP Hamilton Centre, ON
I want to follow up on that.
Madam Fraser, what do you think about that?
Auditor General of Canada, Office of the Auditor General of Canada
We obviously disagree with that. We believe that the percentage that was requested would be the percentage for the property management services. In the contract as well it says that any subcontractors are to respect the percentages given in the contract. So if it's a zero bid then the subcontractor has to bid zero as well. We have come to the conclusion, with which government agrees, that those people should not have been charged for those services.
NDP
David Christopherson NDP Hamilton Centre, ON
Just to follow up on that, Admiral, you had made the commitment before, and you made it again today, that you were going to look at every file, and if there was money to be refunded—I do recall Mr. Williams asking this at one of the meetings—then you would be going after, to use the first word that comes to my mind, Royal LePage to pay for it. Is that going to happen?