Public Accounts Committee on Jan. 29th, 2007

[David Marshall]

That's correct.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

The one in place now that Royal LePage is working with at this time is actually number three.

[David Marshall]

Correct.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Super.

I understand that you were the authority who decided to cancel contract number two. I would like to hear from you what pushed you to cancel contract number two, sir.

[David Marshall]

Well, Mr. Chair, the issues in front of me at the time were that the CITT had considered an appeal from one of the bidders on the number two contract in relation to a technicality in the sense of whether certain extra points could be earned or not. The CITT was recommending that we re-evaluate the contract bids in order to correct that technicality, so we were looking at that issue.

At the same time, Mr. Atyeo at Envoy had lodged certain allegations about a potential conflict of interest among the members of the government departments, including the Department of Public Works. The CITT, at the time, if I recall, had not considered those allegations, again, in that case, for a technicality, but I was certainly aware of them, and we launched an investigation to see if there was any merit to these allegations.

The conclusion was that there was no real conflict of interest, although there may have been a perception of one. The perception was strong enough and confusing enough to explain that I felt the integrity of the contracting process required that when you combine the need to re-evaluate and these other allegations, it was wise to re-tender and clear up any doubt. So that's what I did. That's what I recommended to the minister and that's what we did.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Okay. Mr. Marshall, I want to choose my words, because I don't want to give an impression of wrongdoing on the part of Royal LePage, but what about the allegation of the fact that Royal LePage conducted the original contract, contract number one, the pilot project? The fact that they carried that out would have given them access or would have allowed them to understand—if I could say it that way—in a better way what you were asking of these bidders, whereas Envoy wouldn't have had that advantage, because they had never worked in that particular type of contract with your department. What are your comments on that, sir? How do you see that one would have had an advantage over the other?

Am I right in understanding that there were only two bidders?

[David Marshall]

I think it's important to understand which contract we're talking about. In the 2002 contract—Richard, correct me if I'm wrong—I think Royal LePage was the only qualified bidder.

[Richard Goodfellow, Manager, Project Delivery Services Division, Public Works and Government Services Canada]

Correct.

[David Marshall]

In 2004 there was more than one bidder.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Could we relate to contract one, two, or three as we have explained before?

[David Marshall]

Okay, so you would like me to give you my sense of Royal LePage's position in relation to contracts one, two, and three.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Well, especially to the fact that because they'd had contract number one, they knew what was involved. They knew some of the statistics that appear, from what we heard from Mrs. Fraser. We understand that the actual statistics were much different from statistics that could have been suggested or made to be understood by your people to both of the bidders—or more, if there were more than two—except that in the case of Royal LePage, because they conducted contract number one, which is the pilot project, they would have had the advantage of knowing that the real statistics were not exactly the ones that your department was pushing forth.

Right, Mrs. Fraser, basically, in a nutshell?

[David Marshall]

Yes, I know this suggestion has been put on the table. I'd like to give the committee some context that may change our view on that suggestion, and this is why: the statistics that were asked of the bidders in contract three were based on a policy and a projection of what property management services might be required; they weren't represented as what historically had been used. My colleague from the Treasury Board Secretariat will be able to explain that to you.

On the second point, I think it's very important to know that you heard from both Royal LePage and Envoy that neither firm actually based their strategy on the actual number in the RFP. Royal LePage based their strategy for bidding on whether the government's total cost would go up; therefore, since they felt that according to the policy it would not, they bid zero. Envoy has said that they interpreted the requirement as what the actual service would cost, and they bid accordingly, so I think the notion that Royal LePage somehow used insider knowledge is not as accurate as has been presented. I think the committee should think about it that way.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

You're saying Mrs. Fraser would be sort of wrong.

[David Marshall]

No; I'm saying that it's an assumption on the part of the Auditor General that bears scrutiny.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

I see. Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Proulx.

Mr. Laforest, you have eight minutes.

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

Good day. Welcome to the committee.

My first question is addressed to Mr. Badun. You are the president of Royal LePage. At the December 12 meeting, your vice-president, Mr. Bélair, stated, in reply to a question I put to him concerning Ms. Sandra Buckler's lobbying activities and the point at which she began to work as a lobbyist, that her role was to advise you on issues relating to the Public Accounts Committee.

Could you give us some further details on that, please?

[Graham Badun, President, Royal LePage]

Thank you for the question and the opportunity to clarify that.

We engaged Fleishman-Hillard, a firm we've used on and off over the years to help us with in preparation of bids, etc., when we learned that this committee was being lobbied by Mr. Atyeo and his advisers around certain aspects of the process. We engaged Fleishman-Hillard to help us in terms of a better understanding of the processes. It isn't an everyday occurrence for a firm of our nature to get in front of a committee like this. It's a bit of a foreign process, honestly, so we engaged them to help us better understand the process, help us determine what kinds of facts we needed to get out, and help us establish meetings with members of the committee and with other stakeholders, etc.

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

When did Ms. Buckler begin to do the work you asked her to do?

[Graham Badun]

It was work we asked of the firm; I believe she engaged with us and the firm around May of 2005.

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

This confirms what Mr. Bélair told us. I would point out however that Ms. Buckler registered as a lobbyist as of June 22, 2005. I think that there is, thus, an important ethics problem, since two Royal LePage representatives have told us that she began to lobby committee members in the month of May, since you were interested in the work of that committee, while she has not yet registered as a lobbyist. I want the committee to take note of this, as well as you.

I would like to put a question to Mr. Marshall. Last November 28, the Auditor General, Ms. Fraser, stated in her report that this contract had not been awarded in a fair and equitable way. Minister Fortier replied that same day to journalists who asked him what he intended to do about that that the contract was valid until 2009. I suppose that Mr. Fortier was aware of procedures and of the fact that this report would eventually be studied by the Public Accounts Committee. It is as though he made statements without waiting for the review by the Public Accounts Committee.

Since you are the deputy minister, did you recommend that he state that the contract was valid until 2009? If that is the case, did you contact the Privy Council Office before making such a recommendation? Can you tell us whether there was communication between the minister's office and the Prime Minister's office in this regard?

[David Marshall]

Mr. Chairman, I'll try to answer that. There are several aspects to the question.

Certainly the Auditor General has reported or stated in her report that in her view the process was not fair and not tendered fairly. And certainly we have taken this very seriously and have had discussions, both in my management team and with our minister, as to what has happened and about what our recommendation is. That is the normal course and that's what happened.

I must tell you that my recommendation, when all the factors were considered, was that while there were some administrative errors, potentially, or some confusion around the numbers, taken as a whole, the process was balanced and the result would not have changed in either case, depending on whatever might have happened. So my recommendation to my minister was that there was no basis for retendering the contract. That was my advice, yes.

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

So, you are the one who made that recommendation to the minister.

Do I have any time left?

[The Chair, Liberal, Shawn Murphy]

A minute.