Public Accounts Committee on Jan. 31st, 2007

[Michelle d'Auray]

It is always appropriate - as my colleague will explain - for Public Works and Government Services to do a cost-benefit analysis. In the present case, we did such an analysis, which is in the documents that you have received, to be able to determine if it would be acceptable for the Crown to let CED stay where they were. If our conclusion had been that it was not advantageous to the Crown, we would have told Canada Economic Development to move.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

All right.

[David Marshall]

Mr. Chairman, my colleague has correctly described the situation. The Department of Public Works and Government Services has evolved. There was a time when we really tried to lean over backwards. We still are obliged to help departments carry out their operational requirements, and when a client comes to us and says “Here's my operational need--I need to be in this place”, we take that into account.

In this case, because we knew there were other tenants who needed space and we could backfill the space we had just leased, we looked at it and said that it was acceptable for the agency to stay where it was.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

The Auditor General also said that the decision to renew the lease at Place Victoria cost an additional 4.6 million dollars. Is that true?

[David Marshall]

Mr. Chairman, we don't agree with that number. We looked at the difference in rate between Place Bonaventure and Place Victoria over a five-year lease, and we looked at the cost of fit-up that was being avoided, and the cost of moving that was being avoided, and we concluded that it would be cheaper to leave the agency in Place Victoria if they didn't need more space. That was the issue.

The real cost to the crown is the time it took us to backfill the Place Bonaventure space, and in that case we consider that to be about $2.1 million. That's our sense of what it cost the taxpayer.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

According to you, the cost is less than half what has been calculated by the Auditor General. It is 2.1 million dollars, less the savings obtained from staying at Place Victoria.

[David Marshall]

I'm sorry--is the point you're making that it still did cost $2.1 million? Is that the point you're making?

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

According to you, the overall cost, the supplementary cost, is about $2.1 million.

[David Marshall]

The cost of the unproductive rent is $2.1 million, yes.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

That's the only cost that you can associate?

[David Marshall]

That is right. That is the cost.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

That is on the whole process?

[David Marshall]

That's correct.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Rodriguez.

Mr. Laforest, for eight minutes, please.

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

Good afternoon.

My first question is for Mr. Marshall about PWGSC. Your mandate was to cut costs, on an annual or five-year basis. Public Works Canada invested billions of dollars in leases for office space and to manage space occupied by other departments.

In the present case, did you try to go with CED people to the regions of Quebec in order to find cheaper space?

You've just told my colleague that there is no difference between Place Victoria and Place Bonaventure. Did you go with the departmental officers to look at the space?

[David Marshall]

Yes, Mr. Chairman, we definitely do. We do seek to get the best value. I think it's important to think about it as two separate requirements. When the agency said they needed extra space and a fit-up, you have a conclusion that it's better to go to Place Bonaventure because of the costs that would be involved. If you say you don't need more space and you don't need a fit-up, then it's less expensive to leave them where they are. Those were the kinds of considerations we had when we looked at this.

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

My other question is for Mrs. d’Auray. Did you consider moving outside of Montreal? Since we're talking of the Economic Development agency for the regions of Québec, would it not be appropriate that it be set up somewhere else while providing exactly the same services that are provided from Montreal where the cost of space, I'm quite sure since I have checked, is much higher? Would it not be some kind of appropriate decentralization since your role is to provide services to the regions?

[Michelle d'Auray]

Mr. Chairman, when the lease came up for renewal, that possibility was not considered. However, the agency has 14 regional offices spread out in the province. So, about half its staff is already decentralized.

Another aspect of the decision relating to the business office of Montreal Island was to get this office out of Place Victoria in order to move it to another part of the city - because its role is to provide services to Montreal Island - and to locate it in a less prosperous neighborhood in order to contribute to its revitalization. Those factors are taken into account. I can tell you, since we already have 14 business offices spread out in the province, that about half the staff is located outside of the Montreal region.

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

You told the Auditor General that the Economic Development agency had determined at the beginning that it would need more space. Was that based on the fact that CED would expand? How come that, overnight, those projections - and I suppose you made some - became invalid?

When a lease is about to expire and that one plans to have more staff, which translates into needing more space, I fail to understand how it is possible to come to another decision overnight, which leads to an increase in costs. Can you explain that for me?

[Michelle d'Auray]

The process is as follows. When the lease expires, Public Works and Government Services Canada ask their client – Canada Economic Development in this case - what will be their future needs. Then, an assessment is made based on the needs analysis, which was done.

However, within this analysis, CED also told Public Works that the location of their office on Montreal Island was still under discussion. No decision had been made at the time but the plans and estimates were assessed on the basis that the Montreal Island office would be located within headquarters, if I may use that word. Furthermore, the agency planned to expand because of specific programs that were to be transferred or offered to it.

During the process, a decision was made about the Montreal Island office. So, one factor changed in mid-course but we knew that the expansion needs of the agency would remain. A proportion of the needs and of the staff was not the same as at the very beginning of the process but we had already advised Public Works of that possibility.

The needs assessment also took account of the fit-up work for the space at Place Victoria which was not really up to our standards, and that would have entailed additional costs. As my colleague told you, when we do a cost-benefit analysis, we take account of the fit-up work that has to be done. At the time, all costs considered, it was more advantageous to move. Without those costs, it was more advantageous to stay put.

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

You say that along the way you advised Public Works that your needs had changed.

[Michelle d'Auray]

At the start of the process, we had indicated that this issue would have to be resolved along the way but that, as far as our needs were concerned, we should still be able to maintain the original request.

That being said, we had also made some projections based on retrofitting the space. Since I was not there at the time, I am relying on the existing documents and on the letter from the Secretary of State indicating that the agency will not need any retrofitting, which would mean another cost reduction.

[The Chair, Liberal, Shawn Murphy]

Merci, Monsieur Laforest.

Mr. Fitzpatrick, you have eight minutes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I would like to ask Mr. Arès a fair number of questions, and he's in an inconvenient position. I'm less than enthusiastic about asking questions to the people at the front of the desk, because their answers are totally inconsistent with the answers they gave on June 8, and I presume they were under oath at that time.

I'd like to direct my questioning to Mr. Arès. Maybe he could take Mr. Marshall's place; I don't intend on asking Mr. Marshall any questions.

I ask that my time doesn't click until the gentleman can resume his seat.

I know why you'd want to count it.

[The Chair, Liberal, Shawn Murphy]

We have the new Mr. Marshall.