Public Accounts Committee on Jan. 31st, 2007

[Tim McGrath, Acting Assistant Deputy Minister, Real Property Branch, Department of Public Works and Government Services]

Do you mind if I take that, Mr. Chair, in that it's a program issue?

It is not often, to be quite honest, but it does happen. It happens on occasion. It has happened on a few occasions in Ottawa--for example, with HRSDC, Elections Canada, and CRA--but we try to mitigate as much risk as we can in those situations. At the same time, we put the departments on notice now that if they're changing their minds, this is the cost involved with changing their minds.

At the same time, because of a recommendation in one of the new requirements that came out from SCOPA, we will now report in our plans and priorities statement, in our departmental performance report, those groups that don't accept the lowest-cost solution, so that's very transparent now in the process.

[Judy Sgro, Liberal, York West, ON]

If a department does change its mind, as EDC did, who has to deal with the costs to the crown?

[Tim McGrath]

In this case, we took a decision that...we had other clients who were looking for space in downtown Montreal. When we did the comparison of the Place Victoria renewal, with DEC agreeing to avoid costs for a number of fit-ups they'd originally said they needed but which, because they were remaining in situ, they decided they would forgo, we took on the responsibility of backfilling the space at Place Bonaventure. We had three clients who had expressed interest in the space. Those three clients moved in, but not as quickly as we had thought they would. As a result, the program took that cost.

Now, we do have a $2 billion program. We're talking about $2 million, so it was one-tenth of one percent of our total budget cost associated with that.

[Judy Sgro, Liberal, York West, ON]

Did the department achieve the value for the crown when it negotiated the renewed lease at Place Victoria, though?

[Tim McGrath]

Yes, we did.

[Judy Sgro, Liberal, York West, ON]

Were you comfortable with that?

[Tim McGrath]

Yes, and further to another question, all the accessibility issues were indeed in the renewal with Place Victoria, so the landlord did comply with those principles, in terms of meeting the accessibility standard of the government.

[Judy Sgro, Liberal, York West, ON]

Okay; thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you, Ms. Sgro.

Before we go to Mr. Williams, I just want to invite Mr. Sloan to perhaps square the circle. Do you have anything to add on the discrepancy between the $2.1 million given by PWGSC and the $4.6 million referred to in the Auditor General's report?

[Bruce Sloan, Principal, Office of the Auditor General of Canada]

Thank you, Mr. Chairman.

Yes, I would like to comment on that. When we conducted the audit, we looked at the financial analysis that was on the file at the time. It indicated that $2.5 million related to staying in place at Place Victoria was in excess of what it would cost to move to Place Bonaventure, and it indicated there would also be $2.1 million in unproductive rent as a result of that.

We made inquiries in both the regional office and headquarters for financial analysis, and that is the analysis we had. The $4.6 million we stand by.

[The Chair, Liberal, Shawn Murphy]

Thank you very much.

Next is Mr. Williams, for eight minutes.

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

Thank you, Mr. Chairman.

I understand, Mr. Marshall, that you weren't there at the time, and I think that you, Mr. McGrath, weren't there at the time, so you're both just talking from the record, I presume, and the briefings you had.

Mr. Alfonso Gagliano's name has come up. You may know that he has come up with this committee before. It seems to me we've had some indication here that the minister's office was informed. Was there a policy or anything written that required the minister's office to be informed of any space that was being leased or rented in Montreal, Mr. Marshall?

[David Marshall]

Yes, there was.

Tim, can you describe the administrative requirement that we had at the time?

[Tim McGrath]

Yes.

At the time we would furnish to the minister's office a report for all transactions greater than 500 square metres, with a strategy on all of the leasing transactions that were involved in the department at the time.

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

Did the minister's office respond and give you any direction as to what they would like you to do with any of the space?

[Tim McGrath]

No.

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

There was never any feedback?

[Tim McGrath]

There was feedback in terms of discussing the strategy and talking about various markets, but never any direction as to what to do with a particular lease.

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

Okay.

Madam d'Auray, as the president of EDC, you were aware that the lease was coming up, expiring, and you, as the president, obviously indicated to Public Works that you wanted more space. You asked them to get you a lease with more space. Am I correct in saying that?

[Michelle d'Auray]

You are correct in saying that my predecessor did so, because I was not the deputy minister or the president at the time, but, yes, that would be the process. When a lease comes up, there is a discussion with Public Works. In this instance the request was initiated by Public Works to my department--because the lease was coming up--to have a discussion, as is normally the case, on what the requirements were, what our plans were. Based on that, a technical assessment is made.

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

The decision was that you needed more space, and the lease was coming up for renewal, so Public Works started the process. They put it out for tender after sending down to the minister that they were going to send it out for tender. Then it didn't happen. You decided that you didn't need more space; you didn't need an upgrade. Was that your decision?

[Michelle d'Auray]

As the record has shown, the documentation that we have on record demonstrates clearly that part of the space request was an issue right at the outset.

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

My question was this. When the decision was made, you wanted about 8,500 square metres, I believe. You had about 5,600 square metres where you were. All of a sudden, after they decided to accept the Bonaventure lease, you said “We don't need all that extra space. We're quite happy with what we have.” Was it your decision to live with what you had, or did somebody else tell you that you were going to live with what you had?

[Michelle d'Auray]

Mr. Chair, I can only answer with regard to the documentation that we currently have, which is that our minister at the time made the request for the department to stay where it was, predicated on no fit-ups and no expansion. That is the documentation that we have on record and, on the basis of that, then the discussions went on with Public Works.

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

If I read that correctly, Madam d'Auray, there was no request from your agency to say “We like where we are. We like the space we have. Leave us where we are.” It was a directive from the minister's office saying that you were going to keep what you had and nothing else. Is that right?