Public Accounts Committee on Jan. 31st, 2007

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Mr. Arès, welcome to our committee.

By the look of e-mails and correspondence, I see you were directly involved in the re-tendering process for the Quebec region's offices, back in 2002 and 2003—and very much involved with it.

I want to go over some facts to see if there's any disagreement. After an evaluation process, the existing landlord came in fourth on the tendering process. That was the Auditor General's point of view. Do you agree with that position?

These are basically yes or no questions.

[Mario Arès, Regional Manager, Assets and Facilities Management, Department of Public Works and Government Services]

Yes, that's true.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

And that evaluation process was done pretty much according to the guidelines and the rules that we have for procurement?

[Mario Arès]

Yes and, to make sure, we checked with Consulting and Audit Canada.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

That would be a yes? Okay.

I only have eight minutes, so I really want to move through this as fast as I can.

Now, it's my understanding that at some stage of this whole process there were some pretty clearcut directions that came down the tube from the political masters, which said that for this property they were going to renegotiate a deal with the existing landlord and that's the way things were going to be. You wrote an e-mail on May 3, 2004—and I thank you for the e-mail, because I think you showed yourself to be a very professional, dedicated public servant by writing that e-mail—and you expressed some real concerns in that e-mail.

Do you take the position that ultimately this lease arrangement, the whole process, was basically scrapped, and it was given to the existing landlord because the political ministers of the day decided that it had to stay with the existing landlord?

[Mario Arès]

That is not quite true. I have to explain the situation. Within the process, up to the call for…

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Could I just go over your e-mail a bit and remind you of some of the things that were said in the e-mail?

[The Chair, Liberal, Shawn Murphy]

If I may, Mr. Fitzpatrick, you asked the witness a question, and he's going to give you an answer, so I think we have to oblige the—

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Well, he has to speed it up.

[The Chair, Liberal, Shawn Murphy]

Go ahead, Mr. Arès. Please, continue your answer, sir.

[Mario Arès]

The process went well until we gave the contract to Place Bonaventure. Everything was done according to our procedures and policies. Furthermore, we had called on Consulting and Audit Canada to ensure the integrity of the process. Everything had been done according to the rules. However - and that is a situation I did not control - in the days following the signing of the lease for Place Bonaventure, we were informed that Canada Economic Development would remain at Place Victoria.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I'll just quote directly from your letter so I'm not misplacing the words:

...the decisions on this file have been taken at the corporate level and are in opposition to our regional recommendations. The following points support my position....

There are about five of them, and one of them makes allegations to memos and documents actually containing false information. I'll quote the last statement in your letter:

“This partly explains why it is preferable that I not write a memorandum to the minister on this matter because it would not say what certain interest groups would want it to say.

I find that a very intriguing commentary, and the five points you've raised in here seem to me to be all significant and substantial.

I want to be clear here. Now, this was back in the sponsorship era and so on. The Minister of Public Works at that time, was that Alfonso Gagliano, or who was it? Do you know who the Minister of Public Works at that time was?

[Mario Arès]

It was Mr. Gagliano.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Are you sure it was Gagliano?

[Mario Arès]

No, if I remember correctly, it was Mr. Boudria.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Are you sure it was Mr. Boudria?

[Mario Arès]

Yes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

At the time of this memo, on May 3—

[Mario Arès]

He had not been in the portfolio for long.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Okay. We were told before that it was Minister Goodale. It's not Minister Goodale?

[Mario Arès]

The memo was written on May 3rd. At the beginning of April, we were informed that Canada Economic Development would remain at Place Victoria. At that time, there had not yet been any negotiations with Place Victoria.

At the beginning of May, people in our communications branch asked me to draft a memo on behalf of the Department justifying the decision to remain at Place Victoria. I refuse to do so, for the following reason: from what I knew at the time, the rent at Place Victoria would be 430 $ per square meter. According to the analysis done at the regional level, it would not be economically viable to stay put since we already had signed a lease with Place Bonaventure.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

In the procurement process, if you have public tenders for something, and people in good faith submit tenders and so on, and then behind the scenes negotiations start with the fourth-place tender to renegotiate.... There's even correspondence about changing the blaming windows in the building so you could change it to a prestige or class A thing, and that would get around the problems with the other tenders and so on.

This is a bunch of nonsense, sir, quite honestly. This is not what the Canadian public expects in the procurement process, and the people in good faith who bid on these tenders have to be scratching their heads about the integrity of the system. I don't care how anybody tries to spin that now.

On June 7 we were told that there was no economic advantage in giving it to the fourth party. We asked for that analysis; we never really got the analysis. And today, four or five months after the scene, we get this big thick book and it looks like somebody has finally done an analysis on this matter.

I am less than enthusiastic about what's going on with this particular file. I think it stinks to high heaven, and there is something seriously wrong here. I think any reasonable person who looked at this file would be scratching his or her head big time. This thing isn't over by a long shot.

Were the six conditions that were put down to renegotiate with these people, including the disability access requirements and so on, ever complied with? I don't think so. Yes, or no? Do you know?

[Mario Arès]

If the rent had been kept at 430 $ per square meter, as to the terms of the lease, that would obviously not have met the six conditions. I don't know who made the decision in the Minister's office or the Deputy Minister's office. From that moment on, I was kept informed but I do not know why the decision was made. I was told that CED would remain at Place Victoria. If the cost had been kept at 430 $ per square meter, that would not have been a viable decision.

I know that negotiations were going on at the time in order to get a new rate from Place Victoria but I was not involved in that. At that time, I did not know the new rent. Mid-May, it appeared that the rate would be 308 $ per square meter. You should have a look at the new analysis based on that rate. It showed that, without any moving and retrofitting costs, keeping CED where they were during five years with a rent of 308 $ per square meter, without making any improvement to the building, would be an economically viable solution or at least a solution equal to the decision to move.

[The Chair, Liberal, Shawn Murphy]

Thanks very much, Mr. Fitzpatrick. Merci , Mr. Arès.

We'll go to Mr. Christopherson.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you very much.

Apropos nothing directly related to any dates, this jumped out at me, so maybe you can clarify it for me, Mr. Arès.

In the memo--and it looks like it's from you to Normand Couture--the second paragraph reads: “More than a month ago, we informed the Minister's office of our accommodation strategy for CED, our client. On June 8, after a meeting with J.M. Bard, we were told to put the CED file on hold.”

Two paragraphs down, it says: “It is also important to remember that CED was burned more than three years ago with the abortive move of its office to Place Ville-Marie. The client is watching us closely on this project. Failure is not an option; our image and reputation are at stake.”

Could you just expand on exactly what that's referring to please, sir? Somebody?