Public Accounts Committee on Jan. 31st, 2007

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Okay. I don't need you to repeat that again. The point is that one Liberal politician wrote to another Liberal politician asking that all your work be overturned, and the taxpayers pick up the tab for an additional $4.6 million so that your agency would stay in a building owned in the majority by a prominent Liberal supporter. Is there anything that is not factual about that statement?

[Michelle d'Auray]

Mr. Chair, I'm not in a position to respond to.... I'm not sure that's a question, actually.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

It is a question, because again, I have the Auditor General's report, who points out that the decision not to move cost an additional $4.6 million. Not one of you has given any rationale as to why that happened. You said there was a cost-benefit analysis to determine whether it was possible. Anything is possible, but is it the right decision? None of you have indicated that it is. In fact, you haven't even told me why you didn't need to move. Even if you didn't need all the extra space, it still would have made sense to move, because you had a building that you were locked into paying rent for, and that you were going to have to rent, regardless.

[Michelle d'Auray]

If I may, the requirements at the time included a fairly extensive fit-up. If you did not include those costs, did not include the costs of physically moving—because there were some costs to be incurred in the move, and there were some costs to be incurred in the purchase of equipment as a result of the move--then yes, there would have been an expenditure incurred, which was not incurred.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Your colleague who sits right next to you does not agree with you. He says it seems clear enough that the insistence on staying at Place Victoria in this case serves interests other than the sound management of public funds. Your friend, your colleague immediately to your left, disagreed with you in a letter that he wrote on May 2, 2002. Why do you think he disagreed with you on that? Why do you think the Auditor General disagrees with you on this? Are they all wrong?

[Michelle d'Auray]

I would expect that there is a cost-benefit analysis that was done, and I think my colleagues at Public Works have given you some of that information. I can only confirm that in fact DEC-CEDQ remained in the building, there were no fit-ups made, there were no costs incurred as a result of the move, and my colleagues at Public Works were in fact able to negotiate a lower rate in order for us to remain in the building.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Poilievre.

Thank you, Madame d'Auray.

Mr. Christopherson, you'll have five minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

I don't want to use up my time, but I want to point out a couple of things you might want to follow up on. One is under tab 28, on page 22. It's the in-binder copy of the letter Mr. Fitzpatrick handed out. I don't know whether you have a copy of this or not, Chair; we'll make sure you get one, if you don't.

If you look at the very bottom of the page.... I was just glancing at it, and what I noticed was that after “Suzanne” in the intro, the paragraph is missing. I thought it was just a page that got lost in the photocopying, but the “22”—the page number—is at the bottom, and what's missing is in between.

So there's a sentence that is missing that makes it difficult to say it was just a photocopying error, when the page number 22 at the bottom.

I'm at tab 28, on the third page in, the first English page. At the bottom, there is room for those two sentences above the “22”.

I leave that with you. I don't want to get my thing....

The other thing I want to point out, Chair, because I want to try to get to the heart of a couple of things, is that there's a document—and I can find out where it came from, but I pulled it out of the pages—from the ADM of real property services to the regional director general of Quebec region. This is stamped as received on July 11—that would be, by the director general. It says, in the fourth paragraph:

A few hours after the Board met, we were informed that the Minister's office had an interest in this project. It asked the region to put the project on hold.

That's July 11. In the deputy's opening comments, he makes the statement—and I accept it, obviously, as true—that when they called, the ADM for real property found out on April 4 that the client had changed their mind. Yet above that, they say they had talked to the client, who had said they were not putting it on hold.

So we have a July 11, 2001 document that says the minister's office said to put it on hold. We have another accounting that says they checked with the minister just before they signed the contract and were told everything is cool. Then they are advised, after their ADM calls the minister's office, that no, it's to be cancelled. I think that needs to be checked out a little further.

But what I want to come back to, in the very few moments I have left, is this whole document we've been referring to—a couple of comments have been made. I want to read parts of it.

This is what's missing from the binder version, which is in Mr. Fitzpatrick's version:

Suzanne,

It is not my intention to write a memorandum to the minister on this matter. Ever since we approved the lease at Place Victoria on April 2, 2002, for 5,790 square metres, 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:

--This is Mr. Arès's document--

I am not familiar with the current state of the discussions/negotiations between the leasing officers and Place Victoria; these officers report to the Minister's Office. I therefore conclude that our minister knows more about the situation than I do.

I see lines being crossed here.

The e-mail from Claude Séguin to Tim McGrath (April 26) contains false information....

I don't know why he's saying that. Then the next paragraph starts:

It seems clear enough that the insistence on staying at Place Victoria in this case serves interests other than the sound management of public funds.

Pierre mentioned that already.

I cannot agree to cover, in an administrative manner, a decision that is difficult to justify financially, because it is costly....

Next:

Place Victoria never complied with our accessibility requirements for disabled persons and never showed any interest in doing so; and this won't change, which goes against our internal compliance policies.

Who will sign to approve the exception this time?

This partly explains why it is preferable that I not write a memorandum....

I have to tell you, sir, as I read this, this is somebody who's very concerned that a day like today might happen. You wanted to make sure you were covered in terms of what you did, because you did nothing wrong, but you were not answering for anybody else, in terms of decisions around you.

That's what this looks like to me, Chair.

[The Chair, Liberal, Shawn Murphy]

Mr. Marshall.

[David Marshall]

Mr. Chairman, I really do feel that, in the interests of understanding exactly what happened, it's very important for committee members to go forward in time from the memo Mr. Arès wrote, because he wrote it at a point in time, and that's what he believed and he wrote that.

It may interest you to know that Mr. Arès subsequently did write the memorandum to Minister Goodale recommending the signing of the lease at Place Victoria. He became aware of events and information that caused him to have a different view later on in the process, so it would not be appropriate for the committee to stop.... I think you might ask Mr. Arès and other witnesses if there were any changes in the facts that changed the opinion he expressed in that letter. It's important.

[David Christopherson, NDP, Hamilton Centre, ON]

I appreciate your guidance, and--

[The Chair, Liberal, Shawn Murphy]

You're out of time, but I'm going to ask if Mr. Arès wants to elaborate in any way.

[David Christopherson, NDP, Hamilton Centre, ON]

I am going to suggest that we have further things to pursue here, sir.

[Mario Arès]

When I wrote that memo, I had been asked to justify the decision to remain at Place Victoria even though we had signed a lease with Place Bonaventure. I refused to do so because, according to the information I had at the time, the rent would be 430 $ per square meter. I could not see how I could justify selecting the fourth bidder when the others had offered a better rate than Place Victoria.

Then, there were negotiations and I believe they were concluded around mid-May, that is to say about 10 to 15 days after my writing that memo. That's when I was informed that the client had changed the requirement. I wrote the ministerial memo a bit later — sometime in June I believe — explaining the decision with a rent of 308 $ per square meter. However, at that time, we were not dealing with the same requirement at Place Victoria as during the call for tenders. In the lease signed with Place Victoria, the moving costs, the fit-up costs, all the IT costs, the swing spaces and so on had been withdrawn. Also, the rent had been cut by about 120 $ per square meter following a negotiation led by the rental officers. So, the facts were not the same as when I wrote the first memo.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Arès.

Mr. Rodriguez, five minutes.

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

Thank you, Mr. chair.

Mr. Marshall, earlier I asked you a question about the 4.6 million dollars and I want to ask it again because it is a figure that keeps coming up. You believe it is incorrect.

Could you explain to me how you came up with your own figure?

[David Marshall]

The question about how you would assess a cost versus another has to be understood as to whether you're looking at Place Victoria or Place Bonaventure. Had they come to us right at the start and said, “We don't need more space, we don't need a fit-up”, we would have looked at their situation and said, “Look, if we can renegotiate a good price where you are, it's going to be less expensive to leave you there”.

When we already have a lease space that we have negotiated, we look at what is the cost of where you are on a per-metre basis versus Place Bonaventure. What would it cost us to move you? What would it cost us for fit-up? When you compare those two, you find that it's economical to leave them in Place Victoria.

Now, you already have a leased space that you have to backfill. If you could have backfilled it on day one, there would have been no cost to the crown. It just took us a little longer to backfill, and that's the cost we consider was the extra cost to the taxpayer, which is $2.1 million.

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

What would have been the cost of moving from one place to the other?

[David Marshall]

The actual moving costs, I believe, would be about $200,000 or $300,000, but then there would be a need to fit up the new place with information technology, furniture, and so forth, and that cost would be about something like $2.5 million, $2 million to $2.3 million.

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

Mrs. D’Auray, does CED have any space problems at this time?

[Michelle d'Auray]

The lease at Place Victoria is about to expire and we have already started the process to call for tenders with our colleagues at Public Works Canada —

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

Do you want to move?

[Michelle d'Auray]

The lease will expire soon. We have to look at some issues at Place Victoria, namely the fact that our standards for square meters per employee are not met. Those standards were not in effect at the time but they are now. So, at this time, those standards are not met.

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

Is it not because you have too many employees that you will have to move?

[Michelle d'Auray]

No. The lease will expire and we have carried out a needs analysis based on the new standards.