Public Accounts Committee on April 30th, 2007

[The Chair, Liberal, Shawn Murphy]

We have them all. Some of them are fairly lengthy, and we're sorting them out and having them translated.

Mr. Fitzpatrick is next, for eight minutes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I have a question for Inspector Roy. You're an experienced investigator. Let's say an organization is being investigated, and an experienced investigator walks in and interviews somebody in that organization for a three-hour period. At the beginning of the interview a tape recorder is turned on and it stays on for that length of time. Wouldn't you find it very unusual for that person to walk away from the meeting and say they were not a witness?

[Paul Roy]

Yes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Thank you very much, sir.

Now I want to get back to the pension issue. Morneau Sobeco was the original business to sign off on that business case for outsourcing. I'll address this to Mr. Rogerson, because he worked in that area for many years and I think he's an expert in that area as well.

Would you expect the comptroller to sign off on a major contract of that nature?

[A/Commr Bruce Rogerson]

I'm not aware of who had the delegated authority at that time. It depends on to whom the commissioner delegates signing authority. So would the comptroller sign that off? It would depend on who had the delegated authority to sign it.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I believe it was Mr. Gauvin at that time.

[A/Commr Bruce Rogerson]

If he had the authority to sign it off, he would have signed it off. On the normal process in any contract and procurement, as you know, we only have up to $25,000 for contract authority. Thereafter it goes through Public Works.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

But before it went to Public Works, somebody like Mr. Gauvin certainly would have approved or signed off on that business case, you would think.

[A/Commr Bruce Rogerson]

I can't speak for him, but I can tell you that my previous experience there, with the internal control unit I put in place at the time, was to review such contracts—

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

My understanding is that in the RCMP, before it went off to the Public Works, Morneau Sobeco was involved in calculating the actual estimates for this sort of contract. They may even have been involved in actually writing up the request for proposal--the specifications that went into that proposal. Lo and behold, when the tendering process worked its way through, guess who bid on it? Morneau Sobeco. Guess who won the bid? Morneau Sobeco.

In your experience, would you call this standard practice in procurement?

[A/Commr Bruce Rogerson]

Not at all. We're supposed to set our own statement of work, statement of requirements, and request for proposals based on our internal experts, along with some others, to address.... We would not give anyone a competitive inside edge, because then it wouldn't be a fair and open contract.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

If a contractor in a well-run organization tried to get inside information and assist the process, people in charge would just close the door on those people and tell them to turn their tails and head the other way because it wasn't the way they did business. Is that a correct assumption?

[A/Commr Bruce Rogerson]

That is correct.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Mr. Crupi and Mr. Gauvin were here. Mr. Gauvin told us in this committee that he took away Mr. Crupi's contracting powers. Then we discovered that after that decision was made, Mr. Crupi carried on as if nothing had occurred. He kept on contracting. He found a friend in the CAC group who could help him out with his contracts, and may have pushed through as much as $6 million worth of contracts. Mr. Gauvin told us he wasn't aware of this situation.

With the checks and controls you helped set up in that area, wouldn't it be very unusual if the guy in charge of this thing--after he terminated the guy's right to contract and he worked through $6 million worth of contracts--didn't know about it?

[A/Commr Bruce Rogerson]

It would have been either the chief financial officer or the senior full-time financial officer who was in charge of financial services, or the person in charge of assets and procurement for the RCMP. If they failed to brief Mr. Gauvin, he could have been kept in the dark. However, I would say that was a highly sensitive area at the time, with respect to the pension outsourcing.

It depends on when the audit was done. It depends on when the criminal investigation was done. From my experience, if that was high-risk, which it was, there would have been an active monitoring unit to review how those things were allocated and how the contracts were awarded.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I'm baffled that the guy in charge of this would terminate his contract and service and just let him carry on in his own little department, without any controls or checks being put in place. Then he came to this committee and said he didn't know that guy was doing it. It seems an incredibly difficult concept to accept or believe.

[A/Commr Bruce Rogerson]

In our world we empower people to make decisions through the delegated authorities. If those people failed to brief Mr. Gauvin, they should be held accountable. If he was unaware, and his people working in those respective areas were still conducting that business and not briefing him on that, then he was kept in the dark.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

But if the RCMP procurement front-line staff knew full well that Mr. Crupi was continuing to issue contracts and negotiate those contracts, and had a revolving door going on with them, don't you find it unusual that with that large number of people in the RCMP procurement aware of this going on, they would not have brought this to the attention of the chief financial officer of the organization?

[A/Commr Bruce Rogerson]

I would hope they would, but with respect to Morneau Sobeco, if my memory serves me correctly, and from what I've heard with respect to that particular firm, there was already business being conducted with them, and therefore there was an implied contract. As a result, the decision was made to sole-source it to Morneau Sobeco, because of the implied contract already in place.

Therefore, Morneau Sobeco was awarded the contract, based on the fact that offer acceptance and consideration was already in place, and under business law they could take us to civil proceedings and say that there was an implied contract to start with. To my knowledge, therefore, they did not go through the normal contracting and procurement procedures with respect to awarding of that contract.

Did Dominic Crupi sole-source that? I'm not sure. Was Dominic Crupi involved with working with Morneau Sobeco up front? Absolutely. Did the organization take a risk-managed approach and say, “Will we be served civilly, and therefore end up with two separate contracts? If we go to the public tendering process and another person is awarded, then would Morneau Sobeco stand a legal challenge with respect to saying there's already an implied contract because we've done work on this?”

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

But you would agree with me that it would be very bad practice for procurement if the main contractor were involved right at the front end in drawing up the specifications and the estimates on any procurement process? That would just be bad practice, and I think every taxpayer in the country should be concerned if that were standard practice.

[A/Commr Bruce Rogerson]

You would have an insider's edge, because you'd know the organization, how it's structured, the true costs, the additional costs.

As you know, when you go to the competitive process and people bid on it, a committee is struck, and we award points as to the credibility of the organization and their functionality. In fact, you structure what you require through MERX, through our contracting and bidding process, because NAFTA kicks in as well. It has to be an in-house process in order for people to actually be able to bid in a fair process.

In this case, what you're alluding to is that there was already insider trading going on. They already had the inside track. They also had a competitive edge. Would they also have been able to outbid the other competitors? I would say that they would have had a competitive edge. Since we didn't go to a competitive contract, I don't know if somebody else would have come in cheaper.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Fitzpatrick.

That concludes round one. We're going to go to round two. I just have one or two questions before we go to round two.

I'll go back to you, Mrs. Burton. I know we've touched on this question before, but your evidence before this committee is that Ms. Revine was eliminated because of a reorganization. How many other positions within the Royal Canadian Mounted Police were eliminated because of this reorganization?

[Rosalie Burton]

Mr. Chair, I can only speak to the ones within the area that I inherited—

[The Chair, Liberal, Shawn Murphy]

I mean just in your area.

[Rosalie Burton]

—and there were 12. That was due to a budget pressure of $1.3 million for the fiscal year 2004-2005.

I'll apologize to the committee that this has not been translated--I don't have those resources available to me--but I did bring supporting documentation on that for the committee's reference, and I'll certainly provide that to you.

I will take this opportunity, Mr. Chair, to indicate that the workforce adjustment directive was applied. I engaged a public service staff relations advisor to make sure that this was done correctly. That was done, and she was present at the meeting where Ms. Revine received her letter.

The other thing that I wanted to clarify is that when John Hartin came into the organization, it was to replace Peter Hooey, a different director. It wasn't to take on the work that Ms. Revine had done.