Public Accounts Committee on June 4th, 2007

[Kim Casey]

My name is Kim Casey and I am the president of Casey Computing Solutions Inc.

After working for approximately 10 years for Indian and Northern Affairs, I moved to the consulting industry and spent seven years at various levels in that field before we commenced our own company in 1991.

While my husband and I are owners of this company, we still bid ourselves out on contracts and, when successful, fulfill the work for which we bid. In addition, we bid on requests for proposals, putting forward various professionals who are associated with our company. We have varied between 15 and zero placements at different times in our company history.

Both my husband and I spend most of our time working on our own contracts for clients in addition to running our consulting company. Contracts we enter into can be amended by the client in a number of ways by shortening the time, by cancelling the contract, by extending the contract, and/or by changing people or adding people, depending on the terms of the contract.

I wish to respond to the false allegations recently portrayed in the media, which stated that “Kim Casey added her husband to the contract at a cost of $675 per day, a move that drove the contract cost to the RCMP up by 25%. Casey didn't have the proper approval to add her husband.”

This statement is false. I do not have, nor have I ever had, the authority, power, or facility to amend, extend, or vary a contract. My husband Pat had already been on a contract working with the RCMP for over a year at a rate of $675 per day. His contract was due to expire, and the client had a requirement to continue his services.

The client's procurement person worked with the contract authority, and they determined that another existing contract with our company would be amended to include Pat's services at his current rate, and there was a further amendment to adjust the value. I believe this procedure conforms to the government's contracting rules and regulations. These amendments were signed off by a director at the CAC at the time.

The media obviously twisted the facts to make a sensational story, or they didn't understand.

I want this committee to understand that we conformed to the requirements for requests for proposals and statements of requirement in regard to the RCMP work. Qualified people were proposed, and all requirements were addressed. We won the bids based on these criteria. Contracts were awarded, and the contracting authority ranged from the director level all the way up to the Minister of Public Works and Government Services Canada. To the best of my knowledge, there were no irregularities, and from my perspective, everything was done according to the rules.

Of the people we proposed, all of those whose services were used--including Pat and me--worked very hard and long hours, often on nights and weekends, and produced an extremely large volume of work.

In my opinion, all of the negative statements made in regard to Pat and me were because of the complicated matters involved and a misunderstanding by those making the wrong statements. I am very proud of the work that we did on behalf of the RCMP in meeting their requirements on very tight deadlines.

[The Chair, Liberal, Shawn Murphy]

Thank you, Ms. Casey.

I understand, Mr. Crupi, you have a brief opening statement.

[Dominic Crupi]

Yes, thank you.

This is my third appearance before this committee. Once again, I would like to reaffirm that during my time as a director of NCPC, briefings, presentations, and status reports were all provided to senior management, division representatives, advisory committees, etc., on a regular and ongoing basis. I did not ever knowingly or purposely bypass or circumvent or advise anyone to bypass or circumvent any processes or approvals. I did not threaten any individual with losing their job. I am not a procurement or HR expert, nor have I ever claimed to be. I am a payroll system expert.

At no time was there any collusion with CAC or individuals from CAC. At no time during my time as a newly appointed director did I ever receive any formal training from the RCMP in regard to financial authorities, staffing, or contracting processes, and therefore I had to rely on the guidance of experts in those fields in the RCMP, RCMP management, and those individuals and employees around me.

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Crupi.

We are now going to start the first round.

Mr. Wrzesnewskyj, seven minutes.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you, Chair.

[The Chair, Liberal, Shawn Murphy]

I'm sorry, there's another opening statement. I didn't know that. Mr. Pat Casey has an opening statement.

My apologies. Go ahead, sir.

[Pat Casey]

My name is Pat Casey. I've had a successful career for over 30 years working in the high tech and consulting industry. I have significant experience in business analysis, systems analysis, risk analysis, project planning and development specifications. I worked as a consultant with Revenue Canada, HRDC, Industry Canada, Public Works and Government Services Canada, and in private industry for Canada Corps., IBM, Nisha, and others.

For over three years, I worked diligently to produce thousands of pages of requests and required documents for the RCMP. I worked hard and I produced what was requested under the RCMP's directions.

I'm only going to respond to two issues that Staff Sergeant Frizzell read in his May 29 testimony.

First is the question of my involvement in Morneau Sobeco's being retained to administer the pension and insurance plans. Pension administration was put out by public tender under a request for proposal published on MERX. Morneau Sobeco was successful in that bid. I understand that Morneau Sobeco required one year to organize the start of pension administration. I was not involved in any way with the development of the request for proposal or its evaluation in regard to pension administration.

On a separate matter, although somewhat related, it is my understanding that the RCMP was dealing with Great-West Life on or around 1995 in providing some of the administrative functions for insurance. Great-West Life was then requested by the RCMP to examine taking over full responsibility for the administration of insurance. I was not there at that time.

One year into preparing to take over the insurance administration, Great-West Life advised the RCMP at a meeting with my superiors and me, in December 2001, that because they had recently taken over London Life Insurance and Prudential Life, they had decided they no longer had the resources to complete the insurance package of the RCMP within the timeframe demanded. Great-West Life explained that the resources they had would be required for the amalgamation of the three different insurance companies. They advised the RCMP that they would need approximately five years to implement the insurance administration required by the RCMP.

We were directed by my supervisors to do two things, amongst many. One was to cancel upcoming meetings in order to coordinate analysis of a business case, to examine the costs and benefits of the system as it was at that time, to analyze the proposed system of Great-West Life with a five-year delayed timeline, and to analyze the costs and benefits on a proposal planned by Morneau Sobeco with a delayed timeline of one year. Other companies were considered but rejected, because they could not meet the stringent requirement of the security of data demanded by the RCMP.

This evaluation was undertaken and completed by Liz Valentine, Garry Roy, and me, from information gathered from numerous sources.

I invite the committee to read the whole document rather than the two or three pages that I believe you were referred to by Staff Sergeant Frizzell. If you read this complete document, I believe you will have a better understanding of the magnitude and complexity of the dramatic changes that were taking place.

The study compared the costs and benefits of the various solutions described above from information submitted to the RCMP. The RCMP felt there was an advantage to utilizing Morneau Sobeco's plan because they had in place much of the information that would be utilized by insurance administration, due to their preparation for taking over pension administration.

Second, I was requested to prepare an option analysis for contracting insurance administration in light of the recent decision of Great-West Life in regard to the timeline. This option analysis was done in a coincidental timeframe to the above referred report.

In the option analysis, I reported, from information received from the RCMP, four options, one of which was the recommended option to contract Morneau Sobeco following an ACAN tendering process. I considered three other options: tendering by request for proposal, amending the pension administration contract with Morneau Sobeco, and contracting directly with an administrator through the RCMP insurance committee.

The RCMP was working under a major deadline in regard to its insurance administration as it was directly linked to the pension administration project, which was being moved to Morneau Sobeco as of April 1, 2003.

I once again ask you to read this document, which I'm sure would have been provided to you by Staff Sergeant Frizzell, but may be overlooked in the volume of materials. I at no time explored the option of Morneau Sobeco being a subcontractor of Great-West Life, nor did I ever recommend it.

I'm concerned about the contents of the business analysis, since we were given costs to be made of a confidential nature. May I ask you, Mr. Chairman, to order me to produce this analysis of a business case, to protect me?

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Casey.

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

Mr. Casey referred to two documents, and I think they should be tabled since he made reference to them. I guess Staff Sergeant Frizzell made reference to them, saying they should be actually tabled here and translated, if required, and made available to all members.

[The Chair, Liberal, Shawn Murphy]

I thought we had them already.

We don't have them. They will be translated and tabled.

Mr. Wrzesnewskyj, seven minutes.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you, Chair.

Congratulations, Mr. Guimont.

My question to you is this. When was this KPMG report first requested by Public Works--the original report, because there were several of them?

[François Guimont]

I'm looking here, and I will also be relying on Mr. Minto to help me. This would have been back in.... I'm looking at a chronology, just to be accurate here, obviously.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Because of the time limitations, if you don't have that handy, what I would request is this. In your opening statements, you said you've reviewed a number of steps: the hiring of KPMG, revoking of CAC's contract team authority, the separation of consulting and auditing, and then taking disciplinary action against a number of the employees. If you could undertake to provide us with dates and timelines on that, it would be quite helpful.

[François Guimont]

I will do that quite gladly.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you.

I'd like to move on to the contracts that Casey Computing Solutions won. In 2002 there were six contracts. I'll separate them out into two sections. The first five were all contracts under the approximately $85,000 NAFTA limit, which otherwise would have required a very fulsome tendering process. So there is a pattern that all of these contracts were beneath those stringent requirements, and when we look at that KPMG report and run through the contracts—and I'll just highlight a single point on each—on the first contract, number 560-3037, the KPMG report states, “The contract winners decided before request for proposals”. Obviously, Casey Computing Solutions was the beneficiary of that process.

A month later, the second contract, 560-3038, appeared to be a contact for work previously done by the same people hired by Casey Computing Solutions, work they had previously done for the RCMP. Once again, Casey Computing Solutions was the beneficiary of that.

On the third contract, 560-3089, Mr. Brazeau stated that it was not cost-effective to solicit bids at that time. Once again, Casey Computing Solutions was the beneficiary of the third contract.

On the fourth contract, 560-3138, there was only one bid. Casey Computing Solutions was the beneficiary of that one.

On the fifth contract, 560-3261, perhaps I'll just read a few parts of what KPMG had to say in their report: “The scoring evaluation appears to have been done solely by Mr. Brazeau”.

It goes on to say: “We noted a number of instances where the pen marks would appear to indicate that the scoring was changed for the various bidders. In fact, there are two instances for the second highest bidder where the scoring appears to have been reduced”. That begs the question of why that perhaps happened.

And it goes on to note: “We note that the second highest bidder proposed a per diem of $585 versus Casey's proposed per diem of $1,025”.

We've also heard testimony from Mr. Guimont's predecessor that as far as he was concerned, this contracting was rigged. Those are pretty harsh terms he used.

But all of those were small contracts, within five months; they were all under the $85,000 limit. But then we hit the big bonanza. Contract 560-3261 was a contract with an amended value just shy of $3 million, and when we look to see what happened there, we find that only one company bid: Casey Computing Solutions. They had done all of the previous work required. They had done some of the work that was part of this bigger contract.

So my question to you, Mr. Casey is, are you aware that you were the only bidder on this contract? Or perhaps your wife would prefer to answer.

[Kim Casey]

Yes, as the president of the organization, I am the one who was interviewed by KPMG and I was not aware up until that point of time when I was interviewed that we were the only bidder on that contract. During the interview I was asked that same question. I told them at that point in time that I did not have knowledge of that.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Okay.

Mr. or Mrs. Casey, did you ever provide hockey tickets to Mr. Crupi?

[Kim Casey]

Yes.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

How often?

[Kim Casey]

I don't know; it was about five or six times.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

So in your opening statement when you referred to the many nights of hard work as well, would that perhaps be included in there?

[Kim Casey]

No.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Mr. Crupi, what other benefits did you receive beside hockey tickets from Casey Computing Solutions?

[Dominic Crupi]

Those are all the benefits I can think of, sir.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

That you can think of.

And if your memory were jogged about other potential benefits, what might you think of?