Evidence of meeting #66 for Public Accounts in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rcmp.
A recording is available from Parliament.
4:25 p.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
How could you be satisfied when you had not verified that information against other suppliers?
June 12th, 2007 / 4:25 p.m.
As an Individual
I was satisfied. If Mr. Koziol or any others were not, they should have brought to my attention that we should check with others. No one brought that to my attention.
4:25 p.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Your satisfaction didn't amount to much satisfaction for the RCMP members, given that the estimates Morneau Sobeco provided were off by about $6 million. Morneau Sobeco estimated in the range of $2 million as a cost for outsourcing pension fund administration and those costs accelerated to almost $9 million.
4:25 p.m.
As an Individual
They were just that: estimates. Until such time as we saw the bids, we really didn't know what the total value of the processes and cost would be. We also included--
4:25 p.m.
As an Individual
Finance had changed a lot of our requirements. Originally cheques were to be issued by an outsourcer. They changed it, and it had to be done through Public Works. That probably cost us over $1 million. We had no financial framework in terms of financial officers. When I asked for a chief financial officer for the pension plan and a group of people, they authorized a few, maybe two--
4:25 p.m.
Conservative
4:25 p.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
You just told us that you got an estimate from only one source--the source that ultimately became the contractor. The cost went 300% over budget.
In retrospect, do you acknowledge that it might have been a good idea to shop around and ascertain if the estimates of the future contractor were in fact accurate?
4:25 p.m.
As an Individual
I thought they were accurate at the time based on the information we had given.
Just for another piece of information, the first estimates for Public Works to take on the function they had been asked to take on was over $70 million. That was way beyond what we paid Morneau Sobeco. The first estimate from Public Works to take on the function of RCMP pensions was over $70 million. I don't believe we were over $20 million transition costs.
Public Works ongoing costs, I am led to believe, are higher than Morneau Sobeco's ongoing costs. So if and when they chose to move to Public Works, I would suggest the cost will be significantly higher. This is information I have received.
4:25 p.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
I have a question for Mrs. Pell.
Morneau Sobeco was a limited partnership in 2001. Is that correct?
4:25 p.m.
Conservative
4:25 p.m.
Morneau Sobeco
Offhand, I don't know exactly how many partners there were in 2001. I could get that information for you.
4:25 p.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Can you please table the names of the partners in that organization in 2001? Do I have that commitment from you?
4:25 p.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
We have that commitment.
Was former defence minister Doug Young involved in any way in Morneau Sobeco?
4:25 p.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Can you explain why the costs accelerated so far above the estimates that your organization provided to the RCMP?
4:25 p.m.
Morneau Sobeco
First of all, the costs that were in the Auditor General's reports were not our fees; they were our fees plus other costs.
4:25 p.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
That's not the question, though, because I'm talking about the cost of outsourcing. Your company gave projected costs for outsourcing. Those estimates were dramatically exceeded when the outsourcing actually occurred. Can you tell us why?
4:25 p.m.
Morneau Sobeco
I can only speak to our fees per se. I cannot speak to the other internal costs that the RCMP decided to take on that we were not aware of.
Our fees did increase, and as I said before, they're all public within Public Works. The main reasons were either change in scope.... Mr. Crupi mentioned one of them. There was also a significant difference between the volume of the population--the estimated transactions that were in the bid--and what happened in reality. So there was a significant difference between those two assumptions. There was also other work that was provided that was not part of the original outsourcing requirements.
4:30 p.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
I have to say that none of those explanations justify a 300% increase in costs--unless you were misled on the assumptions at the outset, in which case we'd like to know by whom you were misled. But right now we have a situation where your organization was the only one that was asked to provide estimates and ultimately won the contract to carry out the plan, for which your company had been the ultimate proponent. That looks suspicious to us from the outside.
Mr. Gork, can you tell us why the Ottawa Police investigation was not allowed to investigate the Morneau Sobeco and Great-West Life activity with regard to the pension and insurance fund? Why was that part of the investigation not allowed to go ahead?
4:30 p.m.
A/Commr David Gork
That wasn't part of the original investigation. The investigation was to deal with the pension fund, not insurance for outsourcing. If an issue comes up, then you need another team to start that investigation. You just can't carry on with the same team forever and a day. We had a mandate and we were working within that mandate.