Public Accounts Committee on June 8th, 2006

[David Christopherson, NDP, Hamilton Centre, ON]

I appreciate that. That's what I'm looking to hear, and it's why I didn't launch an attack; I asked a question.

[Tim McGrath]

If you go back to the exhibit itself, it says “may cost the Crown”, because we have a series of options we can exercise, including our option to purchase that building. At the end of year two of this lease agreement, we had the option to buy the building. There was no funding available, but the landlord didn't know that. The landlord had put a five-year mortgage in place and was facing a penalty should we have exercised our option.

In return, we negotiated a lower price on our option to purchase in 2008, which will basically put us in the very same financial position as our original analysis of purchasing the building at that point in time. If we buy the building in 2008, the Crown will not suffer a $13 million loss and will actually be in the very same position as if we would have purchased it after year two of the option. The reason why we didn't purchase it after year two was because we wanted to let the warranty period go on this new building for all the new systems and everything that was installed. We felt it was better for the landlord to take responsibility and accountability for the entire warranty period, and then the options started. We have an option to buy in year two, year five, year 10, and finally at the end of year 15.

[David Christopherson, NDP, Hamilton Centre, ON]

If I understand correctly, you're suggesting that the option you have in 2008 will put you exactly where you would have been, the best-case option, according to the analysis provided before the decision was taken.

Do I have that correct?

[Tim McGrath]

That is correct.

[David Christopherson, NDP, Hamilton Centre, ON]

Very good. Would you be good enough to provide me with a copy of the original investment analysis report and the subsequent report, showing the sums that establish what we just talked about here?

[Tim McGrath]

Yes, I will.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you very much. I appreciate that.

Number two, I have a question on something the deputy minister said. And I'm doing something we don't usually do, which is ask questions we don't know the answers to ahead of time; I don't know the answer, but it jumped out at me.

Mr. Marshall, you said, “We are enforcing a tighter space allowance for public servants and a less expensive fit up package than previously allowed.” Can you just expand on that for me, on what it means?

[David Marshall]

Yes, I will, Mr. Chairman.

The utilization, just before we began our program, of space in the public service was an average of 21.4 square metres per person. We have established a target to bring that down to 18 square metres per person, and that target was established from understanding what other industries--banking, insurance, and other large employers--provide for their employees. We have steadily been moving the federal government down to that level, so as we reach it over the next few years, it will represent a 15% reduction in the space we use. At this stage, we have achieved a reduction down to about 20.5 square metres, and that action by itself results in about $40 million a year of savings to the federal government, and we're going to move that down further each time there's a new building or move.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you.

Your standard is the rest of the private sector, and, let's be honest, their purpose is to save money. That may be a good standard by which you can make money, but I have to admit, I'm more concerned about how much space we're forcing people to work in. Can you tell me what kind of health and safety standard you went by, and ergonomic standards, maybe a joint health and safety committee...? I just want to establish that we're not unilaterally forcing people to work in squirrel cages so that we can save money on office space. That's where I'm coming from, so if you could help me....

[David Marshall]

Absolutely. We have had extensive discussions with unions. I might say that the Auditor General's Office conforms to the 18 square metres of space. We have now several departments in that space and they feel very comfortable in it. It's a question of how the layout is organized. There is much better understanding now of lighting and ventilation and so forth, so we are able to take advantage of all that and still provide good space.

[David Christopherson, NDP, Hamilton Centre, ON]

Again, I don't really know the answer to this question. I assume, then, from what you're saying, there are no grievances, there are no current health and safety issues around this. This is just doing business and everybody's cool?

[David Marshall]

Right.

[David Christopherson, NDP, Hamilton Centre, ON]

Very good, thanks.

Moving, then, to the issue--and this keeps coming up over and over, and it's getting to be like a broken record, but here we go again--on the review of where we've been in the past and are still having outstanding problems. The Auditor General in 2002 said, and this was out of her 2002 report:

The Branch needs to make better use of financial and operational information and improve the way it analyzes options, particularly those with longer-term implications. It has difficulty accessing cost information and needs to do more work on creating cost information by client.

Again, it's very similar to what we've seen in this audit, and our briefing notes indicate that similar findings were there in 1994 and 1991, so we seem to have a problem. Here's what I'll ask you. I know you're making assurances, everything's going to be wonderful, and you're going to fix it, and you have lots of plans, cool, but what I'd like to know is exactly what kind of deadline are you putting to that? Why should we feel comfortable that you're actually going to do it this time when there are at least three previous Auditor General reports that show this remains an unsatisfactorily resolved issue?

[David Marshall]

I'm not going to stand here and tell you that we're going to be perfect in the next quarter or the next two quarters. What I can assure you is that of something like the six recommendations in the last audit report from which you quoted, two related to systems, and we have made very good progress on all the others, especially issues like creating a planning framework, understanding the long-term needs of departments, and analyzing options before a decision is made. So on those we have made very good progress, and I believe the Auditor General is prepared to acknowledge that on our behalf.

Where the Auditor General has called us to account is that in the very many complex systems we run, we do have good information on individual buildings--we know what things cost--but they've described to us that we do need better information on what the original budget was versus what things finally cost, although we do get approvals each time when we have to spend some more money. As well, they've described to us the advisability of having portfolio-wide type of information to analyze, and we do agree with that as well.

Systems can be very powerful. They can also be very expensive and very complex, and we can waste a lot of money on them. We've taken a lot of time to understand exactly what our operational needs are as we get into these various actions that we're taking. This fall we're putting out a tender request, not to build our system but to acquire property systems that might exist--we believe they do exist in the industry--so that we will be able to take advantage of them without having to go through a long and complex development process.

So we're taking this very seriously. I can assure you that you will see those actions coming, and we will, of course, be accountable to you. But we're working hard at it. It's just that there are thousands of people and systems, and so forth, so it can't be solved very quickly. But I expect that over two years you will see good progress

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Christopherson and Mr. Marshall.

Mr. Bains, for eight minutes.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Thank you very much, Mr. Chair.

I want to ask a few questions with respect to the new RCMP complex that's being proposed. The JDS Uniphase complex is the one I'm referring to.

I know you've talked about this briefly with some of the other members. I just want clarification. Did Minto Developments submit an unsolicited proposal? I know this question was asked before. Was it unsolicited?

[David Marshall]

Yes, it was.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Okay. So there was no evidence; there was no bidding process whatsoever. Is that correct?

[David Marshall]

That is correct.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

About three years ago, the Department of National Defence offered to buy the JDS complex for about $65 million, and then it backed off. Subsequent to that, Minto bought it for $30 million. Is that correct?

[David Marshall]

Yes.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Okay. My understanding is that currently there's a bit of confusion, because in the Senate we have the minister saying one thing and in the House we have the parliamentary secretary saying another thing. So there's a bit of confusion in terms of terminology of where this particular project is in the purchasing cycle.

I would like your assistance on this. Is there a memorandum of understanding? Is there a letter of intent? Where is the current process at, and what is the deadline associated with it? If there's a memorandum of understanding or a letter of intent, what's the deadline associated with that?

[David Marshall]

There has been a letter of intent signed with the vendor, Minto, on January 10. The option we have with the vendor expires on June 15.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Within the next few days.

[David Marshall]

Yes, so a decision must be made--