Public Accounts Committee on March 6th, 2008

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

You stated in your opening statement that you accepted the recommendation exactly as presented. Later on, in answer to Mr. Hubbard's question, you said that one of the things you always ensured was, have the rules been respected? Now, the rules were not respected in this situation. We know that, so we want to know why.

Ms. Cochrane was here the other day. She said they saw this as two transactions, that Place Bonaventure was a transaction on its own, and the extension of the lease in Place Victoria was perceived to be a new transaction, a sole-source contract.

This is totally contrary to all the rules. So why would you, first of all, ask if all the rules had been followed, and then find out that the rules had not been followed and approve it?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Williams, as I understand the rules pertaining to leasing in the Department of Public Works, it is indeed within the rules for a lease to be renewed with an existing landlord if there is a demonstrable economic benefit. The answer to that was, with the rent coming down and the space being less than originally asked for, there was a demonstrable economic benefit to the crown.

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

Yes, I can appreciate that, but the economic statement did not build in the fact that you are now paying rent on vacant space over at Place Bonaventure, which is part of the entire economic transaction analysis.

If you took the narrow point, fine, you can claim that. But the second thing is, why would you approve an extension of a lease where the landlord would not even provide access for people with physical disabilities, which is the rule of the Government of Canada?

[Ralph Goodale, Liberal, Wascana, SK]

The testimony before the committee indicates, as I understand it, that that is the one modification, the one fit-up, that was provided for, and that work was in fact done.

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

We have a letter on file, Mr. Goodale, saying that the landlord was not interested in doing that; neither was it available, and he wasn't even interested in doing that.

[Ralph Goodale, Liberal, Wascana, SK]

I will be happy to check the testimony, Mr. Williams, but three or four times, in the transcripts that I've read over the last two or three days, witnesses have said to the committee that the fit-ups required to properly respect disabled people were in fact done.

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

Here we have a situation where the landlord, Place Victoria, puts in a bid of $500-and-some per square foot. He finds out he's number four on the list, comes back and says, “Let me amend my bid down to $430 or $405 a square metre. Now I'm the lowest bidder. You don't have to do leasehold improvements, and so on and so forth. I win.”

Is that how the Government of Canada normally does business?

[Ralph Goodale, Liberal, Wascana, SK]

My understanding, Mr. Williams, is that it wasn't a case of the landlord saying that, but in fact the responsible officials within the Department of Public Works going to them and asking if a renegotiation of the cost was possible. And it turned out to be true.

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

We have total rules regarding contracting and tendering, Mr. Goodale, and they say that if somebody has the lowest tender, that is the one accepted, and of course we signed the lease with Place Bonaventure. But you can't go back to the existing landlord and say, “Now we know what the marketplace is paying, you can undercut it and stay where you are.” Those are not the rules of the Government of Canada, so why are you saying that you've followed the rules?

[Ralph Goodale, Liberal, Wascana, SK]

Indeed, Mr. Williams, that's not my interpretation of what happened here.

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

Is this how we do business?

[Ralph Goodale, Liberal, Wascana, SK]

No, I think you're twisting the interpretation.

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

I'm not twisting the interpretation, Mr. Goodale.

[Ralph Goodale, Liberal, Wascana, SK]

Both deputy ministers told this committee, and it's in the evidence, that if a favourable rental lease rate was not achievable at Place Victoria, then Mr. Drouin's request would have been turned down. But in fact it was negotiable, and both transactions--Mrs. Cochrane said two transactions--were successful.

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

I have to interject, Mr. Goodale.

You're using the word a “favourable” rent at Place Victoria; “favourable” means lower than the marketplace, the lowest of the bids.

[Ralph Goodale, Liberal, Wascana, SK]

Well, it's in the market range, as I understand it.

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

This is how you're trying to tell me the Government of Canada does business. Now we know the Government of Canada does not do business this way: by squeezing the landlord down because you have some bids from the competitor, saying they're charging x, so if you charge x less a few bucks, you can stay. That is not how the government does business.

As Mr. Christopherson says, there are some serious motivations here. Claude Drouin can interject with a letter, as pointed out, turn the whole system upside down, and you call this following the rules. By your own statement you said, to my first question asking if the rules had been respected...the answer, of course, is that by virtue of a letter from your colleague, the secretary of state who sits in cabinet with you, all the rules were turned upside down. So how can you tell us the rules have been respected?

[Ralph Goodale, Liberal, Wascana, SK]

In the first case, the fairness monitor would say, as I believe the testimony before this committee indicates, that the tendering process was properly done. Indeed a contract was signed with Place Bonaventure.

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

Well, I don't find—

[Ralph Goodale, Liberal, Wascana, SK]

With respect to Place Victoria, that was the existing space where the existing lease was in place, and the rules of the Government of Canada say that that can be renewed on a sole-source basis if there is demonstrable economic advantage to the crown, which there was in this case.

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

Not after the process of tendering.

Mr. Miller has the rest of my time.

[The Chair, Liberal, Shawn Murphy]

Mr. Miller.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you, Mr. Chairman.

Mr. Goodale, I don't want to waste any time.

First, when the decision was made that a reduced space requirement would work, when that decision was made, was that information handed to the winning bidder so that they could then adjust their bid? Yes or no.

[Ralph Goodale, Liberal, Wascana, SK]

That whole process started before I was minister.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Was it or not then? You're saying you don't know.