Public Accounts Committee on May 13th, 2008

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Then the question arises, in the eight requests that were made.... The cover for this particular process was provided in the contract request form, in part 1(e), and I'll table this particular document. It asks whether this work could be performed by an employee. What it states is that “There are no employees with the required skills and expertise.”

What's particularly worrisome is that someone has taken the time to write in the margin--obviously someone wanted it on the record, it's handwritten--“On advice of Mike to issue contract”.

You've just told us and indicated to us that you feel that there are individuals in your communications branch--there are 60 individuals--who are highly qualified, who could do this. Yet in the contract request form it clearly states that there are no employees with the required skills and expertise.

[Robert Wright]

I'm very proud to be the Deputy Minister of Finance. We have some great employees with all sorts of skills, but there's no employee on communications who I would let work in the minister's office on the political design, defence, and preparation of a budget. That's a political function. It's in the minister's office, where there are exempt staff, and we connect to them in a supportive way.

The budget was let from the minister's office for political support. And no, departments don't do that.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Mr. Wright, on January 22, 2007, following a meeting with the minister's former chief of staff, Mike Giles, from your department, wrote to Mr. McLaughlin and told him, with reference to the pursuit of tailoring the contract for Mr. MacPhie,

Communications is a fairly widely available commodity, and therefore, it would be difficult to come up with a reasonable rationale that would allow you to proceed on a sole-source basis.

It goes on to warn Mr. McLaughlin that a contract of this nature typically undergoes significant scrutiny.

[Robert Wright]

That part of it was certainly right.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Does that indicate that the first part is not?

[Robert Wright]

No, it's correct. I think there was an initial meeting, and Mike gave the same response that he would to a department official or someone from the minister's office who was seeking to do this sort of thing, to advise of the options available and the pros and cons at a very high level.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

So you're now trying to provide a reasonable rationale, which he indicated at that time was not available for--

[Robert Wright]

I'm not trying to provide that. I think Mr. McLaughlin provided that. The onus was put on him. He's the one who was delegated authority. And the message to him early on was that if you're going to do something other than a competitive process, you'd better justify it well.

[The Chair, Liberal, Shawn Murphy]

Okay.

Mr. Wrzesnewskyj, your time is up. We're going to move on right now. Thank you, Mr. Wrzesnewskyj.

Thank you, Mr. Wright.

Monsieur Laforest, seven minutes.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chairman.

Mr. Wouters, you said in your opening statement that an overarching statement of principle on procurement allowed you to take further steps and follow up with respect to the Federal Accountability Act. You state the following:

[...] an overarching statement of principle on procurement that commits the government to promoting fairness, openness and transparency in the bidding process has been incorporated into legislation through the Financial Administration Act.

Is anything provided for cases where there was no call for tenders despite the fact that there should have been? The act states that contracts above $24,999 should be put out for tender. Pursuant to the legislation, there should be transparency in the bidding process, but is there?

[Wayne Wouters]

When it comes to the contracting policy or the regulations of the Treasury Board policy, there are a number of conditions that apply. Departments are given certain authorities to contract up to a certain limit, and that depends very much on the nature of the contract. For example, the Department of National Defence has much higher authorities than other departments.

When it comes to sole-source contracts, basically departments, or in this case a minister's office, have the authority to enter into sole-source contracts up to $100,000. They can also make one amendment up to an additional $50,000. In this case, when you look at those authorities, you'll see that essentially this contract was in the authorities. Now, the minister has to ensure, or a department has to ensure, when letting the contract, that they comply with the conditions of a sole-source contract.

Overall, that is the way the contracting policy works. If there are contracts over a certain limit, then they must come to the board for approval.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Section 16.4 of the act states:

(a) the measures taken to organize the resources of the department to deliver departmental programs in compliance with government policies and procedures;

Are you stating that the $122,000 contract is not a breach of the applicable administrative regulations?

[Wayne Wouters]

What I've said is that the minister had authority to enter into a contract up to $100,000. In exercising that authority, the minister has to ensure, if it's a sole-source contract, that the bidding process is required, except in four circumstances where a sole-source contract can be provided. One is that it must be a pressing emergency--for example, an ice storm, where the government has to move very quickly. In that case a department or a minister's office can enter into a sole-source contract up to $100,000. Another is when it is low value. As you know, for under $25,000, sole-source contracts are allowed. Another is when it is not in the public interest to do a bidding process. That's normally for national security reasons. Finally, it's allowed if only one person is felt to be capable of performing the work. That's usually linked to intellectual property.

So in exercising that authority--

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

I would like to continue in the same vein.

I have a question for Mr. Wright. Essentially, the secretary of the Treasury Board Secretariat just told us that there are four possible exemptions that could apply in the granting of a $100,000 contract. According to the legislation, Mr. Wright, you are the accounting officer, and if there is a disagreement with the minister in any particular case, you must ask for advice from the secretary of the Treasury Board Secretariat. You did not do this, from what I gather. Would this mean that you agreed with the minister as to the granting of this contract?

How could you justify, at $122,000... Was it an emergency? The contract was not under $24,000. You also stated that it could have been done by someone in-house. How can you explain that a contract such as this one, of a value exceeding $100,000, in fact worth $122,000, was granted without a call for tenders, despite the fact that in all probability, the act does not provide exemptions for this type of case?

[Robert Wright]

That is a key point for our review.

I think I will just give a little context for it.

First of all, as the accounting officer, I make sure that I have adequate controls for the entire budget of the Department of Finance, including the review and accounting for the minister's office. The budget of the minister's office is not managed by public servants, and the people in that office are not accountable to me. The guidelines from the Privy Council Office and the Treasury Board minister are very clear in that regard.

Just to step back from this contract, and further to the comments from your colleague from the Liberal Party, the minister's office wished to engage in a contract above $25,000. They asked about the rules to do that, and were given a high-level response from Mike Giles, which is the same advice we would get within the department: this is what you should consider as you are going forward; there is no law there, but these are the guidelines for how it should be done. That was the advice given.

Now, the question was, is there something unique about Mr...? And this is a judgment, by the way, delegated properly to the chief of staff of the minister to make. The judgment was: was this unique, and should there be a request for proposals?

Well, it is quite unique: you don't go to the public with requests for proposals to ask somebody to come in and work in a minister's office at budget time to manage the political interface with others. That was a key factor that the person responsible and accountable, David McLaughlin, considered. It's the same consideration. The department itself has had some direct contracts above $25,000 with individuals for personal services. It's a consideration that we've made, and it's a consideration of judgment.

Following the rules of the Treasury Board and the Privy Council, the person authorized to make that judgment was the minster's chief of staff. He sought some advice on some parts of that contract, the department reported it, and he made his decision. And there was no difference between me and the minister in this regard. I did not discuss this with the minister, and he did not discuss it with me.

[The Chair, Liberal, Shawn Murphy]

Monsieur Laforest, thank you very much.

Mr. Williams, for seven minutes.

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

Thank you, Mr. Chairman.

I noticed that neither of you acknowledged in your opening statements that you are accounting officers who are accountable before Parliament for the administration of your departments. So let me ask you, do you both acknowledge that the Financial Administration Act delegates to you, as deputy ministers, the administration of your departments?

[Robert Wright]

Mr. Williams, I have acknowledged that to you in this committee before—and before the act existed. We're ready to be accountable for our administration.

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

And, Mr. Wouters, do you acknowledge that responsibility?

[Wayne Wouters]

Yes, I do.

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

So we're talking about your responsibility for the administration of this contract. While you seem to put it off to the minister's office, and say these were not your staff, the rules still apply to them, and you administer the rules.

Is that correct, Mr. Wright?

[Robert Wright]

Well, there is a very big difference between interfacing with the minister's office on their administration—

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

No, no. My question was do the rules apply to the exempt staff in a minister's office?

[Robert Wright]

Do the rules apply to the exempt staff in a minister's office? Right, these contracting rules apply to the exempt staff in the minister's office.

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

So they can't say they're political, so the rules don't apply to them?