Public Accounts Committee on March 24th, 2009

[François Guimont]

Thank you, Ms. Fraser. We didn't wait to conduct a review. The Auditor General told us that it was important to determine whether there were any other potential conflicts of interest. So we essentially took a sample. Moreover, the person responsible for the file is here. We started with 500 contracts. Then we did a review of 50 of them. I emphasize that we used review parameters, as opposed to audit parameters. I was pleasantly surprised to find that, as I remember it, for at least 95% of the contracts, there were no third parties of a company. That's a good thing. I wanted to know whether that was common or exceptional. That wasn't very common. The people who prepare the contract specifications are often departmental people.

In addition, we knew that a consultant had been involved in one way or another in the specifications or part of the work on 28 of the 50 sample contracts, if I remember correctly. The analysis done revealed no conflict of interest. Measures had been taken to minimize the number of conflicts of interest or to ensure that there weren't any.

Lastly, I would like to emphasize that the Treasury Board policy permits a consultant to assist someone in preparing the specifications for a contract, provided certain measures are taken. Those measures essentially consist in full disclosure of any conflicts of interest. There is very clear documentation on the Treasury Board's expectations when someone decides to ask an outside third party to assist these people in preparing the specifications of a contract.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

I have another question on the employer-employee relationship. Can anyone tell us how many employees are hired by subcontractors? We're told that 14,000 persons work for the department. How many in total work for subcontractors? Do we have an idea of that?

[François Guimont]

I don't have that figure, but I'll be pleased to try to find it for you. We're going to see what the limits of my system are. I understand your question: you want to understand the ratio.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

That's correct.

[François Guimont]

I'd like to say briefly—

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

I simply want to finish my question.

[François Guimont]

Go ahead.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Indeed, it's a matter of ratio, but we also have to look at the terms of the contracts. We're talking about conflicts and significant risks. The Auditor General's report states, and I quote:

PWGSC has developed practices to reduce the risk of creating an employee-employer relationship in awarding a contract; however, the department does not formally monitor whether the same consultant had been retained through a series of consecutive contracts within branches.

In the meantime, have any checks been done of labour laws and the collective agreements of professionals in the federal public service? There is a high risk of having an employer-employee relationship, and that's important. I want to emphasize that because this is an environment that I know very well. The terms of these contracts become a major and significant risk. I'd like to know the terms of the contracts or whether the risks are significant, as is mentioned in the report. It's important to know them, so that the risk can be thoroughly analyzed.

[François Guimont]

Mr. Chairman, I can give you some statistics on that. I don't know how much work that will require; so it would perhaps be a little unfair to promise that you'll be receiving them in one or two weeks. I know what you want. I'm going to take steps to provide them, and I believe that this information will be useful to me as well. We're on the same wavelength in that sense.

[The Chair, Liberal, Shawn Murphy]

Okay. You can file that with the clerk of the committee, and that will be distributed to all members.

Merci beaucoup, monsieur Desnoyers.

Mr. Shipley, you have five minutes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much, witnesses, for being here again. As my colleague said, it's refreshing to have a good Auditor General report and your comments about the significance of working closely with the Auditor General, to help go along with your action plan, your management plan, your procurement.

I'm new on the committee, and I think departments sometimes work in silos. I'm trying to figure out how we can transfer some of those comments, but mostly some of the action plans that have been put together. You can just change some of the wording. If they're development plans for departments, how can the government take those and transfer the ones we can use to other departments? Regardless of who we are around this table, we quite honestly want government to be looking after our public dollars. We're taxpayers also.

You have so many employees--14,000, I think. It was interesting for me to understand the sequence of events in procurement: the Treasury Board, the minister, and Public Works. The 1,700 trained people will also have jobs to do.

Mr. Guimont, you talk about a 9% turnover and the number of contracts that come due each year. I'd be interested in understanding how the contracts are awarded. That goes back to the assurance that we want to see public dollars spent well. What are some of the challenges your staff face in managing those contracts so there is accountability and transparency to the general public? We often just hear about the other side of it. We're spending so many dollars, so how do you make it accountable?

As we move into this next section and away from Public Works into our infrastructure, this is going to be a significant issue.

[François Guimont]

If you don't mind, Mr. Chairman, I will allow Madam Meredith to answer, since she is chairing the procurement oversight committee.

[Daphne Meredith]

Thanks very much, Mr. Chair.

To your first comment about the observation that often government departments can seem to be siloed, disconnected from each other, I think that can be the case. Our accountability to Parliament is quite separate.

But we do meet with colleagues. As one example, I chair a group of assistant deputy ministers who come from a number of other departments, small and large. We talk through issues of procurement, including in that discussion our best practices. So we do have some avenues--and through the Treasury Board Secretariat as well, committee work--where we have an opportunity to share best practices. So we're not completely isolated from one another.

In terms of the challenge--especially given employee turnover--of how you ensure a very high standard in ensuring fair, open, and transparent awarding of contracts and contract administration, I would point to, in our case, the creation of this framework, something that's logical and systematic, and something that, as an important component, has the guidance for individual employees who are involved in awarding contracts or administering them.

To my earlier point, we are ambitious in the use of our tax dollars, whether for getting the goods and services we need to run programs or whether for greening or SME involvement. Yet we really need to focus on ensuring that the way the contracts are awarded is fair, open, and transparent.

I will speak to our contracting officers and the process they go through to ensure that fairness is there. They are assiduous about ensuring that opportunities are publicly posted, in our case on the MERX system. They are assiduous about ensuring we have evaluation committees for defining the criteria that will determine who wins a contract and that the people chosen to participate on committees have no conflicts of interest. That's precious to us.

We need to make sure that each bidder is treated fairly, in the sense that we can't be giving privileged information to any one bidder. They're very careful about that. Any unsuccessful bidder is given the right to a debriefing after the award to ensure they understand the reasons they did not win. They're not given such a briefing before the evaluation is done, of course, because that might allow for bid repair. We have a highly professional and well-trained staff who ensure the rigour is done.

And then, of course, we have the posting of awards of contracts, according to the proactive disclosure policy of the Treasury Board Secretariat. All of that is transparent as well. There is a lot of rigour in place to ensure fairness, openness, and transparency.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Shipley.

Mr. Christopherson, five minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Mr. Chair.

I have a couple of matters, just to follow up on the body shop stuff. I'm curious. How much of a premium is there in hiring a contract person as opposed to hiring a staff person?

This is to the deputy.

[François Guimont]

I understand the question. I just don't have the answer. It's a very straightforward question; I just don't know.

Daphne Meredith, I don't know if you would have an answer to that.

[David Christopherson, NDP, Hamilton Centre, ON]

I would accept having something forwarded to me, Mr. Chair. I understand.

[The Chair, Liberal, Shawn Murphy]

Before we move on, he may not know the answer because he wouldn't know, necessarily, how much the body shop paid the people involved.

Are you able to give an answer, Ms. Meredith?

[Daphne Meredith]

Not a comparative answer.

From the Auditor General's report we have a sense of what some of the daily rates were for individuals on these contracts. As I recall, for some of the higher-end work it ranged from $800 to $1,100 per day. You'd have to do the math and figure out what the equivalent would be for a government employee. But then, of course, as Mr. Guimont pointed out, part of the reason for hiring those people is for flexibility, so that you're paying them only for the time you use them, not a full year's salary.

[David Christopherson, NDP, Hamilton Centre, ON]

No, I understand the principle of the extra; I just wondered what it was.

[The Chair, Liberal, Shawn Murphy]

Just to finalize that, could you get back to him with the information you have? All right.

[David Christopherson, NDP, Hamilton Centre, ON]

Thanks, Chair. I appreciate that.

Have you had many union grievances in this area--in other words, the union claiming that some jobs should be full-time rather than being contracted out? It's a natural tension.

[François Guimont]

I would say that the department has gone through, and is going through, a business transformation. We are going through a business transformation. I'll give you an example.

We used to do a lot of building maintenance. Now we have a contract with SNC-Lavalin ProFac. They carry out the work in our buildings. This was done in full consultation with our unions. It is working very well.

Frankly, on this business transformation that we're doing, I made reference to the 9% attrition we're going through every year. It's not only about shedding people, it's about transforming. But we try to offset the change in business delivery with attrition so that we don't impact individuals.

The second point I would make, and this can be tested, is that we have a very professional and very good relationship with our union folks. As to the number of grievances, I don't know if Madam Meredith has that, but I can get it for you. I understand it's specifically about the issue of professional services versus work that could be done by....

I'll look and see if I have the data, and I will provide that to the chair.

[David Christopherson, NDP, Hamilton Centre, ON]

All right. We'll wait to receive that, then.

Page 18 of the Auditor General's report, under 3.62, reads as follows:

In three cases, there was evidence that the incumbent contractors had participated in developing the search criteria or the statement of work for contracts that were subsequently awarded to them. This is a conflict of interest and does not comply with the policy that contracting be fair and open.

I've already acknowledged that there aren't huge systemic problems or trend lines. My question on this one was that when I read it, I thought, you know, given the complexity of everything you're dealing with and all the things you've done right, how can it be that something so obvious could happen when there are a number of steps here. There are a number of steps; it's not a one-off incident.

I know you can't give me a pointed one, and I give you the opportunity to walk me through the park because it's my last question. But I'm just curious. In such a complex department as you run, where--to repeat myself--so many things are so right, how could there be this kind of blatant...? In this sea of competency and professionalism, you have this one sore toe sticking out. How is that? Help me understand how you get examples like that when everything else is going so well.

[François Guimont]

Thank you for the question.

Mr. Chairman, I said earlier on that Treasury Board guidelines allow for the use of external help in putting requests for proposals together, or some assistance, for reasons of either workload or complexity. That's the point you made--complexity. It has to be done in a very structured fashion. This is where I think the OAG looked at this and felt that in this case, the way the people were involved was a conflict of interest.

In one case, there was a conflict of interest declaration made, but it was not to the right level. The Treasury Board provides a framework for that, and we did not follow that framework. The Auditor General picked that up, and she's right.