Public Accounts Committee on March 24th, 2009

[Sheila Fraser]

I'm not sure that's what he said. I think what he said is that they would rather be working on the projects--

[François Guimont]

Yes, working on the projects.

[Sheila Fraser]

--rather than bidding on contracts and doing all the contract administration.

[David Christopherson, NDP, Hamilton Centre, ON]

I'm sorry. I thought he meant they would prefer to be inside the department working on them all the time.

[Sheila Fraser]

That's why they work with these placement organizations rather than doing it on their own.

[David Christopherson, NDP, Hamilton Centre, ON]

Right, okay.

[François Guimont]

If I may, it's a very valid question. From my perspective, if you look at the department, our attrition rate is about 9% per annum, 9%. That's about 10%. Multiply that by five years. That's 50%, 12,000 or 14,000 people. That's a lot of people leaving.

The point I want to make is that we have a very comprehensive strategy to hire people, not massively, just to replace the people we need to do a good job. We're not only looking for young employees who are capable coming out of university; we also have a so-called mid-career entry program hiring priority. These mid-career people could be people who are in the private sector with five, six, seven, ten years of experience, and we would like to see these folks applying for our jobs through the competitive process. They are welcome to come.

I don't have the statistics right now for how many of these people we normally get, but our doors are not only open to the younger generation; they are also open to those people who have capacity and capability. Walking in, they may not know all the rules and procedures, but they have a working knowledge of what their responsibilities will be very quickly and they can be productive. That certainly is a priority for us.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Christopherson.

Mr. Saxton, for seven minutes.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Mr. Chair.

Thank you all for coming here today. I'm glad to see that my honourable colleague on the other side is not himself today. It was a pleasant change.

[Some hon. members]

Oh, oh!

[Andrew Saxton, Conservative, North Vancouver, BC]

It's not that you are not pleasant otherwise, David, but you're more pleasant today than I've seen for a while.

[Some hon. members]

Oh, oh!

[David Christopherson, NDP, Hamilton Centre, ON]

Take the shovel out of his hand, will you?

[Andrew Saxton, Conservative, North Vancouver, BC]

Now they are all in a good mood.

I'm pleased to see that we have a pretty comprehensive action plan in front of us here today. Thank you for providing that. The action plan lays out the department's response to the second part of the Auditor General's report dealing with the administration of contracts.

Before I get there, I want to briefly touch on the awarding of contracts, because I do believe this is a good-news story. In the past there have been major problems with Public Works, and it's very rewarding to see that changes have been made.

Looking back to your report of 2003, you had some strong words to say about the awarding of contracts, words such as “little regard for Parliament” or for the “contracting rules and regulations”. In this report we see, and I quote:

The tendering process was therefore conducted in a fair and open manner.

...

...we found that 96 percent of the contracts that PWGSC awarded on a sole source basis complied with the appropriate legislation, regulations, and policies; consequently, we concluded that they were awarded in a fair, open, and transparent manner.

That is a significant change from the 2003 report.

Auditor General, is it a fair assessment to say that we have seen a significant improvement with the awarding of contracts, and could you elaborate on this improvement?

[Sheila Fraser]

Thank you, Chair.

I would say we were very pleased with the results of this audit as well, which shows that Public Works is managing its contracts for professional services. The awarding of those is as one would expect, and they are doing it very well.

Reference has been made to the 2003 report. I would just caution that the comments we made were related to a very specific program, and in fact, in that report we indicated that one of the problems was that the program was managed outside the normal processes of Public Works. I don't remember the exact words, but we did say in the report that there were actually pretty rigorous control systems in place and that if the program had been managed through those systems and practices in that department, we questioned if the irregularities we found would have occurred. It is very important not to generalize the audit finding around the sponsorship program to the whole management within the Department of Public Works. We tried to be very clear at the time and since then that it was not a reflection of the way public servants in Public Works did business, and that was what in fact made it so unusual at the time.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

Now, with regard to the administration of contracts, you have recommended that PWGSC needs to “develop and implement a framework to ensure quality and compliance”. Are you satisfied with the contract management control framework as proposed by PWGSC, and does it address your concerns?

[Sheila Fraser]

Yes, Chair. As I mentioned in my opening remarks, we have been consulted and have reviewed the framework. We believe it addresses all of our concerns and, if implemented, should certainly deal with the issues that we found in the audit on contract management.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

Now I have a question for Mr. Guimont. First of all, congratulations on your gold star for awarding contracts.

Can you let us know the areas of the framework that have been completed and for which we can see results in a timely manner?

[François Guimont]

With your agreement, Mr. Chairman, I will ask Madame Meredith to answer this question.

The only point I would make on the gold star is that if I could put it in the bank and cash it in due course, I would appreciate it.

[Some hon. members]

Oh, oh!

[Daphne Meredith, Associate Deputy Minister, Department of Public Works and Government Services]

Thank you, Mr. Chair. It's my pleasure to answer this question. I'm doing so because I chair the committee in the department that oversees procurement. It's a committee that was established in 2007, and we are adjusting our activities as we determine the best way to approach oversight of procurement in the department, knowing how important it is to the department.

In the Auditor General's report, of course, the reference is made to more than a billion dollars in professional services contracting. But in total, we contract for about $2.3 billion in terms of goods or construction or professional services. It is obviously a huge area of effort in our department and therefore worthy of a good control framework.

I have a committee, as I mentioned, of which the ADMs responsible for each of the branches are members. That governance structure is an important component of the framework and has been in place since 2007.

There are several elements of this framework to which Mr. Guimont referred. One of them is a solid management information system. This is something we invested in heavily as a department—it's approaching $40 million, actually—over the past couple of years. We now have an SAP-based system that we call SIGMA. We feel it's a very high-standard system that allows us to impose financial controls and allows for proper materiel management.

Mr. Guimont referred to the training and control of delegations in our department. He said 1,700 people in our department who are given delegations have had the training and are certified to use them. That's a very important aspect of our control framework as well; it also is in place.

We have established guidance for our employees. This is an area in which we've been very active over the past several months, especially since we received the report, because we recognize that contracting is not child's play. It's complicated, for good reasons, given the money involved and the complexity and the need to derive the best value we can from taxpayers' dollars. If you counted the number of guidance documents in this area of government, you might be surprised. By my count, there are about nine statutes that relate to procurement or contracting, there are the contracting regulations, there are 15 or more Treasury Board policies or directives that relate to contracting or procurement. There's a lot of guidance, let's say, to the individual employee who is trying to put this together and manage well. We invested time and effort to do a good comprehensive guide that leads them through how to apply the rules and supports them in the process. We have checklists—tools to help them—that we've issued. We have approved this guidance. We have issued it in the department as a support mechanism and we are going to now be running training sessions for all of our managers across the country, starting in May on the west coast and in Ottawa.

Further to that, we also have a monitoring mechanism. At the beginning, at least, we will be doing a review of 200 contracts per year, 50 per quarter, reviewing the files to determine whether they have addressed some of the issues that were raised in the Auditor General's report. We will be reviewing the results of that monitoring in my committee on a quarterly basis, using it as a tool to measure how well we're doing.

So I believe we have all of the elements in place now to see continuous improvement in this area.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Saxton.

There are just a couple of issues I want to cover before we start the second round.

Monsieur Guimont, on the procurement ombudsman, can you tell the committee how it's working and what changes it has made in your particular department?

[François Guimont]

You've probably had the pleasure of meeting Shahid Minto, who was with the department before and through a selection process has become the ombudsman for the department. He has a team with him. He reports directly to the minister; he does not report to me. Administratively, he's part of the department, so we have a relationship through service level agreements for HR management, financial management, and things of that nature. I put emphasis on this because the ombudsman is truly an ombudsman, separate, reporting to the Minister of Public Works and Government Services.

With respect to his work, his mandate deals with contracts that are below the threshold of $25,000. He also has power and responsibilities to carry out investigations if need be. He has the capacity to do that as well. We meet with him regularly. I'm speaking a bit about his business, but we have quite an ongoing relationship because I can glean a fair amount of information from him, which is useful to me in my administration. He's been dealing with complaints. I don't have the numbers; it's not my line of business.

I must admit, Madam Meredith, I was positively surprised that he's not swamped with complaints, but he obviously has work coming his way. Frankly, for me, the ombudsman doing his work--as I say, he's independent--also allows me to be better in the work I'm doing.

One last point I would make, Mr. Chairman, is that his function, as per the Federal Accountability Act and regulations, does not preclude me from having a function to also resolve disputes, and I do have that. If you are an outsider, you can either access the department to get satisfaction with a complaint you have or go directly to the ombudsman and the CITT, if the threshold is there, etc. That's the way things are operating.

I would say, generally speaking, it has been very good. He's going to be, if I remember, filing his first report just before the summer, which will outline essentially what it is that he's been doing over his first year of mandate.

[The Chair, Liberal, Shawn Murphy]

Another issue I want your thoughts on, Monsieur Guimont, is the whole issue of risk acceptance and risk management. There have been many people in the last number of months, including Mr. Tellier and Mr. Mazankowski, making the comment that the public service, because of the advent of rules and ombudsmen, has become too risk averse, and as a result things are being gummed up, it's slow, things aren't getting done that perhaps should get done. It puts you in an awkward position. You come with a good report, everything is good, and congratulations...then you get other people saying that you're not making enough mistakes. I'm sure you're following this discussion very carefully. It is an issue and it has to be managed by you.

As the accounting officer, can you comment to this committee just how you view the whole issue of reasonable risk acceptance and proper risk management?

[François Guimont]

Yes, thank you for your question.

I refer often to intelligent risk-taking, which is essentially the point you're making references to. Mr. Chairman, in the department, because of the recent history around it, our people can be quite cautious, and frankly, they are cautious for the right reasons. We're dealing with taxpayers' cash. When it's not that, we're dealing with competitions, where people want to have a fair shake to access these contracts. Ideally, our people should be quite serious and they are serious about the business.

I find that if you want to create the right balance between intelligent risk-taking and risk management, Madam Meredith and I, with the framework we have, will create the conditions for people to feel more comfortable in assuming their responsibilities. Deep inside, I believe our people want to do the right thing. There will always be exceptions, and when they are caught we deal with them. Setting that aside, people walk in in the morning and they want to do a good job.

Often--and I think Madam Meredith said it--there are a lot of things coming our way, various acts and regulations, policies and procedures, and all that. This is frankly where I value the work of the Auditor General. I look at this as a recipe for me simply to apply the right ingredients and create what we need to do in order to get better. That's what the framework did. For me, risk--risk assessment, risk management, the issue of intelligent risk-taking--has to be taken in the context where people with the right framework will assume risk. It's just that when they don't know, they make mistakes, and then they don't feel good about it. Certain issues that were picked up in various files.... At PW they want to do the right thing, and when they know they've made a mistake they don't feel good about it. Our responsibility is to create the right conditions for people to assume the risk correctly, and I think we've done that.