Public Accounts Committee on Nov. 4th, 2009

[Terence Young, Conservative, Oakville, ON]

But there is a plan there. I'm just wondering, if it's not approved by government, would that prevent it from being implemented in an emergency?

[Sheila Fraser]

I think people are using it as if it had been approved. It's only really by approving it that the department then gets, if you will, the authority. Each department reports to its minister. One department cannot tell another department what to do unless there is some policy or plan in place. That's why the approval of this is really important.

[Terence Young, Conservative, Oakville, ON]

Thank you.

Do I have a little more time, Chair?

[The Chair, Liberal, Shawn Murphy]

One more minute.

[Terence Young, Conservative, Oakville, ON]

Thank you.

Madame Fraser, with regard to the Income Tax Act, I'm sure no one would disagree that taxpayers have a right to know how much tax they owe so they can determine and plan their lives and their business. Having run my own business for many years, I can sympathize with that. In fact, every year I think this is the year that I don't have to hire an accountant to do my taxes, and every year I say, no, I'd better not this year. You want to check because you're always afraid you missed one deduction, or that you're going to pay too much, and you're going to treat yourself unfairly, so you end up paying accountants. It's confusing.

But with regard to the changes you wanted to see, the technical amendments, I think it's important to note that they were introduced in November 2006--and your report says that in the footnote--and again in 2007. And I'm quite sure they will be introduced to Parliament again when the parliamentary calendar allows. When that happens, in your view, will that solve the problems that you identified in your audit?

[Sheila Fraser]

What I understand is that the bill that was introduced contained about 150 amendments, but there are at least 250 more that have not been presented publicly and for which proposed legislation has not been prepared. We were told by the departments that they want this initial bill. They've taken a process where the initial bill goes through and then they do the others. So there is quite a catch-up to do.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Young.

Thank you, Ms. Fraser.

That concludes the first and second rounds. I'm going to ask Ms. Fraser or Mr. Vaughan--we've been easy on Mr. Vaughan this afternoon--whether either of them have any closing or concluding remarks.

[Sheila Fraser]

Chair, I would thank the committee for their interest in the report. We look forward to future hearings on specific chapters.

[The Chair, Liberal, Shawn Murphy]

Mr. Vaughan, do you have anything to say?

[Scott Vaughan]

Thank you, sir.

[The Chair, Liberal, Shawn Murphy]

As you've heard in the motion, Ms. Fraser, we have picked at least four of the chapters that we will be holding hearings on, inviting the accounting officer of the respective departments. That will take place starting in December. We may be going beyond four, so we'll certainly be following up on your work and that of your office. Thank you very much.

For the next item of business, I believe Madame Faille has a motion to present. Do you want to do that today, Madame Faille?

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

I think we have enough time left to deal with this matter. I believe everyone has received a copy of the motion. For the benefit of the committee, I will now read it:

In the matter of the contract awarded to Brookfield Global Relocation Services in 2009 as part of the Integrated Relocation Program (IRP)—a program whose contracts were reviewed by the Auditor General and found to contain inaccuracies and not to be “tendered in a fair and equitable manner,” as stated in her 2006 report, which was supported by the Standing Committee on Public Accounts and welcomed by the Minister of Public Works and Government Services— That the Committee ask the Auditor General to conduct an audit of the Integrated Relocation Program (IRP) as of April 1999, including the tendering and awarding of the 2009 contract, and to present her findings to Parliament.

Mr. Chair, I believe the Auditor General identified a significant number of cases. She made us realize that the files do not always contain the reasons for the decisions made and that contract files are often incomplete, missing or subject to conflicts of interests.

Regarding this matter, the process was qualified as follows: “In 2006, Auditor General Sheila Fraser concluded in her annual report that the tendering process for relocation contracts was fraught with serious discrepancies and irregularities”. On August 18, 2009, it was announced that the contract had been awarded and that it was valued at about $150 million per year over five years, or at $750 million. We are talking about a substantial sum of money.

At the end of the competitive process, it seems that there was only one bidder, namely the company that had held the contract since 1999. Apparently, in this instance, officials had put themselves in a conflict of interest position. There were stories of trips to the Caribbean and to Alaska, and of golf games paid by the company. Companies that had taken part in the consultative process carried out by Public Works in 2008 again were critical of the process leading up to the awarding of the contract. Allegations were also made that the department was unable to answer the questions of those who suspected the company that had been awarded the contract was passing along the contracts to sell the homes being vacated to its own agents. These allegations were made by the former president of the Association des courtiers et agents immobiliers.

The committee met in camera last June. I am tabling this motion because the committee has a duty, in order to bring this matter to a close, to ask the Auditor General to examine this contract and to report back to Parliament.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Madam Faille.

I'll entertain eight interventions, up to a minute each, and then we'll go back to Madam Faille and put the question. But before I do that, I just want to point out that hopefully no one's under the illusion that a motion like this is binding on the Auditor General. This is just a motion from the committee. She may or may not accept it. She's got her own risk methodologies that determine whether or not she would actually conduct an audit of this nature.

Mr. Lee, very quickly, one minute, and then we'll go to Ms. Crombie.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

I intend to support the motion. The reason is that this relocation contract had already caught the attention of the Auditor General previously, for reasons Madame Faille referred to. But in the rollout of the new contract, which went to Brookfield Properties, I think it was Brookfield Properties—

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

It was Royal Lepage, then Brookfield, yes.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

It was awarded to Brookfield Properties' sister corporation. The deadlines for the tender, the date for decision on the successful bidder, the date of the commencement of the contract under the award, including the spin-off time of a couple of months, were, to my understanding, so compressed, compressed into a month, for such a huge contract--one of the largest contracts of its kind in North America, it's a massive, massive contract--that it's hard to understand how anybody could bid and be ready to deliver on the project. You had to open offices right across the country and you only had two or three weeks to do it with the window of time that the department offered.

So I think there are still questions about this, big questions about how the department ended up boxing itself in again, and I want to get those answers.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Lee.

Ms. Crombie, one minute, please.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

I concur. We reviewed this matter in June, independently of each other--we hadn't spoken--just prior to the contract being tendered to Brookfield and Royal Lepage. We had some concerns with it back in June, and nothing was done. The contract was tendered, but that does not negate the fact that it is a highly complex contract. There were very tight deadlines and timelines put in place, and there was a significant and realistic fear that the process favoured only one bidder, and lo and behold, that's all we had.

So there has to be legitimate concern that there wasn't a fair and open process. We look at how limiting the bidding process was: huge start-up costs, new technology, hiring and training of staff, opening up offices. It just limited the scope. We have to better understand what happened. This is a company that has won the same contract four times in a row, back in 1998, 2002, 2004, and yet again in 2009. It just doesn't seem right. I think we should look at it a little more closely.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Ms. Crombie.

Mr. Saxton, one minute, please.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Mr. Chair. I admire the diligence and tenacity of Madame Faille in proposing this; however, unfortunately I will not be able to support it.

On June 18 the committee had an in camera session with the departmental officials, and the committee concluded that it was satisfied with the department's actions. We adjourned following a motion by my colleague David Christopherson that read as follows:

That the committee do now conclude its study of the procurement process for the integrated relocation program, in relation to the committee's study of chapter 5, “Relocating Members of the Canadian Forces, RCMP, and Federal Public Service”, of the November 2006 Report of the Auditor General of Canada...

The committee's June 18 minutes state that this has basically been put to bed. Furthermore, an independent third party fairness monitor came out with this report, which I would like to table before the committee, Mr. Chair. They said the process was conducted in a fair, open, competitive, and transparent manner.

This committee thoroughly examined the AG's report of November 2006. We made a report with recommendations. The department came here in June and assured us that it had fully implemented all of the recommendations as well as those of the Auditor General, and the fairness monitor's report concluded that this was a fair process.

So I think we've had enough of this particular report, Mr. Chair.

[The Chair, Liberal, Shawn Murphy]

Mr. Kramp.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

We all want what is right, but where do we go and when do we stop? This was before this committee before. This same issue was before government operations and estimates, and I sat on it. We reviewed it. We reviewed it again for the second time on June 18, when we had the senior people in, Daphne Meredith and other witnesses. And whether we agree or not, no convincing evidence was put forward in those different sets of hearings to give us reason to believe that we have to continue.

Where do we go? How many times do we go back and address the same issue? If there is conclusive evidence, or not even conclusive but serious evidence, that any member of this committee wants to bring forward that is going to lead us to rethink the issue that is constructive, that's there, that's a smoking gun, then by all means let's go back and do it. I'd have no difficulty. But to say we should go back because we weren't satisfied is not good enough. We're going to be doing that on every issue we deal with. I go back to the invoice situation, to Lepage, and on and on. We can go endlessly on these types of issues. Where do we stop? Where do we go?

We've made a decision. As I said before, it has already been before the various committees of this House three times now. To take it back again, if it's the will of the committee.... Honestly, it might not be 100% satisfactory to everybody, but where do we draw the line? We have all kinds of other responsibilities to do as well.

[The Chair, Liberal, Shawn Murphy]

Mr. Christopherson.

[David Christopherson, NDP, Hamilton Centre, ON]

Thanks, Chair.

To pick up on Mr. Kramp's concerns, he makes valid points, but I do think there are a couple of things to put in the mix of our consideration.

Number one, one of the reasons we concluded was not just that at that point our findings were relatively inconclusive, but that the bidding process was under way and we were very sensitive to getting involved in an ongoing procedure. So we had reviewed up to that point, but we were cognizant that this thing was under way right then and we had to be careful.

Number two, if memory serves me right, we were assured by department officials that there would be more than one bidder. Yet here we are; we ended up with just one.

My last point is just to add a little comfort level. It's really not going to be our decision as to whether to go on. This will go to the Auditor General. She will obviously review what we've done to date, and if she determines that we've taken this as far as an auditing process or an accountability process requires, then she will say no. If she agrees that there's something new or something further, then she'll make that decision. Our decision today is whether we want to place it in front of her for that review and consideration, and in light of the issues that are on the table, I'm comfortable supporting that today.

[The Chair, Liberal, Shawn Murphy]

With no other speakers, we'll come back to you, Madame Faille, for the last minute, and then we'll adjourn.