Public Accounts Committee on June 15th, 2010

[The Chair, Liberal, Shawn Murphy]

I will at this time call the meeting to order. Welcome, everyone. Bienvenue.

This meeting, colleagues, I think is a very important one. It's to deal with the state of repair, the governance, the rehabilitation plans concerning the seven or eight buildings that comprise the parliamentary precinct, and of course including the building we're in now. These, as everyone knows, are very historic and traditional sites and form part of the heritage of this country. They're home to approximately a million visitors a year, and they're very much a symbol of our system of parliamentary democracy.

The Auditor General's office has completed the performance report on the governance, the rehabilitation plans, the availability of resources dealing with the total renovation of these buildings. The committee has had a tour, which we thank the Deputy Minister of Public Works and Government Services for organizing.

Today the committee is going to hear from the Auditor General on this performance report, and we're very pleased to have with us this morning the Auditor General, Sheila Fraser. She's accompanied by Sylvain Ricard, Assistant Auditor General, and Edward Wood, principal.

From the Department of Public Works and Government Services, the committee is pleased to welcome the deputy minister and accounting officer, François Guimont. He is accompanied by Mr. Robert Wright, the project executive director, major crown projects, parliamentary precinct branch. Most of us met Mr. Wright last week, who gave us the tour of the buildings.

We certainly thank you very much for that, Mr. Wright.

So without any further delay, I'm going to call upon the Auditor General for her opening remarks.

[Sheila Fraser, Auditor General of Canada, Office of the Auditor General of Canada]

Thank you, Mr. Chair. We thank you for this opportunity to meet with the committee to discuss chapter 3 of our 2010 spring report, entitled “Rehabilitating the Parliament Buildings”.

As you mentioned, I am accompanied today by Sylvain Ricard, Assistant Auditor General, and Ted Wood, principal, who are responsible for this work.

We had two objectives in conducting this audit: first, to examine if Public Works and Government Services Canada, within its mandate and in cooperation with others, had put in place a sound governance framework for the overall rehabilitation project, and secondly, to look at whether the department had sound project management practices for rehabilitating the Parliament Buildings.

The importance of the buildings on the Hill cannot be overstated. The Parliament Buildings are the centrepiece of our national political life. The site, the architectural style, and the building layout were designed to convey an image of ceremony and order. With time, the buildings and the grounds have become a symbol of Canada's parliamentary democracy and the federal government.

The Parliament Buildings have been in need of major repairs and upgrading for over two decades. Through its assessment of building conditions, Public Works has identified serious risks that could affect the continued operations of Parliament. The heritage character of some buildings is also threatened. Furthermore, the Senate and the House of Commons have indicated that their current and future needs cannot be met by the buildings in their present state.

Mr. Chair, the governance arrangements are hindering rehabilitation work while the buildings continue to deteriorate.

We found that decision making and accountability are fragmented. We also found that the current arrangements do not allow for reaching consensus on priorities and committing resources to implement long-term plans.

These weaknesses, which cannot be attributed to any organization alone, result in delays in making decisions and implementing projects, and contribute to increasing project costs and risks.

We believe that unless governance is fixed, only limited progress will be made on the rehabilitation of the Parliament buildings. Three critical issues need to be dealt with: accountability relationships, long-term planning to rehabilitate buildings and meet the requirements of their main users; and stable and long-term funding to complete planned work.

The ultimate purpose of these buildings is to support Parliament's unique operations. In our view, the Parliament buildings are a special purpose space and the control of and responsibility for these buildings need to rest with Parliament.

Mr. Chair, we have recommended that the Minister of Public Works and Government Services, in cooperation with the principal players, should develop and propose mechanisms to ensure that the responsibility and accountability for the Parliament Buildings rest with the Senate and the House of Commons.

On the question of project management, we noted that the rehabilitation projects on Parliament Hill are unique and complex. We found that once rehabilitation projects were agreed to, the department had in place generally sound management practices. These practices took into account the unique nature of this work, such as the heritage character of the buildings, their age, and their condition.

We are pleased to report that the department acknowledges the recommendation and has undertaken, within its mandate and authorities, to work with other stakeholders to strengthen governance.

In conclusion, Mr. Chair, the longstanding governance problem, which we and others have raised over many years, has to be resolved.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions.

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Ms. Fraser.

We're now going to hear from Mr. François Guimont, the Deputy Minister of Public Works and Government Services.

[François Guimont, Deputy Minister, Department of Public Works and Government Services]

Thank you, Mr. Chair.

I am very pleased to be here to discuss chapter three of the Auditor General's recent report on Rehabilitating the Parliament Buildings.

Mr. Chair, I would like to thank you and your fellow committee members for taking the time to visit some of the project sites last week. These visits present wonderful opportunities to get a first-hand view of the important work my department is carrying out on your behalf. Mr. Chair, I would like to underline how much it meant to my staff to have the opportunity to showcase these important projects to committee members.

During the tour, we responded to a broad array of questions and I found it be a rich exchange. As a follow-up we made a commitment to respond to two specific questions. Mr. Chair, I would like to take the opportunity to table the responses before the committee today.

As the official custodian of the heritage buildings and grounds on Parliament Hill, Public Works and Government Services Canada is responsible for their care, upkeep, structural integrity and appearance; the management of major renovations and new construction; and the provision of general-purpose accommodation. It carries out these functions in consultation with its parliamentary partners, that is, with the Senate, the House of Commons and the Library of Parliament.

As you know, under the long-term vision and plan for the parliamentary precinct, a multi-faceted program of work has been undertaken to upgrade and restore the three main Parliament buildings.

Our initial five-year program of work from 2007–12 first focused on creating interim accommodation to allow the main parliamentary buildings to be emptied and their functions to be relocated off the Hill, to carry out urgent repairs. I am pleased to report that 13 of the 15 projects in this phase are complete, and the remaining two will be finished in 2010. All of these projects were completed on budget and on schedule, and several have realized substantial time and cost savings. As a result, we will be ready to empty the West Block this summer, four years ahead of schedule. Furthermore, full rehabilitation of the southeast tower was completed in the summer of 2008, and rehabilitation of the north towers is now under way.

To keep deterioration in check, the long-term vision and plan also include a preventative maintenance program called the recapitalization program. It addresses critical elements that can't wait until major renovation projects begin. This will allow future work to be undertaken efficiently and cost-effectively.

We were very pleased that the Auditor General's report recognized Public Works and Government Services' strong results in project management and program delivery. The AG report noted that project management practices are generally sound. The department places due importance on protecting heritage character. The department has a reasonable approach to collecting information on building conditions. A process is in place to collect information on client needs. The impact on the environment is taken into account. The department has a costing methodology in place. The rehabilitation projects benefit from lessons learned.

The Auditor General also noted that the federal heritage buildings review office has commended the West Block project as showing great respect for the heritage character of the building.

While the AG recognized the good work we do in Public Works and Government Services, she also drew attention to the issue of governance.

The department acknowledges the Auditor General's recommendation regarding where responsibility and accountability for the Parliament buildings should rest. The department takes this issue seriously.

First, I have assigned a senior assistant deputy minister in Public Works to lead this important file. That was done last Friday. Second, we are studying and engaging other countries and provinces to get an understanding of their governance models. This analysis was drawn from a review of literature, as well as discussions and meetings between the department and, for instance, the Sergeant at Arms in the United Kingdom, and more recently, the architect of the Capitol in the United States.

Third, Madame Aloisi, the new assistant deputy minister responsible for governance, will be engaging central agencies and the Department of Justice over the summer to discuss governance matters in detail. This will inform the development of options and discussions with parliamentary partners this coming fall and winter.

In closing, I feel we are at a crossroads for setting a long-term path for the rehabilitation of the parliamentary precinct.

I will be pleased to answer your questions.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Guimont.

We're going to go now to the first round, with Mr. Lee, for seven minutes.

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

Thank you, Mr. Chair.

This meeting has gotten off to a fairly good start. Our basic problem as members of Parliament is that everybody owns this place but nobody owns the place. The Auditor General's view has been very helpful in at least crystallizing an awareness that there isn't an actual landlord. There might be something on paper, but nobody really carries the can on the place. There's no minister whose responsibility is to ensure that this place is the way it should be.

I appreciate the position the Minister of Public Works and the Deputy Minister of Public Works are in, that they own only a piece of this. They said it very clearly: they manage the renovation. They're managers. They're imported. They make sure the lawns are cut. Public Works does a lot of things, but Parliament has never said to the Minister of Public Works, you're in charge of the whole place, the meeting rooms and everything. It looks as though that has been a continuing problem for 140 years.

So let's look at the framework issue the Auditor General has pointed out. You just made some comments, Monsieur Guimont, about trying to renovate the framework that would manage the Hill. Could you shine some more light on that? Does your department have an objective, or has an objective been expressed by those non-landlords who are organizing this possible new framework for the management, ownership, landlording, husbandry, whatever it is of the Hill? It's not caretaking.

[François Guimont]

Thank you for the question.

I would say as a first point that Public Works and Government Services Canada is the custodian of the buildings, so we own the buildings and the grounds. We're not alone, frankly. The National Capital Commission has a role. The parliamentary partners have a role to play. It's their institution.

I think Madam Fraser, in her report, gives a very good analysis of the shared accountability, which in itself can be a challenge. It is noted in her report--and I certainly agree with this--that the department, as custodian of the buildings, works under the government system, under the executive branch, and more directly, in our case, as we carry out investments, under Treasury Board rules.

Ours is not the only department; all departments are like that. Yet the requirements set forth by the House of Commons and the Senate are theirs, and they don't follow exactly the same rules. You have your rules quite logically. I think this has been picked up over the years, as you rightly point out.

For a number of years people have noticed that there is shared accountability. It's not that no one is necessarily accountable at the end of the day; it's shared accountability, and with that come challenges.

More specifically, on the issue of governance and what we may be looking at--

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

Could I just interrupt?

Okay, governance is the big picture here, but you said “we own the buildings”. This is, with respect, a meaningless statement. By “we”, you probably meant Public Works, or did you mean the crown?

[François Guimont]

I would say the crown vests the ownership in Public Works as a department. So it is ultimately--

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

So if you really owned them, wouldn't you take care of them? I don't expect you to account for 140 years of history, but if you say that you own them, then I'm going to look to you. But I'm not going to look to you, because I know you don't really own them. Canadians own them.

I'm sorry, I've diverted a little bit. We'll go back to the framework.

[François Guimont]

It's fair. I understand your point, and I agree with that. Ultimately, we're custodians of these buildings on behalf of Canadians. It's the same way when we carry out investments, we use taxpayers' money.

Going back to the point of governance, not to be too long about this, I think the first step, quite logically, is to look at the models out there, and there are quite a few where the ownership has been vested into the legislative branch of government. We have examples of that; it's been documented. I think Madam Fraser notes that, whether it's in the U.K., Australia, New Zealand, or frankly even in a republican-type system like the United States, it's a bit of the same principle. So in order for one to manage correctly and set projects, the accountability should be in one area. It doesn't mean that it excludes discussions—far from it—but having one area where the accountability is squarely rooted is certainly helping decision-making in long-term investments.

As we look at the options--we're going to be looking at the various models--we are going to look at elements related to ownership, the point you make. What should the new entity look like, structurally speaking? Who should be part of that entity, the decision-making functions related to governance? Leadership--who should be in charge? Funding elements: how would that be thought through, how would that be challenged, how would that be set in place?

There's the issue of transparency. When we look at the models, most of them have a relationship with an auditor general equivalent, so there's transparency in how decisions are made, value for money, and things of that nature. On oversight, it's the same thing. And delivery and implementation: how will that be carried out?

So in a governance model, I'm not saying these are the only elements that should be considered, but it's quite important to be able go through these elements as options are being put forward and considered.

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

Okay.

From the Auditor General's perspective, as she looks at it, that's the missing piece of the model, the mechanism, the organism that governs the place.

I will say, Mr. Chair, that on our trip the other day to look at the renovation of the West Block and the other precincts, it looked very well managed. I have no complaints about that. But I'm really interested in the evolution of these series of boardroom meetings and slide shows that's going to produce a framework. That's what the Auditor General says we need, and that's what MPs and senators need to make sure the place is properly taken care of in the future.

Thank you, Mr. Chair.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Lee.

We're going to now move to Madame Faille.

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

Thank you, Mr. Chair.

Last week's visit was much appreciated. I do nonetheless have a couple of questions concerning the management of the project. Of course you must have learned something from your experiences renovating the Library of Parliament. Unless I'm mistaken, a substantial portion of the Library renovation work was contracted out. Which firm is currently overseeing the renovations under way on Parliament Hill?

[François Guimont]

A number of different firms are working on the Hill. In the case of the Library of Parliament—Mr. Wright will answer that question—the project was managed by the firm of the original architect, Mr. Fuller. More specifically, the work was carried out by PCL, Fuller and Pomerleau.

We contract with different firms for different projects. Briefly, when we go forward with a project proposal, we call for bids to ensure the best possible price and the best possible work. So then, different firms may be retained. That said, these were the three firms hired to oversee the work at the Library of Parliament.

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

What is the status of the renovations currently under way to the West Block and Centre Block?

[Robert Wright, Project Executive Director, Major Crown Projects, Parliamentary Precinct Branch, Department of Public Works and Government Services]

As far as contractors for those projects, those contracts have not been awarded to date, so we don't have contracts in place for the major rehabilitation. On the north tower project that we visited last week, Verreault Construction is the general contractor who is conducting the work on the north tower rehabilitation.

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

Generally speaking, how much time does it take to complete these arrangements, and subsequently to award the contract? How far along are you in preparing the tender process?

[Robert Wright]

For the major rehabilitation of the West Block, for example, we will be going forward in the fall for new government authorities to be able to go out for tender to begin the major rehabilitation. We expect to be able to start the project this fall, and then tranche by tranche we will go out for additional contracts. To be able to accelerate the project as quickly as possible, we have the project broken up into parallel streams of activities that are based on our discussions with expert consultants in the scheduling and costing areas to make sure we have probity from both a fiscal and a timeline perspective.

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

According to the OAG, analyses produced in 2009 came to significantly different conclusions as to the announced timing of the construction work.

Since the OAG's report was produced in 2009—and I refer you to paragraph 3.41—the department has hired a consulting firm to provide an independent review of the analyses and conclusions respecting costs, as well as of the timing of the construction work.

What is the current status of the independent review and what does the review indicate about the risks, costs and timing of the construction work?

Paragraphs 3.19 and 3.41 further note that two studies were conducted by consulting firms, the first in 2006 and the second in 2009.

[Robert Wright]

This paragraph refers to a specific building called the West Terrace Pavilion, which is in the long-term vision and plan. This is a critical facility as part of attaining sufficient capacity on the Hill for the operations of Parliament. The issue is about timing and sequencing of the construction of this new facility. As the Auditor General's report has underlined, these buildings are facing significant deterioration, and this deterioration needs to be addressed in the here and now. Our focus at present is on rehabilitating the West Block and the East Block so that we can get to the Centre Block--

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

What is the current status of the review?

[Robert Wright]

This assessment, this third-party review by Deloitte, has been completed. The finding of the third-party review is that accelerating the construction of the West Terrace Pavilion would be a high-risk strategy, in the sense that it could cause delays to the rehabilitation of the core historic parliamentary buildings from a time perspective and from a space perspective. As you saw last week, we are relocating facilities off of the Hill. The West Terrace Pavilion does not have enough capacity to be a replacement for that interim relocation strategy, so from both a timing and a space perspective, it was deemed a high-risk strategy.

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

You have discounted that option for the time being.

[Robert Wright]

Yes, for now.