Public Accounts Committee on Oct. 28th, 2010

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Is there a staffing issue? Is that a problem?

[Sheila Fraser]

I think there are probably two issues. One issue is of course just the volumes they deal with and the backlogs they have. I think there is a lot of attention put on that.

The other issue, which actually was interesting and came up in a conversation with some senior bureaucrats, is that there have been a lot of policy changes in this department. They go through very frequent changes of policy, which I think is probably absorbing the senior management time and is becoming a priority rather than dealing with the service issues.

I think a discussion with the deputy minister might reveal that obviously the service management has not been the highest priority because of these other issues.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Do you feel that staff training is adequate in the department?

[Sheila Fraser]

We didn't really get into a lot of the staff training. It was more about the service management system that was in place and that was clearly lacking in many areas.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you very much.

[The Chair, Liberal, Joe Volpe]

Thank you, Mr. Rafferty. You're bang on time. That's great.

Colleagues, I've avoided making any comments about some of the questions that the Auditor General can or cannot answer. In other experiences, of course, the business about having a witness--in this case, the Auditor General--comment on policy probably doesn't fit the issue. She is well equipped to handle the audit of the performance or the procedures, but I think it is unfair to put her on the spot to try to comment. But I'm glad she deftly moved away from that. It probably should have been my responsibility, as chair, to say that question wasn't really appropriate. However, we're in the business of trying to cooperate to get at the same answer.

Mr. Kramp.

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

Thank you, Chair.

And welcome to our Auditor General and her tremendous team.

I'm both encouraged and occasionally disappointed when reports come in. But of course you're doing your job. There are two things I really like about this. If there is criticism that is deserved, it's delivered. But if there are accolades and/or encouragement and lessons to be learned in best practices, that's also stated.

Generally, out of the nine reports, we have a really positive...for at least seven of the nine, so I think that's tremendously encouraging. But that doesn't, of course, delay the circumstances when we have a dilemma and/or a problem and/or a weakness. We zero in on it as well.

I'll touch on both the helicopter deal and the economic action plan to start with.

On the economic action plan, I'm wondering about a best practice--is it a best practice?--that was used very successfully for the stimulus, and that was a sort of parallel approval process. Treasury Board and cabinet really worked in tandem, at the same time, rather than in a consecutive manner in reducing the timeframe from the six months to the two months, with a tremendous amount of work, of course, by the public service. Now, is this something that we should or could consider as the modus operandi for other departments, other programs, other situations? Or do you think the emergency requirement of really getting this effective stimulus out in a very short order necessitated that action? What are your thoughts as far as going forward with regard to policy is concerned?

[Sheila Fraser]

One of the recommendations we made in the report, Chair, was that the government should look at what lessons can be learned and whether there are simplifications or modifications that can be made to existing processes to speed up and reduce the complexity of some of those processes. They agreed with us on that. If there is a future hearing, perhaps the Secretary of the Treasury Board would comment on where they see the most potential.

My intuition is that this was a very unique situation. There was a lot of pressure on people to do it, but unless it's really necessary to speed things up, I don't know that it's a system we necessarily have to go to. But I'll leave that for the secretary, I think, to comment on.

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

Okay. So it might not even be reasonable. The solution might not be just A or B; it might even be a compromise between the two, with improvement needed.

[Sheila Fraser]

And depending on the particular program and the particular circumstances, you may have to do it for some but not for others.

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

Right. Thank you very much.

There was one statement I was very interested in, because this committee deals almost exclusively with audit and with the recommendations from your audit. We've seen indications in the past, over many years in the history of this Parliament, when our internal audit process was not satisfactory, and this committee has made some very strong recommendations to improve the internal process.

Regarding your statements on the economic action plan, we're pleased to see the important role that internal audit played. Are there lessons from this that we can extrapolate and take to other departments or other agencies, and could they be applied under the same set of parameters for internal audit?

[Sheila Fraser]

I'll hold comment on that, because we're doing a follow-up audit of internal audit, which we will be tabling in the spring. I think it's evident from this report that there has been a strengthening of internal audits across government and that senior managers are relying on them for advice or assurance. We ourselves are relying on internal audit, which is something we did very rarely in the past.

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

Okay.

Just looking to the Cyclone and the Chinook...two contracts were merged back in 2002 with relation to the Cyclone. Do you know why those two contracts were merged, and do you have information on that?

[Sheila Fraser]

No. Prior to 2006, there were actually quite strict limitations on what information classified as cabinet confidences we were able to obtain, so we were not able to obtain that information.

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

So you were not able to get information from documentation that was made by cabinet back in 2002?

[Sheila Fraser]

That's correct.

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

Okay. Thank you very much.

Do you have the same situation now?

[Sheila Fraser]

No. We have been able to resolve that issue and clarify our access rights. We continue to have vigorous discussions at times about that, but it's working.

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

Thank you.

Do I have any more time, Chair?

[The Chair, Liberal, Joe Volpe]

No.

Mr. Bains.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Thank you very much, Chair.

I just want to continue on with the questions I asked earlier with respect to operational costs. You indicated in your opening remarks that the process was not fair, open, and transparent to potential suppliers. Does this take away leverage from the government to get the best value for money? Is that why you highlighted this concern?

[Sheila Fraser]

it's very clear in government policies that the contracting process should be open, fair, and transparent. We have quite serious reservations about how it was done for the Chinook. In response to Mr. Bachand's question, I will provide an explanation to the committee as to what our concerns are. Just one example is that the ACAN, the advance contract award notice, was issued in 2006, and yet it was three years before the actual requirements were really finally decided on, and they were completely different from what they were in 2006. So just on that basis alone, we are of the opinion that it was not a fair process and that industry members did not have adequate opportunity to present bids if they were able to supply and meet the requirements that National Defence set out.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

So given what you've seen in this report, do you think it makes sense to sole-source large procurement projects? And with regard to the questions I raised on operational concerns as well, do you think that approach gives the best value for money?

[Sheila Fraser]

I think we all have to recognize that there are occasions when sole-source contracting is appropriate. That concept is recognized in government contract regulations. There are four exceptions that are clearly laid out. One used from time to time is that there is only one supplier that can produce or supply that. There could be issues around patents, intellectual property, whatever. Sometimes there is really only one supplier. We would expect in those cases to see very robust documentation as to that fact and the reason there is only one supplier, and that was not the case here. We believe the documentation was not sufficient.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

That's the point I wanted to make. In this particular instance, the sole-source approach was not the accurate one.