Public Accounts Committee on Nov. 5th, 2018

[Nicholas Trudel]

That particular vehicle I couldn't speak to, but I could speak to the sale of nearly new vehicles, which does happen. There are a number of reasons that these sales might occur. A typical example would be that Transport Canada has test vehicles, to test for emissions and road safety and so on. That testing involves mounting equipment within the vehicles and putting some mileage on them.

The question of what is the cheapest way to do this has been asked and re-asked, and for about 20 years the cheapest option has been to purchase the vehicle, use it to conduct the tests, and then resell it.

[Chandra Arya, Liberal, Nepean, ON]

Why couldn't it be used by other departments that are planning to buy new vehicles?

[Nicholas Trudel]

Not all vehicles meet the requirements of their programs. There are specific vehicles that they buy for specific purposes.

[Chandra Arya, Liberal, Nepean, ON]

I'm talking about a general car, a 2018 Chrysler. All the specifications are there. I can bet that in the next 12 months, several other departments will probably buy exactly the same model.

[Nicholas Trudel]

I couldn't say.

[Chandra Arya, Liberal, Nepean, ON]

What type of surplus assets should be transferred and sold? Are there any sort of criteria?

[Nicholas Trudel]

Assets are intended to have a positive net worth, so it's not a garbage bin. The assets sent to us are intended for sale and should have a positive net worth. They should be safe for sale, so we don't handle firearms or—

[Chandra Arya, Liberal, Nepean, ON]

No, what I'm trying to get at is that lots of chairs are being sold. There is a refrigerator being sold. If they are in good usable condition, why not have some other department use them? Why have they been put up for sale?

[Nicholas Trudel]

We do a fair amount of promotion of the transfer program, and with the Auditor General's results, we have pledged to redouble those efforts.

Moreover, the Government of Canada is a very large enterprise across the entire country, and there is a large cost in holding and storing end-of-life assets in the hopes that some other department might use them. We have a very lean organization. We don't have massive stocks of inventory. Our purpose is to receive and dispose, and we try to do that in as timely a manner as possible so that we don't end up in the storage business.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much.

We'll now move to Mr. Nicholson, please.

[Rob Nicholson, Niagara Falls, CPC]

Thank you very much. Thank you to all our witnesses today for your presentations. They were all very insightful and very helpful to this committee.

Ms. Lemay, you talked about the disposal of assets. One thing you said in your opening remarks was that we always strive to obtain the best value for the crown. I think maybe you heard Monsieur Berthelette's comments that very often these things are sold at less than two-thirds of their value. What do you think the reason is for that? Can you give us any insight on that? Do people expect that if they're buying it off the government, they're going to get a bargain, perhaps, or are there just not enough people aware of the site to go on it and check things out?

[Marie Lemay]

Again, if you don't mind, I'll turn it over to Nicholas. He has the daily experience with this. Maybe you have some insight on this area, Nicholas.

[Nicholas Trudel]

First off, there's a difference between the accounting value and the market value of what's purchased. We get 100,000, 90,000 site visits every month, and we have nearly 100,000 registered users. We believe we have a liquid market. When we post an asset, we feel that's a fair opportunity for it to receive value. As in any other auction, we know there will be a difference between what it was purchased for, its book value, and the market value. Those are all different things, but we feel we are getting a good value. I think the auditor's report acknowledged that.

[Rob Nicholson]

Monsieur Berthelette, perhaps you could comment on that, or Monsieur Dompierre. Is it that they're just getting two-thirds of the book value of it? I can appreciate that goods depreciate in value. Are they getting the market value, do you think?

[Martin Dompierre]

When we conducted our audit, we looked at 50 files per department. As has been pointed out, it is the responsibility of the department to do the assessment of the method it's going to be using to dispose. It does a costing of the value of the asset, and if it reaches a point that to sell an asset is more costly than the return, then it has to find another way of disposing of it. Other ways would be a transfer, a donation or recycling. It's the responsibility of the department to make that assessment.

As part of our audit we looked at these files and noticed that they were missing the information required to come up with a decision on which method is the best to use. That's why we have limited observations on the maximization of the benefit, because files were missing that information.

[Rob Nicholson]

I guess that's one point my colleague Mr. Christopherson was making—the lack of information. Indeed one recommendation with respect to donations, some of the background material, said that 84% of federal organizations rarely or never donate assets. I'm surprised that this is a new idea now, the idea of donating these things, or recycling them, as you heard CRA was doing at the time. What's been the problem? What do you think has been the holdup?

[Marie Lemay]

I will just give you my department's approach.

I think it's clear from the audit that we didn't document as much as we should have. As for saying that there was no process, we didn't document it well enough and we will make sure that we do so in the future. We're reviewing the process for doing that. We're actually going to be looking at making sure that we really document how the decision is made.

Regarding the assets sold in the period that covered the audit, there were 2,000 items, I believe. For us that was a book value of $42,000. For PSPC it really was not a lot. We actually got, I believe, $600,000. We actually got a lot more than our book value.

As to our internal process, we're going to make it more rigorous. When it comes to donation, the challenge is partly finding the time to make sure that you do a fair and equitable donation process. That's what we're trying to do with the service provider side of things.

I'm wearing two hats here. From the service-provider side, we're looking at how we could set up a system that will make it easier for departments, that will be a fair and equitable process, and that will allow for the donation to happen. We have to find the right way to make this fair and equitable. That's why we're doing these proofs of concept. We're going to do a pilot. We're working with Treasury Board. We believe there's an opportunity, but it's not easy right now for departments to go down that route and do it in a fair and equitable way.

[Rob Nicholson]

Is it possible that there might be a liability if there is some problem with the product? Do you think that is part of the hesitation that's taken place over the years?

[Marie Lemay]

Yes, I would say that's part of it. Those are all the different elements that we're trying to assess through this two-step process before we recommend a program. Maybe we can't donate all the different asset types. That's what we're trying to see. Does it work better in a specific category? How can we make it easier, but with the proper rigour, while making sure that it's fair, open and transparent?

[Rob Nicholson]

The idea of recycling or reusing office equipment or other assets is something else that makes a lot of sense. It would be pretty straightforward to—

[Marie Lemay]

Yes. There's internal reuse, which I think you've heard CRA did with success. I think other departments are doing that, but not in as documented a way and not as rigorously as CRA.

Then there's the transfer between departments. That's the platform from a service provider, which we'll have to promote even more. Maybe it's a question of the categories of assets we can find, and really putting some emphasis to make sure there's a transfer. We have to spend a little bit more time on this.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much.

We'll now move to Mr. Chen, please, for the second round of five minutes.

[Shaun Chen, Liberal, Scarborough North, ON]

Thank you, Mr. Chair. I want to thank all the guests who are before our committee today for providing their testimony.

My first question is to the Auditor General's office. Exhibit 2.2 on page 7 of the AG's report gives a summary of the number of items that were requested to be transferred or sold per federal organization. The numbers are all over the map.

I know that CRA operates under different policies that they developed because they're not subject to the Surplus Crown Assets Act. With respect to the other departments, you see Shared Services Canada at a ratio of one to three, for example. For every item they transfer, three are sold. In contrast, if you look at the RCMP, for every item they transfer, 133 items are sold. For every item Public Services and Procurement Canada transfers, 24 are sold.

Can the AG shed light on this discrepancy? Is it simply the culmination of individual actions within those departments? Is there any factor that relates to the type of assets and whether they are more easily sold or transferred than others, or are we dealing with comparable or similar items when we track these assets?

[Martin Dompierre]

Basically, the table was constructed with data coming from GCSurplus and GCTransfer. We wouldn't be in a position to provide information about what specific type of assets they are and if they relate to others. We requested each organization that was audited to come up with specific data on their transfers and the surplus assets that they sold. Finally, we did a comparison of that with the government as a whole.

I wouldn't be in a position to give you further information on the types of assets that were sold or transferred, or the trends among the given departments.

[Shaun Chen, Liberal, Scarborough North, ON]

Generally speaking, these items would be chairs, tables, desks, computers and items of that nature.