Public Accounts Committee on March 7th, 2024

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Mr. Chair, I have a point of order.

[The Chair, Conservative, John Williamson]

Wait just one second, Ms. Bradford.

Go ahead, Mr. Barrett.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

The response from the witness was not captured in interpretation. The completeness of her answer was not captured, so if she could restate it, we could have it translated.

[The Chair, Conservative, John Williamson]

Would you mind repeating that?

You may choose to repeat it in French or in English.

We'll make sure the interpretation is working.

[Catherine Poulin]

No problem, Mr. Chair.

I concluded my answer by saying that when we verified the people's security clearances and CVs, which we had asked the suppliers to provide, we found no exception that allowed us to intervene in the contracts.

[The Chair, Conservative, John Williamson]

Thank you very much.

Next is Ms. Bradford.

You have the floor for five minutes, please.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for appearing today.

I want to look at the area of delegated authority, so my question is for the deputy minister.

Can you describe for the committee, please, more about delegated authorities? How do those work and what goes to a minister and what doesn't?

[Arianne Reza]

There are a couple of different lenses to this.

There is the delegated authority from the Financial Administration Act. Often, when you have to run a department, the minister has to be able to delegate authorities to the deputy minister and to the executives and employees below. Different levels of the organization receive the training to exercise their delegated responsibility when it comes to financial controls. Can you sign for a budget? Can you provide assurances that you've received the goods and services that were ordered?

On the contracting front, there's a very similar kind of delegation instrument for contracting authorities. It is refreshed frequently, and usually the delegation of authority for what the minister, the deputy minister or the assistant deputy minister signs off on to authorize entry into contracts is dependent on risk, material level and various elements.

In non-COVID times, the Minister of Public Services and Procurement has delegated their authority to the position of assistant deputy minister and, in some cases, below. During the pandemic, an updated set of delegated authorities was put in place with the support of Treasury Board because we couldn't keep up with the existing levels, and we provided various elements and staff training around the new delegation instruments.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

What volume of contracts are we talking about on an annual basis?

[Arianne Reza]

I think this is a really important question as we look at the procurement function in the Government of Canada going forward, at what we need to deliver to support government priorities and at how we actually structure our procurements.

What's important here is that in procurement, there are approximately 450,000 procurement-related transactions done on an annual basis across the Government of Canada. At PSPC we do approximately 16,000 of these transactions. That roughly translates into contracts, although it's not a perfect one-to-one because there are amendments and other elements.

PSPC does a very small percentage of them as a contract authority of the government's procurement function. The rest are done under the departments' own authorities—their own contracting authorities and financial authorities. With regard to those we do, they represent about $20 billion a year of procurement on the basis of an annual spend of the Government of Canada, which I believe is around $34 billion.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

What could the impact be if a delegated authority weren't in place and everything had to go through the minister?

[Arianne Reza]

It would not be doable. If you look at the volume, the risks, the complexity and the training a procurement officer needs to challenge function and ensure that a file is properly documented, it would just be impossible. In many instances, files of a certain volume, complexity and risk go to Treasury Board. Even then it is a challenge to try to keep up with the volume.

I'll just pause here and turn to Dominic.

[Dominic Laporte]

I fully agree with the deputy. Ultimately, Canadians wouldn't get the service they deserve from the Canadian government. It would stall the entire machine.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Okay.

PSPC has suspended the task authorization authority for all 87 departments and agencies it contracts for when it comes to IT professional services, not just for CBSA and the companies involved in ArriveCAN but for everybody. PSPC is negotiating new agreements with these departments and agencies to ensure more rigour in contracting.

Can you tell us about what will be different in these new agreements versus how things were done previously?

[Arianne Reza]

Before I turn to Dominic, it's really important to say at the outset that the reason we're doing this across professional services—IT staff augmentation in general and how we manage task authorizations—is that the comments coming from the report were around the actual tool and making sure that we're using it to ensure best value and clear deliverables so that when we do get audited or when we want to go back and look at the decision-making, there's a clear evidentiary trail. We decided that we needed to really look at it across the whole commodity to make sure we were providing best value in the procurement process.

Dominic.

[Dominic Laporte]

Very good points have been raised. In addition, we want to make sure that we stay away from broad general task descriptions and ensure that the required skill set is not too wide.

This is also in response to Auditor General recommendation 1.73, formulated to PSPC, on improving the evaluation requirement. Basically, it's making sure that when we look at CVs, it's not only at the contract award stage; it's also at the TA stage. It's making sure that, as I've alluded to, we get from the client the actual evidence in the CVs of the resources that are being proposed. Those resources attest to the accuracy of their experience. They also provide the authorization to use a CV by a bidder or supplier.

There are all those steps in addition to greater transparency, I would say. We also want to know who the subcontractors are who will be used. What are the terms of the daily rate they will be providing? There are new requirements, all incorporated into what we call a task authorization checklist that has now become mandatory for using our tool or supply arrangement. If a client doesn't comply with this new tool, they will not be able to use it. That will bring a lot of additional discipline to make sure that tasks are clearly defined. It's also linked to a specific outcome where security requirements are being met. There are security requirements. There are tons of new requirements.

Also, when we're dealing with contract amendments, we want to make sure there's a true reason for a contract amendment. Is the scope increasing? What are the reasons? What are the obligations to proceed?

Our officers will be performing many more challenges in the future than they have in the past, not only being satisfied that they have asked the client but also looking at the actual evidence provided and, most importantly, as outlined by the Auditor General, making sure that everything is documented. We will be putting a lot of emphasis on proper documentation. That will help. We're also leveraging our new EPS, or electronic procurement system.

[The Chair, Conservative, John Williamson]

Thank you. I appreciate that.

That went over, but I wanted to make sure we had a fulsome answer from you and your department.

Mr. Lemire now has the floor for two and a half minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Let's talk about Dalian.

The newspaper La Presse reported that the firm's president and founder, David Yeo, was both a private consultant and a civil servant with the Department of National Defence. It reported that the value of the contracts obtained by Dalian since 2008 total $149.4 million, including more than $3 million for contracts awarded by National Defence, according to information taken from public accounts. The article stated further that the department did not say whether Mr. Yeo had been suspended with or without pay while an internal investigation was carried out. La Presse stated that Mr. Yeo received double compensation from the government, as an employee and as a contract worker.

If I understand correctly, no checks are done when contracts are awarded to companies such as Dalian.

We are talking about a company that received a total of close to $150 million in contracts since 2008 and whose president was also as a civil servant.

How can you explain that?

[Arianne Reza]

As I said in my opening remarks, you have to understand that there are a lot of policies relating to the responsibility of an employee or in this case of a supplier.

The onus is on them to declare their responsibility. Public servants have, as a condition of employment, a requirement to declare conflicts of interest.

On that side, I believe this committee has asked colleagues from the Department of National Defence to come and speak to the actions they're taking. It's very important, as a general response, to understand that we have a framework to prevent, detect and respond to conflicts of interest.

Many different measures and triggers have been put in place by this. When we know about them, we act on them. The onus is on both the public servant and the contractor to disclose any potential conflict.

This is a very unusual situation. I believe we've been asked to come back and provide more detail on other similar cases that we know about.

In closing, let me say simply that, last year, Public Services and Procurement Canada fired five employees who did not comply with the policies requiring them to declare a conflict of interest. As in every case when an employee is fired for wrongdoing in the public service, we published the information on the Government of Canada's Open Government portal.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

But the checks are done later on, and not when the person is hired.

[Arianne Reza]

Before signing an offer of employment, the employee has to fill out a form disclosing any conflicts of interest. At that time, a decision is made based on the level of conflict of interest.

[The Chair, Conservative, John Williamson]

Thank you very much.

Next up is Ms. Idlout. You have the floor for two and a half minutes, please.

[Lori Idlout, NDP, Nunavut, NU]

Qujannamiik, Iksivautaq. Thank you, Mr. Chair.

As I said in my opening statement, I was shocked that the ArriveCAN app contract was awarded to a business that claimed to be indigenous.

I want to ask about the procurement process, but first I would like to ask the deputy minister if it's a priority of this government to ensure that indigenous businesses and entrepreneurs receive contracts. If so, can the deputy minister explain why?

[Arianne Reza]

This is indeed a very key deliverable for the Government of Canada as it relates to procurement, truth and reconciliation and some of the work that's been done in Parliament and various committees.

Some reports have come out putting a 5% set-aside of what the Government of Canada spends on procurement toward indigenous firms as a goal the government is actively pursuing. As part of that, the Department of Indigenous Services has a directory of indigenous suppliers that have qualified so that when the government is looking to fulfill various goods and services contracts and looking to procure solicitation documents, that directory is consulted. We also make targeted efforts in various communities across Canada and in various first nations to try to use economic levers to encourage various indigenous SMEs to come and compete for federal procurement opportunities.

[Lori Idlout, NDP, Nunavut, NU]

Did anyone in the department, or did the deputy minister, check to see if the recipient of this contract was a part of that registry?