Evidence of meeting #110 for Public Accounts in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was yeo.
A video is available from Parliament.
3:40 p.m.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
What's the salary range for someone in Mr. Yeo's position?
3:40 p.m.
Deputy Minister, Department of National Defence
He was an IT-03. The salary range, Mr. Chair, for that position is roughly $88,000 to $100,000 per year.
3:40 p.m.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
Did DND make a public statement that Mr. Yeo was not in a conflict of interest?
3:40 p.m.
Deputy Minister, Department of National Defence
No such statement was made, Mr. Chair.
3:40 p.m.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
Are you familiar that he made a statement at this committee that he read in the newspaper a statement from your department that there was no conflict of interest? Are you aware that he said that?
3:40 p.m.
Deputy Minister, Department of National Defence
I am aware that he said that, Mr. Chair. I am not sure what he was referring to.
3:40 p.m.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
Therefore, it's not true.
3:40 p.m.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
It couldn't be true, of course, because Mr. Yeo was in a conflict of interest. That was your finding.
3:40 p.m.
Deputy Minister, Department of National Defence
As mentioned earlier, a conflict of interest, real or perceived.... I guess we could debate on whether or not he was in a real conflict of interest. He was certainly in an appearance of conflict of interest, and potentially real.
3:40 p.m.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
He sure is.
Mr. Yeo claims he has a protected B document that says there's no conflict of interest. We have to assume that this came from your department.
Do you know what that document is?
3:40 p.m.
Deputy Minister, Department of National Defence
Mr. Chair, we have no idea what he is referring to.
3:40 p.m.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
Who at DND was responsible for hiring Mr. Yeo? Is it a failure of that hiring process that this conflict of interest wasn't detected?
Mr. Yeo indicated that he believed that what he was doing was very widespread. You would have heard that in his testimony. Is there a gap in the system here? Is this a failure of the hiring process, and do you believe it's widespread?
3:40 p.m.
Deputy Minister, Department of National Defence
I don't believe it's widespread, Mr. Chair. We can come back to that.
Whether Mr. Yeo had a poor understanding of the rules or is ethically challenged.... I would tell you that my experience so far is that he has an ethical issue. The failing was on him in not disclosing.
We are looking at the process under which he was hired. We are involving the Public Service Commission in that, because it was an external process, but there is a look into the hiring process.
3:40 p.m.
Conservative
The Chair Conservative John Williamson
Thank you. That is your time.
Ms. Bradford, you have the floor for six minutes, please.
3:40 p.m.
Liberal
Valerie Bradford Liberal Kitchener South—Hespeler, ON
Thank you, Chair.
Thank you to the witnesses for joining us today.
During his testimony on Tuesday, Mr. Yeo had a lot of very interesting stories about what he did, both as a member of the Canadian Armed Forces and when he was a contractor.
Could you please clarify exactly what he did during his time at National Defence?
3:40 p.m.
Deputy Minister, Department of National Defence
Certainly. I will not comment on his military service, but I will comment on his transition from contractor into employee.
He was a full-time contractor with National Defence for an extended period of time. The team he worked for—quite wisely, I will say—recognized that this was a skill set we needed going forward and that it would be more economical to turn him into an employee rather than pay the higher rate for a contractor.
Obviously, they didn't know that he would turn out to have conflict of interest issues, but he was doing basically the same job as an employee that he was as a contractor. This was putting in place automated and secure systems to allow unclassified information to be shared with a more secure network—classified secret or above—in an automated fashion without compromising the security of the higher network.
He was quite a technical expert and the role was the same as contractor and as civilian. It was thought at the time that it was an economically wise decision to turn him into an employee. Obviously, they did not know about his other businesses and that he had failed to disclose those.
3:40 p.m.
Liberal
Valerie Bradford Liberal Kitchener South—Hespeler, ON
Do you think it's a good idea to hire consultants as full-time employees?
3:40 p.m.
Deputy Minister, Department of National Defence
In certain circumstances, yes, I do. Consultants have a great value to add if we need them for surge capacity or if we need them for a technical expertise that we don't have and we're looking to acquire.
In this case, because of the projects he was on, the major and the colonel who were above him realized they needed this skill set for a project on a long-term, enduring basis. It is a very good thought to try to turn that type of resource into an employee, if the person is willing.
As we know, in this case it did not work out, but I actually applaud the instinct.
3:40 p.m.
Liberal
Valerie Bradford Liberal Kitchener South—Hespeler, ON
I believe that you can provide this committee with some unique insight, having been deputy minister at both DND and at PSPC. In your opinion, why are these HR staffing firms or body shops so prevalent?
3:45 p.m.
Deputy Minister, Department of National Defence
Mr. Chair, body shops exist with private sector clients as well, but they are certainly widely used in the public service. I would offer up—and this is opinion—probably three reasons.
Number one is that getting government contracts is not easy. It is a complex set of rules. Requirements are often long. It takes time because of the evaluation to ensure a fair procurement. There are some contractors who, frankly, just don't want to go through that process. They would rather pay a firm to do it on their behalf, knowing that—in Dalian's or GC Strategies' case—the firm is taking a cut off the top. There's value there for IT contractors who don't want to go through that bureaucracy.
The second piece is that hiring in the public service is so time-consuming. It takes time to run a competition, and finding employees who meet the technical requirements and are willing to become employees takes time as well. Body shops have, in effect, become the “easy” button when there's a short-term need for a skill set. It is very convenient. It is fast.
I think if you look back to our HR processes as well as our procurement processes, you'll see that how intensive and long they can be has created the widespread use of these IT body shops.
The final point I will say on this is that because the IT world is changing rather rapidly, the skill sets of IT consultants often do not exist in the public sector, so it is a very valuable way to bring in a resource that we don't have.
3:45 p.m.
Liberal
Valerie Bradford Liberal Kitchener South—Hespeler, ON
You mentioned that Mr. Yeo was required to file a confidential conflict of interest report within 60 days, but he failed to do that.
I know there is an ongoing investigation, but in general terms, what are the penalties for failing to file this report, and do you feel they should be increased?
3:45 p.m.
Deputy Minister, Department of National Defence
It's a condition of employment to actually disclose conflicts of interest. He agreed with this when he signed his letter of offer. He did not declare anything at the point of hiring or within the 60-day time frame. As he was on a probationary period, the natural consequence would have been termination of employment. If we were dealing with someone who has been a long-standing employee, you might get a different answer, but when someone is on probation, it's very easy to reach the conclusion that they don't fit the ethical profile of someone we would like in the public service.
3:45 p.m.
Liberal
Valerie Bradford Liberal Kitchener South—Hespeler, ON
On Tuesday, Mr. Yeo, when asked about the contract that was signed with Dalian on the day he joined the public service, he said, “I provided my signature to the staff”, and claimed he had no knowledge of the contract.
Do you belief that Mr. Yeo's true signature was on the letter of offer, or was it his staff at Dalian that signed it?
3:45 p.m.
Deputy Minister, Department of National Defence
It's impossible for me to say, Mr. Chair, because, if I recall correctly, it's an automated signature using a computer.
To me, though, Mr. Chair, it doesn't really matter what he did with his business dealings with Dalian; he still failed to meet his obligations to the employer. I don't have an opinion on whether that was he or his staff. To me it doesn't matter, because the requirement as an employee was to disclose his conflicts, and he did not.