Public Accounts Committee on Dec. 4th, 2024

[The Chair, Conservative, John Williamson]

Thank you very much.

Up next is Ms. Bradford.

You have the floor for five minutes.

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

Thank you, Mr. Chair.

Thank you to the witnesses today.

I have some questions for the Auditor General.

Thank you for your work on this report. The recommendations you bring forward are quite useful, but I'd like to focus on the context in which the CEBA program was developed.

You note that the government was able to quickly deliver loans to small businesses, but I read few mentions of the fact that the program was developed during the pandemic.

Could you expand on how difficult it would have been to develop and launch a program of this scale less than two weeks after the country was locked down?

[Karen Hogan]

We include several mentions in our audit report that it was in the context of the pandemic. Like other COVID programs that were launched, this was done with record speed. Putting up a program of such magnitude was very quick when you think that 900,000 businesses, for the most part, in less than 28 days, received the funds they needed.

As I mentioned earlier, it wasn't the “what was done”. That was well done. It was the “how it was done”. I recognize that, at the start of the pandemic, it made sense to find a vendor, because EDC needed surge capacity to do this. It made sense to go with a vendor you knew. However, that doesn't mean you continue to rely on that vendor and don't move away from hourly contracts to a fixed price. We saw movement to a fixed price only in 2024. Three years down the line, you should have had time to run some competitive processes. However, I recognize—we even acknowledge it in the report—that, throughout all of this, there were delays in receiving decisions on the policy front, because this program was transitioning a lot.

It is still the responsibility of EDC, as the Crown delivering the program, to try to always achieve best value for money. That can be challenging. “Is that really the right price? Can we get a better price? Can we go to a fixed price versus hourly?” Certain things, I think, could have been done to improve the value for money as this went along.

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

Do you believe it would have been possible to have a competitive contract take place to meet the requirements of businesses in 2020, during the COVID pandemic?

[Karen Hogan]

That's a difficult question to answer, because there was so much going on in 2020. I think everyone forgets the level of uncertainty. No one knew how long this pandemic was going to last.

However, we have shown in other COVID reports how, after the initial contract, there were opportunities to do quick competitive contracts, sometimes at 10 days and sometimes with a small group of vendors. You just have to find the time and the ability to do that.

I acknowledge that, at the beginning, directing a contract to someone you knew made sense. What you do after a bit of time.... That's where you could have shown better value for money.

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

Do you believe the program would have been a better value for cost if it had been administered within the public service, and would that account for added costs such as benefits, pensions, equipment and other accrued costs?

[Karen Hogan]

There are so many costs when you try to look at a full-time equivalent employee versus a vendor, so it's a very difficult comparison to give. I think that, in 2020, the public service was doing so much for Canadians. They were delivering CERB. They were trying to set up queues. There was a lot going on. Again, I believe it was a good choice to find a vendor to help support that.

It was the continued reliance and poor contract management controls that I question regarding the value for money the government received.

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

How large a staff would be needed to administer the scale of a massive program like CEBA? Do you have any guesses?

[Karen Hogan]

I don't know. That's a very tough question for me to answer. I don't know how many people throughout Accenture and all of the other vendors and financial institutions might have supported that. Let's remember that 233 financial institutions got the money out into the hands of small businesses, so that's a lot of people.

While I love numbers, it would be very hard for me to add those up and tell you what the right number might be.

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

I still today hear from a lot of business owners in my riding about how critical that support was for them and their employees. It seems Stats Canada did a report on business support programs during the pandemic and noted that over 43% of businesses relied solely on CEBA for support during the pandemic.

Given that Canada has had one of the strongest economic recoveries since the pandemic, could you speak to us a bit about this limited analysis of the economic benefits of the program?

[Karen Hogan]

As I mentioned earlier, it's hard to tie this program to a specific measure as to why it was happening. There were other programs that were really targeting certain industries. There were programs that matched health restrictions, so the closures of businesses. This was just a general program. For the most part, there was only a salary threshold that you had to fall into.

It's really hard to know whether this program being temporary versus the others being permanent would have made a difference. Every business that signed on here knew that they were going to have to repay something. You knew going into this that somewhere down the line, there was a debt that you would owe back to the government.

[The Chair, Conservative, John Williamson]

Thank you. That is your time.

Ms. Sinclair-Desgagné, you have the floor for two and a half minutes.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you, Mr. Chair.

Madam Auditor General, I have a list of questions for you. Since my speaking time is limited, please be brief if possible.

As Mr. Moore said, a third party, Accenture, conducted a market study to determine who could best do the work. Accenture then suggested their own company to carry out the work.

Would you say that is consistent with the government's usual procurement processes?

[Karen Hogan]

As I said before, public servants and the federal government are held to quite a high standard in terms of managing conflicts of interests, whether real or apparent.

They are spending taxpayers' money, so I expect a higher standard in managing conflicts of interest in procurement processes.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you for your answer. I think that should be repeated until certain public servants follow your sound advice.

You said that some taxpayers' money was spent outside Canada. Do you know how much of that money was spent in Brazil in particular?

[Karen Hogan]

No, I don't have the details. Right now I am focusing on the contract for the development of the loan accounting software. The contract is in progress.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

What is the value of that contract?

[Karen Hogan]

The contract is worth $36 million. The licensing fees are $7 million.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Okay.

So that is the contract for which Accenture recommended their own business. Furthermore, it assigned that contract to its team in Brazil.

[Karen Hogan]

Yes, it was awarded to Accenture, but I think the individuals carrying out the contract are not all based in Canada.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Great, thank you.

Let us recall that EDC proudly stated that the money was staying in Canada. That is quite a contradiction.

Mr. Moore, you heard what the Auditor General said about public servants and Crown corporations. Crown corporations sometimes think they are not part of government, but they actually are.

The Auditor General also indicated that the standards should be quite high. I know you said that you duly noted that, but do you also take responsibility?

I know you were not in your position when some of those contracts were awarded, but is EDC really taking responsibility for getting things back on track?

Honestly, this kind of thing is unacceptable to taxpayers, in Quebec and the rest of Canada.

[Scott Moore]

We've agreed with the Auditor General's recommendation in this area. It's not something that we do and not something that we will do going forward. We agree; it's not the way we would do contracting, in this example.

I'd also like to go back to your comment or question around Brazil and give actual numbers. I like numbers also. I'm a CFO.

With the Brazil contract, $17 million, less than 10% of the total spend with Accenture, is actually Brazil-oriented. If we look at the contract you're referencing, 180 individuals from Accenture were involved in implementing the loan accounting system, of which 50 were Brazil-located. The rest were principally Canadian. The loan accounting system is now live—it went live in time for us to receive information from the financial institutions—and today we're down to 10 individuals who are working on the program from Brazil for change requests and maintenance.

[The Chair, Conservative, John Williamson]

Thank you.

Mr. Canning, you have the floor for two and a half minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

Ms. Hogan, we've been hearing about contracts, especially the initial contract to Accenture that EDC carried out. It seems, from what you said, that EDC gave too much control to the vendor over key aspects of the contracts, such as scope of work and pricing, and failed to exercise basic controls in contract management.

I used to be a consultant and get government contracts. I don't remember ever writing my own contracts. I was always given a contract to sign. I'm wondering how often it happens, from your experience in looking at government work, that basically they say, “Here's a problem. Can you write a contract for yourself and we'll sign it?”

[Karen Hogan]

It's not a typical practice that I see when we do work on procurement. However, we have seen it in other pandemic situations, and ArriveCAN would be an example that I could bring up.