Public Accounts Committee on June 19th, 2025

[Kristina Tesser Derksen, Liberal, Milton East—Halton Hills South, ON]

That's great. Thanks very much.

I'm going to move on to Mr. DeMarco for his report.

I want to focus on the environment and sustainable development report. I did read it through. I take note that in your report about the national adaptation strategy, you found problems with the design and implementation. You mentioned that in your opening remarks as well.

There were three components, if I understand correctly. The federal, provincial and territorial bilateral action plans and the indigenous climate leadership agenda were the two that were particularly problematic, if I'm remembering correctly. I'm presuming that the third, the “Government of Canada Adaptation Action Plan”, was satisfactorily established. Is that correct?

[Jerry V. DeMarco]

Yes. If you look at exhibit 1.4, you see that the national adaptation strategy was essentially intended to be a three-legged stool, with the three components that you just talked about. Only one of those legs is in place, so it's a precarious strategy at the moment, with only one of those legs.

That federal action plan, which was the central component of the strategy, is in place, so I can confirm that there's a check mark for that. However, we do, later in the report, talk about gaps within that action plan. I wouldn't say that even that leg is a perfectly sturdy one. There are the problems outlined, including a prioritization of risks, an economic analysis and—a theme today—a value-for-money analysis, so there are issues associated with that one leg that is in place.

[The Chair, Conservative, John Williamson]

Thank you.

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

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

Thank you, Mr. Chair.

Ms. Hogan, since I'm also the Bloc Québécois critic for indigenous relations, I would like to talk about the report on registration under the Indian Act. I find this issue particularly significant.

In recent years, a number of people have falsely claimed to be of indigenous descent. Your report states that the department hasn't always been able to prove that registration decisions were made by duly accredited officers. Who should make these decisions? Are self‑declarations sufficient? Shouldn't we give the communities the power to determine who is and who isn't indigenous, and give them sufficient resources to do so?

[Karen Hogan]

The registrar is currently responsible for making decisions on any registration under the Indian Act. Yes, Indigenous Services Canada is responsible for transferring all registration responsibilities to indigenous communities. As part of our audit, we looked at its relationship with the organizations designated as reliable sources that help indigenous people apply for registration. However, we found that the budgets of these organizations weren't updated and were insufficient. It's impossible to transfer the responsibilities without ensuring that the communities have the funding and skills to manage everything. We made a number of recommendations to support the department in this area.

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

The impact is significant. The delays mean that study projects are being postponed. Of course, this means that indigenous people won't be able to receive medical care, such as surgery, for example.

Don't you think that it's basically a two‑tier system and that people are being personally left behind, given the government's lack of action in this area?

[Karen Hogan]

I'm concerned that it takes so long to communicate a decision on a registration application. It takes 16 months on average, which is really too long. Even for priority cases, such as individuals with medical issues, as you said, the time frame is around 10 months.

The government must ask itself why it can issue a Canadian passport so much faster than it renders a decision on a registration application. The public service can send out something important within a more reasonable time frame.

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

Thank you.

[The Chair, Conservative, John Williamson]

Thank you.

Mr. Kuruc, you have the floor for five minutes, please.

[Ned Kuruc, Conservative, Hamilton East—Stoney Creek, ON]

Thank you. I appreciate this.

This is exciting for me, because at constituents' doors, we heard a lot of what was going on with GC Strategies, so I can finally bring the voice of my riding to this public accounts committee. It's quite exciting.

I want to touch upon—and I thank you for touching upon—value for money. This is very important to me personally and to Canadians and Conservatives, I think. I want to touch upon how we had some success, in that we passed the motion to get $64 million back for taxpayers, and I'd like to thank our member from the Bloc for supporting that as well.

Therefore, my line of questioning will be around value for money. On page 8 of your report, you mention that federal organizations hired by GC Strategies were hired for their “specialized expertise”, but on page 9, you noted that in 33% of the contracts you reviewed, those same organizations could not show that the contractors actually had the necessary experience and qualifications.

We all know that GC Strategies is a two-person company that simply outsources the work that it receives. Is it standard practice for government departments to not check the skills and qualifications of people hired through their outsourcing contracts?

[Karen Hogan]

I would tell you that the rules require the public service to look at that, and that's why I say that the rules are clear. You have to put in a contract the skills and competencies that you believe are necessary to deliver the work that you need done.

GC Strategies does not do any of the IT work. It subcontracts that out, but the expectation is to then receive the résumés of the resources or a description of previous work that resources have done. As you pointed out, in 33% of the contracts we looked at, that documentation had not been maintained, so it was difficult for us to be able to conclude that the resource that did the work actually had the skills and competencies that were required and was, hence, being paid at the right rate.

The work was done, but we can't tell you whether it was good value for money, and neither could the departments, because they didn't have the evidence to support that the right skills did the work.

[Ned Kuruc, Conservative, Hamilton East—Stoney Creek, ON]

Thank you for clarifying that. Maybe that recalls some of the behaviour you mentioned over the last few years, which I would maybe call bad behaviour of this government over the last few years.

I have another question. On page 11 of your report, you highlighted that the government contractors must prove they did the work before getting paid, yet your findings show that in over 40% of the contracts examined, there was “little to no” proof that the work was actually done. However, the government departments still approved routine payments to GC Strategies.

I find that very concerning. I know that my constituents found that very concerning during the election. That was the question: If they're not doing the work, how are they getting paid? Who's looking at this? What's the oversight?

Is this normal, and how is this the case?

[Karen Hogan]

I would have told you that it is not normal to sign off and certify that payments should be made when there isn't proof that the work was done, and this was one of the concerning behaviours that we saw.

Again, the rules here are very clear. An individual who is going to certify that an authorized payment is to be made has to have made sure that the work was done, that the deliverables were received, and that the rates charged are accurate rates. Not seeing that made us ask a lot of questions, and many of the public servants told us, “Well, we know it happened, but we just don't have it here to show you and demonstrate it.” That's why the procurement rules exist: to make sure that you leave that trail to show due diligence and to show value for money.

We're not saying that the work was not done; we're just saying that the public service could not show us that the work was done.

[Ned Kuruc, Conservative, Hamilton East—Stoney Creek, ON]

That's fair enough. Thank you for your answer. I guess we could chalk that up to bad behaviour again.

There is another question I have here, and I'm shortly running out of time.

With regard to value for money, how is it possible that, before signing off on millions of taxpayers' dollars in payments, 31 federal departments got it wrong under the purview of this government?

[Karen Hogan]

I believe that points to one of my findings: that I had no reason to believe that this is limited to a specific vendor. I don't have a reason to believe that we are seeing this behaviour because it was contracts with GC Strategies. This is because it is across so many organizations, and it echoes the findings in my first report, which looked at contracts with McKinsey & Company.

I do believe that it's about going back to the basics, honestly, of knowing what the procurement rules are and really appreciating why they're put in place. Most contracts—94% of the contracts—required a time sheet, and to not collect them is a bit of a head-scratcher, because that's the easiest way to show who did what.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mr. Housefather, it's nice to have you back at committee as a full-time member.

You have the floor for five minutes, sir.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you very much, Mr. Chair

Thank you so much to all of you for all of the work that you do.

I don't want to put you into a political ping-pong match. I was going to ask you generally about the F-35s, but before I do that, I have some questions based on the last round of questions.

My Conservative colleague talked about the House passing a motion to recover $64 million, which, as I understand it, is the entire amount paid to GC Strategies. Ms. Hogan, is there any legal basis whatsoever to reclaim the entire amount of money paid to that company, essentially claiming that no work was done whatsoever?

[Karen Hogan]

I couldn't speak to the specifics in each of those contracts. There are 106 contracts, so from a legal perspective, the departments would have to look at that.

However, as I said, we saw contracts where the work was done—

[Anthony Housefather, Liberal, Mount Royal, QC]

Some of the money—

[Karen Hogan]

There was proper support and documentation, so I think an evaluation is needed.

[Anthony Housefather, Liberal, Mount Royal, QC]

Based on your report, for some of the money that was paid, work was actually done. You have no basis to know that any work wasn't done. All we know is that our standards weren't met, in the sense that they couldn't document, through time sheets or other things that were required under the contract, that the work was done.

I'm not arguing that it wasn't shoddy. I'm not arguing that we should be giving contracts to consultants to do HR hiring that we could do ourselves, but we have to put things in perspective. That's what I want to get from you.

[Karen Hogan]

I know Andrew will want to add something here, but every good auditor will tell you that when you don't leave a trail, there is no proof that things have been done. All I can tell you is the attestations I have of public servants, but the lack of supporting evidence is always concerning.

Andrew, did you want to add something?

[Andrew Hayes]

Yes. With the proviso that it's not for us to provide a legal opinion, what I would say is that the Financial Administration Act certification, which requires a delegated official to release payment, would basically be seen by our office as that person saying that they got the services—or the goods, in the case of a goods contract—that were supposed to be provided. That's a problem when there isn't a paper trail: The government is in a tough spot going after a person for whom they've authorized payment and certified that the goods and services were received.

Our message to the public service is make sure that you document your files when you sign off on the release of public funds to a contractor.

[Anthony Housefather, Liberal, Mount Royal, QC]

As somebody who used to be a general counsel, I very strongly believe in strong contracts and being able to show that you followed those contracts.

What I'm also trying to talk about, though, is a question of legal liability. I don't know how the Government of Canada could purport to recover the full $64 million paid to GC Strategies. One would be led to believe by some of my colleagues' comments that there's $64 million sitting in a GC Strategies bank account that the Government of Canada paid out. No: GC Strategies essentially paid its subcontractors. GC Strategies was hired to hire other individuals to do work. We have no evidence that GC Strategies didn't use this money, other than its profit margin, to pay out the subcontractors.

Is that correct?

[Karen Hogan]

As I said, I did not look into the actions of GC Strategies, but I would assume that if all of its subcontractors had not been paid, the federal government would have been hearing about it.