Public Accounts Committee on June 19th, 2025

[Anthony Housefather, Liberal, Mount Royal, QC]

That's right. Essentially, there's no $64 million sitting in GC Strategies for the Government of Canada to reclaim. Is that correct, as far as you know?

[Karen Hogan]

I can't comment on—

[Anthony Housefather, Liberal, Mount Royal, QC]

I mean, based on a reasonable person's assumption—

[Karen Hogan]

I can't comment on what's on the books at GC Strategies. I did not audit that company.

[Anthony Housefather, Liberal, Mount Royal, QC]

That's not what I'm asking you. I'm saying, as a reasonable person, as you just said, they likely paid all of their subcontractors the monies they were supposed to be paid. They didn't earn $64 million in profits from the federal government; they were paid a total amount of $64 million, with which we know they hired subcontractors, and some of the different contracts were fulfilled. We have no proof that the others weren't fulfilled. We just know they didn't meet the written requirements or the requirements of the contract for you to know, on an auditing basis, that they were fulfilled.

Is that correct?

[Andrew Hayes]

What I would say about this is, first, in our mandate, we don't have the ability to follow through with the contracting. We're at arm's length. We can't go and look at how GC Strategies engaged with the subcontractors.

It's fair to assume that if the subcontractors weren't being paid, they would have pursued both GC Strategies, and probably the government, as a defendant in seeking their compensation.

[Anthony Housefather, Liberal, Mount Royal, QC]

Did you find any actions that were taken?

[Andrew Hayes]

We did not do a litigation search or a court search. Again, our point in this is that we can't say exactly what has been provided to the government in terms of services and deliverables when there isn't evidence in the file—

[Anthony Housefather, Liberal, Mount Royal, QC]

Again, nobody is arguing that was good, just—

[The Chair, Conservative, John Williamson]

That is the time, Mr. Housefather. Thank you very much. I appreciate that exchange.

We're beginning our third round now. Again, it will consist of five members, which will probably take us to the top of the hour.

Ms. Kusie, you have the floor again for five minutes.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much, Chair.

I want to go back to how 54% could not prove deliverables were received. You and I had a brief conversation about this previously. As a former public servant, this is absurd to me, considering that the process of signing sections 32, 33 and 34 requires that you must receive the deliverables before payment is released. You must sign the section 33 before the payment is released in the section 34.

Similarly, my colleague mentioned that we've put forward a motion to try to get the money back. Since it's pretty evident here that in 54% of cases they could not prove that deliverables were received, I think it is a reasonable assumption that all of the work was not completed—all of the deliverables were not received—and therefore it would be reasonable to ask for the money back, and for many other reasons, but I think the greatest piece of evidence to ask for the money back lies within that.

In addition, in the last Parliament, I asked the previous Treasury Board president if she would make it an obligation to get the money back. She said she would. We have yet to see a single cent. In the committee of the whole last week, I asked the new President of the Treasury Board—actually, the fourth during my time in this shadow role—if he would make the commitment to the Canadian people to get the money back.

The motion passed, but given all of these lapses—the inability of the previous President of the Treasury Board to get the money back, the weak commitment of the current President of the Treasury Board to get the money back—and going back to your reference to the nuts and bolts, to the paperwork of the public servants themselves, it's astounding, as I said, that a section 33 would have been signed for a financial release in section 34 when 54% could not prove deliverables were received.

This is all leading to my question. In your opinion, at what point are ministers accountable for the funds going out? We have seen in testimony again and again with GC Strategies and procurement that the rules are not being enforced and followed, as you've indicated yourself, yet there seems to be no one who is ultimately accountable for this. It seems to me that the ministers, as my colleague has pointed out, who have been retained in this government and have been promoted in this government, are not even being held responsible for these funds. At what point do you believe ministers are accountable for these funds that are paid out, for which we can't even prove we received a deliverable?

Thank you.

[Karen Hogan]

If I may, Mr. Chair, just to clarify one of the percentages, it is in 46% of the cases that we found little to no evidence that supported deliverables. I believe the honourable member gave a different number.

I think it's ultimately up to this committee and other parliamentarians to hold ministers to account. It is my responsibility to ensure that deputy ministers, who are the accounting officers of departments, are ultimately accountable for all of the decisions and actions that happen in their organization.

The member is absolutely correct that there's a delegation made to an individual in the organization to authorize that funds be disbursed, and that comes with responsibility. We would expect that when that certification is done, they leave a paper trail to ensure they can demonstrate that they acted with the best interests of government and spent funds wisely. Ultimately, that's why I think deputy ministers should be coming here to speak to why their procurement processes and their procurement officers were not following procurement rules.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

In addition, 82% of federal organizations could not prove that fees did not exceed market rates. Again, in my time in the public service, three quotes were required. You had to take the lowest. Were any policies violated in not obtaining these?

Also, are there best practices in other jurisdictions that exist to ensure this does not happen again?

[Karen Hogan]

The finding about not being able to demonstrate that the fees paid were at market rates is a unique one here, as many of these contracts were low-dollar-value contracts, as I mentioned previously, or they were contracts for which only one valid bid was received. While the exemption exists that you don't need to have a competitive process, there is still a requirement to make sure that the price paid is at market value and is not inflated.

This is one of the areas where I think this is why the finding was so high and why, so many times, we didn't see this done. Many public servants didn't know that this requirement existed, but it is one to double-check. Even though you don't go through the competitive process, you should do something to make sure that the price you're paying is a market rate.

[The Chair, Conservative, John Williamson]

Thank you very much, Ms. Kusie.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

[The Chair, Conservative, John Williamson]

Up next is Mr. Osborne. You have the floor for five minutes.

[Tom Osborne, Liberal, Cape Spear, NL]

Thank you.

Not to continue to toss the football, which seems to have become a political football, but you've indicated that the government ignored the rules. When you say “government”, sometimes the general public looks at the legislature as the government.

When you say the government fell out and either chose to ignore the rules or did not understand them, do you mean parliamentarians or do you mean individuals within organizations?

[Karen Hogan]

I apologize. At times, I probably use those interchangeably, but in this case, we audit the actions of the public service. It's ultimately the policies put in place by the public service that get approved and should be followed. However, the government, the elected officials, have to make sure that the public service is putting these rules in place and following those rules.

I apologize if I caused some confusion. Here, we were looking at the actions of the public service, and they did not follow the rules that they themselves had in place.

[Tom Osborne, Liberal, Cape Spear, NL]

Thank you.

You also indicated that ministers should not be involved in the day-to-day part of the tendering process. While there were some times when rules were either not followed or not clearly understood, there are individuals who are trying to make this look like a minister did not do their job.

The real issue here, as I understand it, is that there are perhaps too many rules, and over the course of a number of years or decades, rules keep getting put in place. Perhaps there needs to be a streamlining of rules and a better understanding by and education of public servants of what the rules are.

Can you clarify that?

[Karen Hogan]

I'm happy that your question kept building on that. It allows me to expand on my response that I gave earlier. The Financial Administration Act, which a previous member was referring to when she mentioned sections 32, 33 and 34, is a law. That is something that the government put in place, and then the rules that the public service put in place are how to operationalize it.

The requirement that you must have evidence when you certify is part of the law. It is part of the Financial Administration Act. How that's done is what's in the rules and regulations. That's where I think there's confusion. There are very many rules added on to how to operationalize that, which I think is why we're seeing the behaviour now of the rules not being followed. It's because they may not be known, or they slow down the process and people might try to work around them to expedite a procurement process.

I hope that helps the member, Mr. Chair.

[Tom Osborne, Liberal, Cape Spear, NL]

Thank you.

Building on that further, over the course of years or decades, regardless of the administration, ministers put rules in place. Under the Financial Administration Act, those rules need to be followed. We need to ensure that time sheets are signed off, and so on.

What would your recommendations be in this regard? In the last round, there were no recommendations.

There are already enough rules in place. However, for the time sheets that were not signed off on, for example, and the verification that money was being spent as it should be or there was value for money, where does that responsibility rest, knowing that the rules have been put in place?

[Karen Hogan]

If I walk down the web of rules, ministers are accountable and answer to Parliament. In turn, ministers hold deputy ministers accountable for delivering all of the programs and services and following all the rules and acts that exist. Deputy ministers delegate that somewhere in their organization, and the responsibility then rests with a responsible person overseeing procurement in each and every department, agency and Crown corporation.

The requirement of getting a time sheet comes from two places. There's that delegation, but then if the contract calls for it, there's also the enforcement of the terms and conditions of the contract that the departments would have put in place. Ultimately, it flows its way back up through the organization, but it starts with the individual managing the contract and the procurement process.

[The Chair, Conservative, John Williamson]

You have just a few seconds. Why don't we hold off until next time and I'll keep that in mind?

Thank you, Mr. Osborne. I appreciate it.

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

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

Thank you, Mr. Chair.

Mr. DeMarco, I think that it's important to make the most of your attendance here in the committee today. I'll speak on behalf of my colleague from Repentigny, Patrick Bonin, who is basically wondering the following.

In your report 4, you state that the federal government is struggling to implement sustainable development in Canada. You also note that Canada holds the lowest score in terms of improving performance on sustainable development indicators. Why is Canada so slow to make progress and among the worst countries at achieving sustainable development goals? It's as bad as the United States. How can we turn things around?