Public Accounts Committee on Oct. 9th, 2025

[The Chair, Conservative, John Williamson]

Thank you very much.

Up next, we have Mr. Osborne for five minutes.

[Tom Osborne, Liberal, Cape Spear, NL]

Thank you, Mr. Chair.

This question is for both Ms. Beck and Ms. Reza.

We are in a changing geopolitical world. If you're watching the weather, you can see it's about to change. How do you balance protecting national security, our sovereignty, with your ability to ensure that procurement is fair, open and transparent?

[Arianne Reza]

We can talk about it from two different aspects.

The Prime Minister recently announced the buy Canada approach, which will be looking to make sure that Canadian suppliers have opportunities to compete, whether it's through Canadian content, through Canadian inputs or through increased SMEs. We're looking to build that ecosystem, and to do that, we need to be stable in all those areas we just described, whether it's making sure the rules are adhered to, or whether it's the challenge function in how we buy things. I didn't manage my fourth frame, but that's one that I think about often in terms of procurement.

The Prime Minister has announced the new Defence Investment Agency, which is really designed to meet the moment in terms of looking at the ecosystem of Canadian military supplies as well as some of the foreign military sales.

Did you want to add anything?

[Stefanie Beck]

I think it goes to the partnership that's required across the whole of government to be able to effectively deliver quickly, yes, but manage risk at the same time. As Ms. Reza was saying, most of these procurements in the future will still be competitive, even though we know there is an urgent need for much of the equipment for the Canadian Armed Forces. We still want to make sure there are lots of opportunities for Canadian businesses, as well as, of course, the broader society, to be able to benefit economically. It's working through what defence procurement strategy will achieve, and it's most likely to achieve both of those goals at the same time.

[Tom Osborne, Liberal, Cape Spear, NL]

Ms. Reza, you talked a little earlier to my colleague, Mr. Stevenson, about keeping the financial aspect of a bid away from the technical aspect. Could you speak about that a little more? I'm just wondering how you balance the amount of a procurement bid versus the technical aspect of a procurement bid, and whether or not that is standard across the board.

[Arianne Reza]

It's an excellent question.

There's a range. It depends on what we're buying in the commodity. Are we more concerned about the best price? Is something a common commodity that we're really looking just to buy and procure, or is this something very bespoke in a niche market where we need the expertise and we may weigh more towards the technical? We keep them separate in terms of additional checks and balances for integrity, so that there's always a chance for them to come together, and nobody knows the order of the bids.

Did you want to add anything on this?

[Dominic Laporte]

No, I fully agree with what the DM said.

In terms of the split, for example, what is very common is to see a split 70% technical to 30% price, but if it is more of a commodity type of good, then we're going to give more weight to the pricing. It does vary, and there is no set standard. This is something that is agreed on with the client depending on what is most important: Is it cost driven, or is it basically quality driven?

[Arianne Reza]

It goes back as being another check and balance; it's a challenge function. We have to agree beforehand in terms of the procurement strategy what is going to be the individual weight. That also helps manage issues and keeps it more transparent. The suppliers know the ratings of the bid as they go in.

[Tom Osborne, Liberal, Cape Spear, NL]

Thank you for that answer.

Mr. Laporte, you talked earlier about measures that were put in place, particularly by Treasury Board. Mr. Hayes may want to weigh in on this a little as well. Could you go a little deeper into what the new requirements are? I know the Auditor General said there are rules in place and it's just that they weren't always followed. There are the new measures put in place by Treasury Board to create clarity of process and ensure fair competitiveness, and also so that we know we are attracting competitive bids and it's attractive to those who are bidding.

[Dominic Laporte]

I'll start with PSPC, which has put lots of measures in place. DM Reza spoke about the quality assurance and recourse compliance office. This is key, I think, to the issue that was discussed.

How can we ensure, for example, that in the future we're able to go back to the record and see exactly what happened from the procurement strategy standpoint? We have a team. We have a senior director who's now in charge of that. They reviewed 1,600 files. We want to make sure that directors are also talking to their procurement office, which means always looking at them in a constructive way. What is missing? What was the reason we didn't have that element on file? How can we make sure we remedy that in the future?

This group has been quite impressive in terms of the work that has been done on that front.

I would say also there is a lot of training. In one module, for example, even though competition is the norm, we were addressing the non-competitive process and the exact situations this should be reserved for.

We also spoke about the new measure that we put in place on July 1. We've put in lots of new measures to put in more robustness when it comes to professional services. If a client wants to put in place a contract for professional services of more than $20 million, they need to seek ADM approval. That was oftentimes left to the manager. Maybe the DG or ADM had no oversight that the department was about to put a contract in place of more than $20 million. This is an example of the measure that has been put in place.

We also wanted to make sure we were limiting the value of these contracts. It's now limited to a certain amount. We spoke about the situation where we have only one bidder. If, in the future, let's say, we run a competitive process, and there's only one bidder, that again will trigger something. We're going to have to validate with the ADM of the client department just to confirm that the technical specifications were not too restrictive in that case.

Those are examples of procedures that have been put in place by PSPC to make sure we've learned from the findings of the OAG and the OPO. On top of that, we're working closely with TBS, because we can influence the procurement process as a contracting authority. Oftentimes, lots of the decisions, as explained by DM Reza, rest with the business owner when defining the requirement, so TBS has put measures in place. For example, if it's an IT contract, they need to check with the CIO to make sure they don't have the in-house resources or expertise to do that internally. There are lots of checks and balances that have been put in place. For a new manager now to put in place a contract for professional services, they need to decide themselves that they don't have any staff who have the ability to do that.

This is quite positive in terms of looking at the collaboration that took place between PSPC and TBS to establish a new framework that is much more robust when it comes to procuring professional services.

[The Chair, Conservative, John Williamson]

Thank you.

Mr. Hayes, I think you have a comment you'd like to make, which I'll allow.

[Andrew Hayes]

Thank you very much, Mr. Chair. I'll make this brief.

In response to your question, the only thing I would add is that with new rules and requirements for processes and a pressure to move quickly, it is important for everyone to understand why the rules are there and how they should be applied in a day-to-day way, but also, as new organizations are coming into the sphere, it's important they be aware of the accountability and their requirements.

We will be in to audit the new organization. We'll be looking at how defence procurement is going to be happening.

I would just encourage everybody to look at the reasons for some of the failures that we found. I also want to mention that the strength of the internal audit functions in all of these departments and by the comptroller general is also a very important tool for improvement.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mr. Lemire for two and a half minutes. This will be your last turn.

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

Thank you, Mr. Chair.

I'd like to turn first to Mr. Cory, from the Canada Infrastructure Bank.

Incidentally, I'd like to point out that, normally, in the meeting room, we have another screen we use to see the witnesses appearing by video conference. The fact that we don't have it today might be the reason why no one's asking Mr. Cory any questions.

Mr. Cory, I'm going to be a little boring, but I don't have enough speaking time to allow you to give a verbal response to my question. For that reason, I'd ask you to provide a written response. Could you send me your vision for regional economic development and describe what you consider to be a rural or remote region?

I note, based on what I see on the map in front of me, that many of the Canada Infrastructure Bank's projects are only being carried out in large cities. I estimate that a region such as Abitibi-Témiscamingue, or even northeastern Ontario, accounts for at least 2% to 5% of Canada's GDP. Yet we don't feel that the Canada Infrastructure Bank is present in the regions. I believe, however, that this would be to its advantage.

I'm running out of time and I'm sorry about that. If you could provide that answer in writing to the committee, it would be appreciated.

I'd like to also ask Mr. Laporte a question I had implied.

[The Chair, Conservative, John Williamson]

Mr. Lemire, I'd like to ask Mr. Cory a question. I have stopped the clock to do so.

Mr. Cory, are you willing to provide a written response to Mr. Lemire's question?

[Ehren Cory]

Thank you, Mr. Chair. Yes, if the committee so wishes, of course we can.

I would just say that the CIB does have projects in every province and territory. We've worked really hard to develop programs, like our broadband for remote communities, that reach all corners of the country. We have projects—wind power, broadband, etc.—across the country. I am happy to share.

[The Chair, Conservative, John Williamson]

Thank you. We look forward to that fulsome response.

Mr. Lemire, I'm giving you back your 46 seconds.

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

Thank you. I really appreciate it.

I'll get back to my question.

Do you still have contracts with McKinsey, particularly at PSPC?

[Dominic Laporte]

No. We checked and, since 2023, there haven't been any contracts with this firm for which PSPC would act as a joint authority or as a department.

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

To my knowledge, PSPC is also responsible to some extent for the government's global digital transformation. We understand that your department has responsibilities, but your oversight role isn't clear to me. In a way, it limits the collaborative and complementary work being done. What I see is that many people are working in silos. This limits opportunities to achieve economies of scale and to create a role within the public service.

In short, could you clarify PSPC's role when it comes to contracting? Could there not be better synergy between departments under your leadership?

[Dominic Laporte]

I'd like to point out that we don't work in silos. We work closely with all client departments.

When we implement procurement tools, it's precisely so that all departments can use them to achieve economies of scale. We're seeking to transform government contracts and our procurement process. It's really by working together with all the agencies involved in digital technology that we'll achieve this.

The perception you're describing doesn't correspond to the reality we experience every day in terms of procurement.

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

I'm glad to hear that. That perception came from answers I received to a question I'd asked in more general terms. Some people replied that it wasn't like that in their department. I certainly hope the reality is as you say.

I'd also like to address the issue of conflict of interest procedures, because it has been raised.

In the case of McKinsey, the conflict of interest didn't necessarily seem to be the problem. Rather, the problem was that government departments awarded contract after contract to McKinsey, which meant that its influence over the actions of the various departments was ultimately almost as strong as that of the government itself.

How can we ensure that, going forward, a firm will no longer be able to have as much influence or as many contracts within the various departments? People from a firm like that have an overall view of things, and if we don't have the same view within government, things may end up costing more, or we may end up being too dependent on a firm like that.

[Dominic Laporte]

This ties in with what Ms. Reza mentioned, namely competition. When we ensure that we have competitive processes in place, we have more bidders. So that's what we are trying to do.

With regard to McKinsey, even though the amounts involved were still quite significant, it wasn't the largest player in these contracts. This firm had 13% of the contracts that were awarded under the heading of professional services. Other qualified firms also received contracts.

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

My time has expired, but I'd like to conclude with one last point. You mentioned the importance of placing greater emphasis on competitive contracts. I encourage your vision, in order to promote transparency and maximize public funds, of course.

[The Chair, Conservative, John Williamson]

Thank you very much.

Next, we have Ms. Kusie for five minutes.