Public Safety Committee on May 31st, 2006

[Sheila Fraser]

Our audit notes that there has been improvement—I would almost say a significant improvement—in the centre's financial reporting and contracting processes at the time of our audit. But we do note that there are still major issues with the development of the second computer system, which is known as CFIS II. This system was originally supposed to cost $30 million but is now at $92 million, of which $30 million is delay costs that we believe are avoidable. It has not been tested; it is not operating. So there is an issue there.

As well, there is an issue with the quality of the data in the registry. There are other assorted improvements that could be made, for example, on performance indicators.

[Maria Minna, Liberal, Beaches—East York, ON]

Are these issues surmountable, in your view?

[Sheila Fraser]

I hate to speculate about the future. I think there are a number of actions being taken with the computer system.

[Maria Minna, Liberal, Beaches—East York, ON]

Maybe I should ask Mr. Baker and Mr. Sims.

[William Baker]

There's still work to do; there's no question. As a public servant with 27 years experience, I can say there's work to do in every government organization.

For instance, in the area of reporting to Parliament, one of our principal preoccupations was to make sure the core data about the firearms program was correct. We want to make sure that with the number of licences, the number of registrations, the number of accesses to the data system and so on, we have good information. Without that, you can't even think of doing more sophisticated analysis and recording.

But the data is useful. It's not perfect; more work can continue to be done to refine the data in the system, without any question. The IT system has been a particular challenge from the outset. Building the existing system...that continues to be the system that supports the Canadian firearms program. Of course, the new system and our attempts to get that off the ground, which have been plagued by a number of challenges over the last few years, are quite well set out in the Auditor General's report.

[Maria Minna, Liberal, Beaches—East York, ON]

There are a lot of IT challenges in many different departments—even within the police force, in terms of setting up some of their systems. But we don't shut them down, which takes me to a question to Ms. Fraser.

I know this is not policy, but you are responsible for accountability to Parliament. There is legislation in place that sets out what this registry is about, and the current government has decided to drop a piece of it without coming to the House. Now that's not accountable to the people or Parliament. Can you tell us if that in fact is correct to do, and at least if it's accountable to Parliament?

[Sheila Fraser]

Again, that is a policy decision of the government.

[Maria Minna, Liberal, Beaches—East York, ON]

Not if it's legislation, it's not a policy.

Nonetheless, I think it's a question that has to be answered.

[The Chair, Conservative, Garry Breitkreuz]

Mr. Baker, one of the questions that Ms. Minna had was on the data itself. What percentage of the registrations have been verified?

[William Baker]

It's a small percentage. Since October 2004, we undertook to verify all firearms that were being transferred or initially registered. In that period of time, I believe roughly 200,000 firearms were verified .

[The Chair, Conservative, Garry Breitkreuz]

Out of a total of how many?

[William Baker]

We have roughly 7.1 million firearms in the database.

[The Chair, Conservative, Garry Breitkreuz]

So the percentage would be less than 10%.

[William Baker]

It would be, in that period of time.

Mr. Chair, I should point out that what I'm referring to was a decision that I believe was made in October 2004 to attempt to verify all firearms on transfer or registration. There would have been a number of firearms verified in the past. As well, in Canada, a large percentage of firearms are sold through gun dealers, who tend to be experts in firearms, so the information they would provide us for purposes of the registration would be reasonably reliable.

But there's still more work to do on data and integrity in the firearms registration.

[The Chair, Conservative, Garry Breitkreuz]

My understanding is that probably 1.5 million in total were verified out of 7 million. So in answer to Ms. Minna, that would give you an indication of the accuracy.

Mr. Norlock.

[Maria Minna, Liberal, Beaches—East York, ON]

I had a point of order; I have to intervene.

With all due respect, the chair seems to take the liberty of asking questions after every one of ours. I don't know what the rules in this committee are, but if you're going to do that, then maybe we also ought to respond after every time you ask a question.

I've never seen this happen before.

[The Chair, Conservative, Garry Breitkreuz]

Well, Ms. Minna, at the beginning I said I had a special interest—

[Maria Minna, Liberal, Beaches—East York, ON]

No, because you're leaving your own comments at the end, which I think are quite biased in this case.

I think Madam Fraser would like to say something to that effect.

[The Chair, Conservative, Garry Breitkreuz]

Yes, go ahead.

[Sheila Fraser]

I'd like to add a piece of information on the last question. We note in the report, on paragraph 4.61, that at October 20, 2004, the 27% had been verified, and after October 2004, another 142,000. So it would be much more than 1 million or 1.5 million; it would be up over 2 million.

[The Chair, Conservative, Garry Breitkreuz]

Yes. That was my question. I just wanted to know that.

Okay, Mr. Norlock.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you very much for coming.

I have a very great interest. I want to let you know, to let all your departments know, that I worked for 30 years for another civil service, and I know that all civil servants do the best they can with what they're presented.

My history is 30 years as an Ontario Provincial Police officer, so I did work under the old FAC system, which I'll refrain from commenting on, except to say that under that system, which I believe was originally created by the then Justice Minister Campbell, and knowing how that system operated, we would know probably within a very short period of time.... All those who had firearms acquisition certificates would, when they acquired a firearm, have to register that firearm. So that information at one time was all with the federal government, and some day I'd like to find out what happened to that. I have a suspicion--and it wouldn't have cost a billion dollars.

Going back to some of the questions in regard to the $39 million, the special report of the Auditor General stated that the Department of Justice officials could not provide documentation showing any analysis or process by which the decision was made to report the $39 million in liability relating to the CFIS II, and government decisions limited Parliament's control of public spending in paragraph 25.

I have a couple of quick questions on that. Was there simply no documentation, or has this been misplaced? Secondly, how specifically were decisions made to report or not report the $39 million?

I note that Mr. Ganim, from the Department of Justice, is here and may be able to better lend some answers to those two questions.

[John Sims]

Mr. Chair, in answer to the honourable member's request, Mr. Ganim would be pleased to take the microphone, I think, and speak to what happened.

[The Chair, Conservative, Garry Breitkreuz]

I welcome you to come to the table to answer that question.

[Wayne Ganim, Former Director General, Finance, Department of Justice, As an Individual]

In terms of the question, as Mr. Sims has referred to earlier, this was a transaction that we were asked to set up in 2002-03 at the year-end. But I must tell the chair and the committee that consideration was never given to the $39 million. What we were looking at and what we were planning for at that time was the first payment of the three-year contract. All documentation on the contract called for payment over three years. So it was never in our planning numbers, never in our bookkeeping numbers, that we were going to pay or have to record costs against the entire contract or the delay costs. It just wasn't on our radar screen.

When we were asked by the Canada Firearms Centre to set up a PAYE for the $10 million, what we did was look at the transaction against the existing contract. The existing contract called for the Crown to basically take acceptance upon certification of the system. The system could not be certified for delivery. It was basically Mr. Hession and HLB Decision Economics Inc. that had looked at the system and confirmed that the contract was in some trouble in terms of delivery.

They were to deliver these goods and services by the month of January of that year. The contractor had informed us that there was going to be a six-month delay on a contract that was going to be for nine months. They were also reporting at that time $15 million of cost overruns on a $32 million contract--$15 million. Therefore, when we looked at it, as a chief financial officer, I basically came to this conclusion: how could I sign section 33 of the Financial Administration Act, which basically says that your goods and services can be certified in accordance with the contract, when in fact the contract was not delivered on? Therefore, we did not set it up as a PAYE that year, but I must say we did not consider the delay costs or the entire price of the contract.

The other point I'd like to bring to the attention of the committee is that since we were not able to do that, we did work with the Treasury Board Secretariat to ensure that the $10 million of that first payment was transferred into the next year. So if you go to the supplementary estimates (A) of the Canada Firearms Centre for 2003-04, you will find that the first transaction in the first supplementary estimates (A) was the $10 million of that payment that we could not make. We brought that money forward so the Firearms Centre could have the cash to pay when the contract was upfront.

In terms of documenting the decision, again, this was something that, when we looked at it, we basically discounted quite quickly because we didn't feel it was a legitimate charge to the appropriation. Once we found out, as we've been hearing here, that there was concern about the error, and it was a reported error that I had made with my head of accounting operations, we did put a two-page memo to file--albeit a year late, I don't disagree with that--explaining what our rationale for our decision was, because we knew it would be challenged and under review. Back in 2002-03, we did not write anything to file.