Transport Committee on Dec. 1st, 2016

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I'm calling to order meeting number 37 of the Standing Committee on Transport, Infrastructure and Communities. Pursuant to the order of reference of Wednesday, October 5, 2016, Bill C-227, an act to amend the Department of Public Works and Government Services Act, regarding community benefit.

Welcome to everyone who's here.

We have with us, Mr. Schwartz, director general, commercial and alternative acquisitions management sector. It seems we always have interesting names for sectors in our government.

I'm going to turn it over to you for some brief comments.

[David Schwartz, Director General, Commercial and Alternative Acquisitions Management Sector, Public Services and Procurement Canada]

Good morning, everyone.

Madam Chair and members of the committee, hello. I would like to thank you for giving me the opportunity to answer your questions concerning Bill C-227.

My name is David Schwartz, as the chair mentioned, and I am the director general of CAAMS, the commercial and alternative acquisitions management sector, with Public Services and Procurement Canada.

My sector buys goods and services and manages construction contracts amounting to over $7.5 billion a year on behalf of federal government departments and agencies. We buy from suppliers around the country.

The operation of government-owned facilities and construction contracts represent the top two commodities that my sector procures. Together, they represent $5.4 billion of the $7.8 billion in procurement we have averaged over the last three years. The services deal with government-owned facilities and construction contracts. The services that we procure include architecture and engineering, construction and maintenance, as well as property management and project delivery.

Today we leverage Government procurement so as to provide economic opportunities and community benefits across the country. Over 72 per cent of the business volumes for contracts awarded by my sector goes to small and medium-sized enterprises.

The majority of construction contracts awarded by PSPC in a particular region go to suppliers located in that region. Communities are currently benefiting from government procurement. Taking the figures from the last three years, we see that 93% of construction contracts awarded in the Atlantic region went to suppliers located in the Atlantic region. That figure was even higher in Ontario and Quebec, at 98%.

Public Services and Procurement Canada is supportive of the objectives of Bill C-227. Public Services and Procurement Canada manages close to $15 billion in procurement on behalf of federal departments and agencies. Those procurements provide economic opportunities and community benefits across the country. Close to 40% of our overall procurement business goes to small and medium-sized enterprises.

With respect to the bill, in order to reduce the administrative burden of having each bidder submit information on the community benefits their respective proposal would provide, the proposed planned approach would be to only require the winning bidder to provide that information and to do so before contract award. A standard clause could be developed and inserted into RFPs issued by PSPC to place this requirement on bidders. Collecting the required information will build departmental knowledge of the community benefits that accrue from federal procurement.

Thank you for your time and attention. We would be pleased to answer your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll start with questions from Mr. Berthold.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

I think it is Mr. Rayes who has the floor, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Go ahead, Mr. Rayes.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

Thank you, Madam Chair.

Thank you for being with us this morning, Mr. Schwartz, particularly since this is the Standing Committee on Transport, Infrastructure and Communities, and you work in procurement. We learned that the people from Infrastructure Canada and the Treasury Board decided not to appear before our committee, since they believed it was not the appropriate place to discuss this bill. We have thought the same since the beginning. In our opinion, this bill should, instead, have been examined by the Standing Committee on Government Operations and Estimates.

In your document, you talk about $7.5 billion dollars and you say that 72 per cent of the business volumes is awarded to businesses in local communities. You even say 90 per cent in some sectors.

Is that correct?

[David Schwartz]

I would like to clarify that.

In fact, our sector purchases various kinds of vehicles, parts, construction materials, and so on. The construction and maintenance of federal government buildings represents about $5.4 billion of the $7.8 billion annually.

In addition, 72 per cent of the contracts associated with purchases made by my sector, which amount to $7.8 billion a year, on average, are awarded to small and medium-sized enterprises.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

As a result, that helps local enterprises in the communities where the projects are carried out.

[David Schwartz]

I would like to clarify something. I said 98 per cent for Quebec and Ontario. That figure is different; it is a base figure. To arrive at that figure, I considered all construction contracts signed by Public Services and Procurement Canada. On average, that comes to a little over $1 billion per year. When we look at the distribution of those contracts, by region, and the suppliers to which they were awarded, the figure was 93 per cent of those contracts for companies in the Atlantic provinces. For Quebec and Ontario, it was 93 per cent. These are two different figures.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

I can confirm, as a former mayor, that when you have projects that receive government funding, that is more or less the figures you get. Between 85 and 90 per cent of projects are awarded to local enterprises, which is easy to explain when you consider transportation costs and the proximity of the enterprises.

You are giving me fairly substantial figures and percentages. What would this bill do, on top of that, to support local communities? Do you not have the power, already, to do the same things when you are preparing tenders?

I have looked at this from every angle, and I still think that all of this does nothing but add more red tape and administration. Some people have talked to us about that aspect. It remains to be verified once the tender is launched.

What are you not able to do at this time that this bill will enable you to do?

[David Schwartz]

I would say that the bill will enable Public Services and Procurement Canada to require that suppliers provide information. Today, we do not collect information about community benefits. With this bill, we will have the power to do that.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

And yet you are able to determine the percentages. How do you do that if you do not have access to that information at present? You said that 92 per cent or 72 per cent of business volumes contracted went to local enterprises, and, at the same time, that you need to have access to this information. You must have got it somewhere.

[David Schwartz]

I would like to clarify something. We signed a contract with suppliers in the Quebec, Atlantic and Prairies regions. So we know whom we are doing business with.

On the question of community benefits, are there apprentices, are parks and other things being built? In my opinion, the goal of the bill is to obtain more information.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

Would you be able, today, at the point when tenders are being prepared, to ask enterprises to have a certain number of apprentices or a certain percentage of aboriginal workers or people with certain disabilities? What would prevent you from including that in your tenders today? I think you have complete power to do that today.

[David Schwartz]

At the moment, that would be optional, but not mandatory.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

The bill says: "the Minister may ... ." There is therefore nothing that requires her to do that.

You could do it today. Is there something in the legislation that prevents you from including those terms when you draft your tenders?

[David Schwartz]

As I mentioned, it is not that it is difficult, but it would be optional. The supplier has no obligation to do an assessment.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

I come from a municipality and I have put out a number of tenders. There is a form, and the people who want to bid have to fill it out. If the tender document says that you need this information, but the form in question is not filled out, their proposal is automatically rejected. There are terms to be complied with and boxes to fill in. They have to fulfil the requirements.

Is there something that prevents you from including your requirements?

[David Schwartz]

That is an excellent question.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

I understand.

[David Schwartz]

I will have to check that again with legal services, because I am not a lawyer. In my view, the purpose of the bill is to gather information.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

We have understood very clearly, but I want to know whether there is something that prevents you from doing it today. A number of people have talked to us and we have looked into it. To our knowledge, there is nothing that prevents you from doing everything that is there.

[The Chair, Liberal, Judy Sgro]

Mr. Rayes, I'm sorry, we've gone way over, because I was so involved in listening to your question.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

Thank you very much. You just needed to signal me earlier.

[The Chair, Liberal, Judy Sgro]

Maybe we'll get back to some of those answers.

Mr. Hardie.