Mr. Speaker, it gives me great pleasure to address the question of member for Renfrew—Nipissing—Pembroke on this very important matter.
As part of a routine audit of contract records completed in April 2003, Public Works and Government Services identified irregularities in the management of the Department of National Defence's IT hardware maintenance services contract with Hewlett-Packard.
To resolve these problems and to help prevent similar problems, actions were taken. HP is to make significant changes to its Canadian management personnel and organization, and to change its management of government contracts to ensure that these issues are fully addressed. HP had also agreed to have the government review the effectiveness of changes made to its financial systems.
Public Works and Government Services and DND are to strengthen financial controls, contract management and oversight, to intensify monitoring, to review the management of relevant contracts, and to strengthen Public Works and Government Services management of cost audit programs and support. In addition, at the same time Public Works started a competitive procurement process to establish a replacement contract to be awarded in April 2004.
The Crown is continuing to investigate the amount of money that has been wrongfully paid out under contracts entered by Public Works on behalf of DND. These irregularities are taken very seriously and, as such, the following actions were taken.
The government is withholding payments pending the final outcome of audits and investigations.
The matter has been referred to the RCMP and outside counsel has been retained.
The government has issued a demand letter to the contractor to recover funds.
Officials at Public Works and DND are working with the prime contractor to ensure that any relevant contract administration issues are addressed.
The investigation is ongoing to determine whether the goods and services were received in respect of all funds paid out.
I believe that Public Works and DND, working together, have done the right thing.