SBUD Committee Meeting

37th PARLIAMENT, 2nd SESSION

Subcommittee on the Estimates Process of the Standing Committee on Government Operations and Estimates

EVIDENCE

CONTENTS

Monday, May 5, 2003

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1735

The Chair (Mr. Tony Valeri (Stoney Creek, Lib.))

Mr. Paul Szabo (Mississauga South, Lib.)

The Chair

Mrs. Carol Beal (Assistant Deputy Minister, Real Property Program Branch, Department of Public Works and Government Services)

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1740

Mr. Dan Ross (Associate Assistant Deputy Minister, Operations Branch, Department of Public Works and Government Services)

Mrs. Carol Beal

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1745

The Chair

Mr. Gerry Ritz (Battlefords—Lloydminster, Canadian Alliance)

Mrs. Carol Beal

Mr. Gerry Ritz

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1750

Mrs. Carol Beal

Mr. Dan Ross

Mrs. Carol Beal

The Chair

Mr. Dan Ross

Mr. Gerry Ritz

Mrs. Carol Beal

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1755

The Chair

Mrs. Carol Beal

The Chair

Mrs. Carol Beal

The Chair

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1800

Mrs. Carol Beal

The Chair

Ms. Myra Conway (Director General, Finance, Department of Public Works and Government Services)

The Chair

Mrs. Carol Beal

The Chair

Mr. Tony Tirabassi (Niagara Centre, Lib.)

Mr. Dan Ross

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1805

Mrs. Carol Beal

Mr. Tony Tirabassi

Mrs. Carol Beal

Mr. Dan Ross

Mrs. Carol Beal

The Chair

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1810

Mrs. Carol Beal

The Chair

Mrs. Carol Beal

Mr. Dan Ross

The Chair

Mr. Dan Ross

Mrs. Carol Beal

The Chair

Mrs. Carol Beal

The Chair

Mrs. Carol Beal

The Chair

Mrs. Carol Beal

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The Chair

Mr. Dan Ross

The Chair

Mr. Dan Ross

Mrs. Carol Beal

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1820

The Chair

Mr. Dan Ross

The Chair

Mr. Dan Ross

The Chair

Mr. Dan Ross

The Chair

Mr. Dan Ross

The Chair

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1825

Mrs. Carol Beal

The Chair

Mr. Dan Ross

Mrs. Carol Beal

Mr. Dan Ross

The Chair

Mr. Dan Ross

Mrs. Carol Beal

The Chair

Mrs. Carol Beal

The Chair

Mrs. Carol Beal

The Chair

Mrs. Carol Beal

The Chair

Mrs. Carol Beal

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Mr. Dan Ross

The Chair

Mrs. Carol Beal

The Chair

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1835

Mrs. Carol Beal

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1840

The Chair

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CANADA

Subcommittee on the Estimates Process of the Standing Committee on Government Operations and Estimates

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NUMBER 010

l

2nd SESSION

l

37th PARLIAMENT

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EVIDENCE

Monday, May 5, 2003

[Recorded by Electronic Apparatus]

»  (1735)  

[English]

    The Chair (Mr. Tony Valeri (Stoney Creek, Lib.)): I'd like to call the meeting to order.

    The order of the day is, pursuant to the motion of the Standing Committee on Government Operations and Estimates adopted November 26, 2002, a study to inquire into matters relating to the review of the process for considering the estimates and supply.

    We have before us witnesses from the Department of Public Works and Government Services. Welcome back. What we are hoping to do is pick up on our last discussion with respect to the Real Property Program Branch of Public Works and Government Services Canada, the discussion we had with respect to your estimates and information generally coming from your department.

    Since you don't have any opening remarks, I will go directly to Mr. Szabo.

    Mr. Paul Szabo (Mississauga South, Lib.): Thank you, Mr. Chairman, and thank you to our guests from Public Works and Government Services Canada for coming back.

    I have three issues. Number one has to do with the workforce, the labour force, and I noted in the commentary you provided to us--and thank you for the additional information--that you acknowledge that this is an issue to be dealt with and that we should have a plan.

    This is not just an issue to be addressed to Public Works and Government Services Canada, it affects virtually the entire public service. The question really is, what is our plan to have a plan so we can find qualified, capable people to do the jobs that are clearly going to come available?

    The second has to do with the age of government-owned buildings. I noted that the average age is substantially higher than the BOMA average, very substantially higher, which means higher costs of maintenance and repairs, etc. I'm wondering whether or not this is a problem to be addressed or an opportunity to be exploited.

    It would appear to me, though, insofar as you have an older inventory and are looking to lease out unused portions, it's going to be difficult to have competitive rates simply because of the operating costs of the facility. I was very concerned about the issue of the age differential. Apparently it was 44 years old for our public works inventory versus 26 years for the BOMA average, which to me is just very, very different.

    Finally, there is a chart in here that basically says the biggest impact of change over the period where we had downsizing was on the leased side. I'm wondering whether or not this was planned and whether or not we considered divesting. I would think that the leasing option would be a little more flexible than owning, notwithstanding the fact that our portfolio size recovered to similar levels between 1994 and 2002.

    As a strategy, in terms of our knowledge of the expectations of the demands of the clients, have we or have we not come back to a level? For the future, should we have any variability for whatever reason it might be? Would a greater shift in the mix of owned versus leased be more appropriate to allow us to mitigate the downside, as it were?

    Those are my three question areas, Mr. Chairman. It's more a strategic and a planning thing.

    I understand the risks. They provided us with a summary of the risk areas. Certainly, when you are a service providing a service to the government, the government environment is to some extent unknown, but we have a fair bit of experience there. As with all industries, the real estate market generally is a risk area, and maintaining the capacity...and even the tenancy thing, when we have these significant changes in the realty market and tenancy becomes an issue.

    It would appear to me that understanding the strategic decisions to keep the portfolio mix where it is, etc., is kind of important. It certainly is with respect to the people and the age or vintage of buildings and the problem that appears to be there, whether or not it's our intent or it's good business practice to address the problem of the vintage of the assets.

    So those would be my three areas.

    The Chair: Ms. Beal.

    Mrs. Carol Beal (Assistant Deputy Minister, Real Property Program Branch, Department of Public Works and Government Services): Thank you, Mr. Chair.

    We'll start with the last one first and work our way backward if that's okay with you.

    On the issue of the inventory mix, it's very clear for us that we need to balance a core inventory of crown-owned assets with an inventory of leased assets to provide exactly the flexibility to which the committee member referred earlier. Our big challenge with respect to maintaining that inventory balance is of course dealing with one of our risk factors, which is having a good handle on client demand.

    Fundamentally, we take into consideration things like the continuity of the departmental operation and the location of the asset. For example, in the national capital area we have a different mix of crown-owned to lease assets than we would have in other areas where the market is substantively different or where the federal presence is different.

    We take into consideration the operational requirements of our clients as well. Some of them have very specific geographical boundaries. If, for example, it's known that we're building a building for RCMP, if it's going to be a laboratory building, and if it's going to be fairly expensive to fit up that building, then it is more logical to have a crown-owned solution for that, and hence we would bring that into the inventory.

    We would seldom take into the inventory through lease something that would require extensive fit-up, because once that investment is made in a leased building, it's effectively lost to the Crown should the conditions change. So, by having lease in our inventory in a reasonable proportion under the market conditions, we allow ourselves to have the flexibility to respond to changing demand.

    That having been said, a question was also raised about the age of the inventory. It is quite correct. It's interesting to note that the average age of our buildings is approximately the same average age as our employees. I'm sure there's no direct correlation there, but it is an interesting fact. We do have an aging inventory, there's no question about that.

    The committee member asked if we had considered divestiture, and yes, we have considered divestiture. I would point out to the committee some of the difficulties surrounding divestiture. Many of our aging assets are in smaller, non-urban areas of the country, where these assets represent what may be the last remaining federal presence.

    I'm not sure if the committee is aware of some of the challenges around the post office divestiture, but I'm sure many of you may recall it. Some of our older assets are dispersed across the country, and divesting of them would in some ways make economic sense, but in other ways it may not satisfy broader government objectives.

    The committee will, I'm sure, recall that under the federal heritage review process, buildings over 40 years of age are considered candidates for designation of heritage status, whether it's recognized or classified, and a lot of our inventory is in that category. We would want to be sure we would be consistent with broader government objectives such as the preservation of heritage assets.

    So when we look at federal presence, when we look at heritage, when we look at the impact the withdrawal of that asset could have on a community in terms of its perception of government--and they often equate buildings to services even though there may not be a direct correlation there--divestiture is an option we consider, but it is not always an easy option for us to pursue.

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    Mr. Dan Ross (Associate Assistant Deputy Minister, Operations Branch, Department of Public Works and Government Services): You should just note that we have a significant number of heritage buildings, and when you average in the parliamentary precinct, it does tend to drive up the number above what the BOMA figure is.

    We also have a fund to renew our crown-owned inventory, and we do routinely tear down an essential Government of Canada building and essentially rebuild it. I'll give you two examples right now. We're about to do that to 740 Bélair, which is a Government of Canada building in Montreal, in partnership with the city and in partnership with national defence. We'll build them a new armoury at the same time we replace that Government of Canada building. Then there's a Government of Canada building in Charlottetown; we'll tear down an old building called the Dominion Building and build a brand new facility.

    The other thing I wanted to point out with those two examples is, they will be state-of-the-art green buildings that are examples of our sustainable development agenda and will be much more energy-efficient and sustainable.

    Mrs. Carol Beal: BOMA also has some flexibility with respect to churn in their inventory, which keeps their average age slightly younger than ours. They have the ability, for example, to convert office buildings to other uses once their lease period has expired for the tenancies in those buildings. It is an economic asset to BOMA members, so they only keep it as long as it is in fact generating a positive return for them. They have better capacity to lease out new buildings than they do to lease out aging buildings, so they have the churn factor working for them, which also tends to drive down their average age.

    I could probably talk a little bit longer about the average age of our inventory, but you may have something more specific you'd like to ask about that.

    To answer the first question that was raised, which was the question about whether we have a plan to have a plan with respect to our human resources, I can say that in fact we do. We have a strategy that effectively says, we will identify the key and core competencies required for us for our future activities. Some of our future activities may in fact be different from some of our historical activities as a department, and we will develop a strategy for each of those key positions to either have in place a succession plan from within the department or have a capacity-building exercise that will allow us to bring in new people to the department to balance that off.

    There are very specific government programs that enable us to bring competent young university graduates into the government organization to be trained for filling certain of these key positions. We also rely on our partnerships with universities and other associations to identify for us potential candidates as intake from the outside.

    With respect to internal development, we clearly have learning plans for each of our employees. We link the learning plans to the succession plan, and in certain of our key occupations we also have training programs that take in-house employees and through a series of courses combined with practical experience make them eligible to compete for future positions in their chosen field.

    An example would be the intensive work we do in training our leasing officers or our property managers. We have a certification program for property managers, so we have internal programs to allow us to build capacity and we have some external avenues that allow us to acquire additional capacity. But I think the key is to identify the competencies we need for the future and to ensure we have a position-specific approach to succession planning there and then a more generic approach to certain common skill sets we need within the department.

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    The Chair: Mr. Ritz.

    Mr. Gerry Ritz (Battlefords—Lloydminster, Canadian Alliance): Thank you, Mr. Chair. Ladies and gentlemen, thank you for coming back again tonight.

    I have a couple of things. The Auditor General constantly makes suggestions to different departments, saying you can do this better or you should do this differently. Once you guys analyze them and try to put them into play, how long does it take to basically take some of those suggestions and make them happen at the field level? I know it depends on which one it is, but are we talking about, can you do it for the next fiscal year? Are we talking about a five-year program to implement?

    Mrs. Carol Beal: We welcome the Auditor General's visits to our department, as frequent as they are. The Auditor General comes and investigates the department on a particular topic, and it often takes anywhere from eight months to 12 months to 15 months to get a report. We work closely with the Auditor General in the course of that, and as we are a learning organization, if there's anything we--if I could put it this way--twig to in the conduct of the Auditor General's work that would result in a substantive change in process or in an improvement to process, we would implement it as soon as we twigged to it with the Auditor General.

    Here's an example. The Auditor General commented on the fact that some of our documentation in the files might not be as complete as possible. That was pointed out, and a process was put in place right away to develop a checklist so our employees would know exactly what should be in a file. They were provided with some training and additional instructions with respect to ensuring the files were complete.

    Some of the other things, however, the Auditor General talks about, specifically in the most recent audit, are things that are more systemic in nature. One of the questions the Auditor General raised was our capacity to forecast demand from our tenants. This is not something we could implement easily and overnight; it requires us working very closely with our client departments. But over the next 18 months we will have put in place certain measures to the Auditor General's satisfaction. We have made a commitment to work with him in that regard and we will do so.

    A couple of other points they raised in the audit we've already taken action on, and in fact, when we appeared before the public accounts committee, in our action plan we were able to table specific timeframes and dates for delivering on their observations.

    Mr. Gerry Ritz: Mr. Ross commented too that you have a fine line drawn between repairing older buildings and deciding to build something new, especially with the Kyoto challenge that's been put in your laps as well. Has there been any thought given to hiving off the National Capital Region? It has to be a money pit when it comes to maintenance. It's just natural; it has to be. There's a huge amount of money that goes into here, and rightly so; it is historical. Has there been any thought given to hiving that off so there's a separate set of numbers for that and so historic buildings in the hinterland don't suffer because all the money has been used here? Can we see there's a give-and-take and that it's not just all here?

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    Mrs. Carol Beal: Perhaps I could comment on a couple of things. One, we do treat the national capital area as a rather unique, special geographical area. It represents about 50% of our budget; it clearly represents 50% of our inventory.

    In making decisions for the national capital area, we have a long-term vision and plan we're currently developing that will look out about 25 years and take into consideration things like changes in work patterns and new technologies, all of that. This will form a framework within which individual decisions may be taken.

    That is one way of looking at the national capital area. Another way is that we do have a national capital program. It's run nationally and the priority ranking is done nationally, so there's not a pot of money set aside for the national capital area and a pot of money set aside, for example, for the Pacific region and another pot for the western region or the Atlantic. All projects are measured against each other in terms of their priority ranking. We have a nationally driven set of priorities in that regard, so it does tend to help the balance there as well.

    In the national capital area we have some heritage buildings apart from the parliamentary precinct, but the majority of our heritage buildings are widely distributed across the country; they're not concentrated in the national capital area. So it tends to offset itself in that regard as well. In fact, in Atlantic Canada we have a high proportion of heritage buildings relative to the rest of the country.

    Mr. Dan Ross: You do know that there is a special allocation of funds for the improvement of the parliamentary precinct. It came from cabinet and from Treasury Board, and I guess it is in the order of half a billion or a billion dollars.

    Mrs. Carol Beal: It's $670 million over the next 15 years.

    The Chair: I understand that. I'm just wondering how you come to terms with or balance some of the regional activities. I know I've looked at several in the western region that really can't seem to trigger any kind of funding at all. I'm wondering, is there any kind of check and balance so it's not all going here, that there is some sort of overview with that?

    Mr. Dan Ross: Outside the parliamentary precinct they all compete equally, based on financial factors, health factors, air condition, working conditions, and client demand for both O&M funding and for new or capital funding.

    Mr. Gerry Ritz: There's Kyoto, and there's no federal plan at this point; Mr. Martin pointed that out in the leadership debate in Edmonton the other night. How do you, then, as a department start to strategize and plan when there is not an overview plan for you to work within?

    You have the physical structures, you have a timeline, and you have targets to set, but it all comes down to dollars as to, again, priorities and so on like that. How do you come to grips with that when you're basically staring at a black void out there when it comes to a legitimate plan? Is there going to be separate reporting on the costs of getting up to that speed so your budgets don't take a hit from somewhere else?

    Mrs. Carol Beal: Mr. Chair, I'm sure you'll understand that I wouldn't comment on whether or not there is an overall comprehensive plan to address Kyoto. I can comment on what our department is going to do to address its requirements in that regard, and yes, we do in fact have a plan for our department, as I'm sure do other departments.

    We have a plan to reduce greenhouse gas emissions as the first step; that's very critical. Back in 1990 the greenhouse gas emissions from our department were 751 kilotonnes per year. I don't want to say what they are as of today, but I can tell you that by the end of this year we will have achieved our Kyoto reduction target, the 31% reduction we intend to achieve there. Just this morning in fact we discussed with the minister a plan to get us beyond that targeted reduction.

    We will be addressing things in terms of three or four separate categories. One is with respect to leasing. By the fall we will be bringing in our new lease acquisitions, the build-to-lease, effective immediately under green lease conditions. As we acquire other leases in the portfolio in the next year or so, we'll be working with the Building Owners and Managers Association to ensure that the community has the capacity to respond to our green lease conditions, but we think we'll be bringing in our green leases under these new terms starting next year.

    With respect to our construction, my colleague has already mentioned a couple of points about some of the things we are going to be doing with new construction, building them to standard. For example, the Bank Street building and the federal judicial building will be built to the highest standard of sustainable development.

    At the same time, we are working with the Canadian Construction Association, for example, on a protocol with respect to construction, renovation, and demolition. That protocol will ensure that waste management on construction sites will be reduced to the greatest extent possible. Our target is to reduce it by about 50% of what it is today. We will be looking to incorporate in our renovation--and Dan also has mentioned that a lot of our inventory will be renovated over a short period of time--about 30% with respect to the new sustainable development standards and so on.

    We have very specific goals in each of these categories for what we are going to do. We know we're going to have to direct money to these purposes in the next few years to come. We'll be tracking our success rate in terms of the emissions reduced and the costs to achieve those reductions.

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    The Chair: Will you be reporting them in the estimates in a separate column to show the cost-effectiveness and show that you need this much more money because of--

    Mrs. Carol Beal: We have two ways of reporting that, if I could so suggest. One is through our departmental report to Parliament, the DPR, but the other is through the commissioner of the Environment and Sustainable Development. Part of what we have just been explaining will form our sustainable development strategy for the department, and we report on that annually to the commissioner of the Environment and Sustainable Development, who reports to Parliament. So there will be the two ways we will be producing our results.

    The Chair: Just before I go to Mr. Tirabassi, I want to pick up on something that struck me when you were talking about some great objectives or goals with respect to meeting Kyoto targets, moving beyond and setting some benchmarks and all the rest of that. Where are we going to find that information?

    There is some comment about whether an overall plan for Kyoto exists or not, but as a department you have just tabled your plans and priorities. Would something like this be good information to have in your plans and priorities so Parliament can look for it when you do your performance reports in the fall?

    Mrs. Carol Beal: I believe that timing is very important in life, and as we briefed our minister this morning on this and got his concurrence with the plan, we would not have included it in the current work underway. However, it will be in this year's sustainable development strategy, which has been tabled with the commissioner, and we would start to report our performance against it in next year's reports.

    If we'd been having this meeting three months ago and we'd had the meeting with the minister, yes, we could have gotten it in this year's report, but it will be picked up in the next cycle.

    The Chair: I think that's right.

    Maybe I'm incorrect in what I'm going to say here, but the estimates process is what everyone seems to want to focus on, and it has a number of components. Given the amount of attention an issue like Kyoto has actually taken on over the last little while, I would have thought as a parliamentarian--and I'm aware I'm talking about relevant information I might want to find somewhere in Parliament through this estimates process--that something like what you just laid out to us would have been absolutely critical to have in the plans and priorities.

    Could you not have said to the minister, we need to get your sign-off on the following because it has to be in the plans and priorities, which are going to be tabled in Parliament, because that's pertinent information for members of Parliament to have? But my sense from your response was, hmm, we missed the target; we'll catch up.

    Timing is important, but if Parliament is going to be expected to refocus itself around the estimates, then I cannot overemphasize the importance of having departments ensure that pertinent, real, good information gets into the plans and priorities and that ministers start to get their heads around plans and priorities and performance reports being critical to the functioning of their department.

    We now have to look for a sustainable development report, and we'll miss a whole cycle. Will we get it in the fall? Will we get what you're talking about in the fall, or will we wait until the following spring to hear about it?

¼  (1800)  

    Mrs. Carol Beal: We'll be inputting to the commissioner in late summer or early fall, and I think the commissioner will be publishing in December.

    The Chair: But that's in terms of your plans and priorities for next spring, right? Is what you're talking about today ultimately going to show up in the plans and priorities of next spring?

    Ms. Myra Conway (Director General, Finance, Department of Public Works and Government Services): Yes, it can, because we have prepared that through the fall, and so it can--

    The Chair: So it would show up next spring, and then in the fall of 2004 you would be reporting to Parliament as to your performance vis-à-vis the benchmarks you have set?

    Mrs. Carol Beal: That's correct.

    Now, I just want to clarify a couple of things. One, the Kyoto ratification by Parliament was a fairly recent act. Two, the budget did set some money aside for the purpose of dealing with climate change, for an action plan around climate change. But until that budget was tabled and ministers had taken decisions as to the allocation of funds within that budget, it was difficult for us as a department to plan with any certainty around what we could do. What we were able to do was to take a look at the management of our own inventory and, in anticipation of certain things, position ourselves to move forward.

    Some of the work we had to do was really to work at costing out some of the options we looked at in order to proceed with the plan as we put it in, and it did take us a bit of time to get there. It wasn't that the minister missed the boat and it wasn't that we missed the boat as to getting the minister to sign it off. It was that we had to do some work within the context and within the framework we were provided in order to be able to put the plan forward before him today.

    The Chair: Mr. Tirabassi.

    Mr. Tony Tirabassi (Niagara Centre, Lib.): Thank you, Mr. Chair.

    I'm referring to the notes you circulated, “Risks and Opportunities”, specifically the very first one under “The Government environment”. You say “Client departments and agencies often have difficulty forecasting their space demands far enough in advance to provide the Department with sufficient time to explore long-term accommodation options.” You state in the last sentence that “The Department can mitigate this risk by careful planning and aggregating demand” and so on. Then it goes on; I'm staying within that paragraph.

    My question is, aren't the client departments engaged in what it is your department is trying to achieve overall? It's one thing to say there's going to be careful planning on behalf of “the” department, but you really do need the cooperation and the understanding of all the other departments since we're are all trying to achieve the same objective. I'm thinking that maybe those departments don't see themselves as part of the overall process; they might see themselves as once removed. Can you comment on that. I would think that's essential in order for you to achieve what you are attempting to achieve.

    Mr. Dan Ross: We work with our client departments every day. The process of creating client support in units was created in 1995 and has been recently reinforced in the big restructuring in public works, and we create client service teams called multidiscipline, informatics, real property, procurement, and corporate shared services. They are led by fairly senior members of the Department of Public Works and Government Services, and they work with those client departments on a daily basis.

    Many of them are co-located and work in the same buildings with the same accommodations as the client department. They are there, so they understand the client. They often sit at their management table. They hear their policy initiatives as to where they're going to go, how they're going to go, when they want to go there, and when they want to go to Treasury Board. For example, with respect to new people to carry out a new policy mandate, often the department hasn't crystallized its own thinking as to what exactly they want, where they really want to go, how many people it will take, and therefore how many sort of bed spaces they need in their accommodation to mandate that.

    Maybe we can do a little bit better in terms of regional plans or community-based strategy and so on, but I think we do very well in terms of getting as close as we can to where we and the client departments themselves think they're going to go.

    There are areas for improvement. Take CCRA, for example, which is a huge department with a lot of infrastructure and accommodation around the country. We need to work more in terms of having a sort of master strategy for where CCRA wants to go. Their concept is to consolidate in certain nodes where they can bring together larger numbers of their employees.

    So you work with them to help them bring their own strategy together, and as you're working together on that strategy, you're thinking, okay, what are our solutions here? Do we do an acquisition? Do we crown-construct something? Are we going to be prepared and sufficiently confident in CCRA's plan that we can enter into a 20-year lease for a new office building?

    So it's very much iterative and it's sort of day-to-day.

¼  (1805)  

    Mrs. Carol Beal: I think there's also the point that with our clients we want to make sure they don't have the sense that the tail is wagging the dog. Say you're delivering a program, perhaps in fisheries, and you are going to cabinet and you're asking for approval for a certain-size program to achieve certain results. The decision is made that you're only going to get a portion of what you've asked for, not all of it, for budgetary or whatever other reasons. We then work very closely with the client to help them understand the impact of that, but clearly it's the client's decision in terms of where those people are going to be located and whether it's going to be centralized or decentralized. Those are the kinds of considerations they have to do first.

    So they're the dog, and we want to make sure they don't have a sense that the tail is wagging the dog.

    As Dan said, we're there with them as close as we can get to give them some good advice and to explain to them some of the accommodation considerations that have to be taken into account. But fundamentally, we have to respect that their driver is their program, and very often space is the last thing they think about, not the first thing they think about in that regard.

    Mr. Tony Tirabassi: I have one more area where I really need some clarification. I think I understand what it means but I'm not certain.

    If you stay with the same document three pages over, “Specific Follow-up Points from the Transcript” is the title at the top. The subtitle is “PWGSC key indicators: why are they important?” The second paragraph says “Most of PWGSC's services are provided within the Government of Canada, and not directly to Canadians”, and it goes on in that paragraph. Could you please clarify what that means in terms of what you do.

    Mrs. Carol Beal: Basically, we're an internal service provider, a common service provider to the Government of Canada. While we use the services of suppliers, the services of landlords, and the services of others to deliver our program to government clients, our program is internal to government.

    This is contrary to, say, an HRDC, whose program would be to provide a direct service interface with the citizens of Canada. We seldom interface with the citizens of Canada in the conduct of our business, although thousands of them every day come into the buildings we provide. They look at that contact with the government with respect to the department they're there to visit, not with respect to public works.

    The only time citizens really regard public works as a direct interface is when we've done something that doesn't please them, when we've implemented a change with which they're not overly comfortable or satisfied, or if they wish to do business with us as a customer in some way or another.

    Mr. Dan Ross: If your question is about services in general, of course there's the receiver general. Millions of payments are made and cheques issued directly to Canadians every day by our accounting and banking branch.

    Mrs. Carol Beal: But that's not in the real property area.

    The Chair: Thank you.

    I just have a couple of questions before I turn it back over to Mr. Ritz.

    In the document you provided as a follow-up to the meeting of April 9 you mention that you provide accommodation to 190,000 public servants and parliamentarians. Then today the Secretary of the Treasury Board suggested that we have over 453,000 people on our payroll. I'm just wondering how we can square the two numbers.

    It's a simple question asked by the chair of the committee, how many people are in the public service, and it's taken a while to put it together. I thought we had it until I read your document that said 190,000.

¼  (1810)  

    Mrs. Carol Beal: This may not be a perfect answer to the question, Mr. Chairman. I understand you're having someone from Treasury Board Secretariat appear before you in the days to come.

    I think the simple answer to that question is that we provide accommodation to departments of government that have general employees who need office space. We don't provide to the Canadian military, for example. While we might provide office accommodation for their headquarters, they have a large number of military personnel, uniformed personnel, who don't occupy office buildings but are found on bases.

    The coast guard and fisheries are other examples of where they very often provide their own office space and their own bases. While we would have accommodation for some of the coast guard employees, we wouldn't have accommodation for all.

    Our number is based on the number of public servants we accommodate within our program. The Treasury Board Secretariat's number would be based on the number of employees of the Government of Canada at large, who may or may not occupy our space. I think that's the simple answer.

    The Chair: I thought it was a pretty good answer.

    Mrs. Carol Beal: I'm sure the Treasury Board Secretariat can help you out with that.

    Mr. Dan Ross: That seems a big difference, though, in number.

    The Chair: It's quite a large difference. This says 453,000 and you have 190,000, so that leaves 263,000 people at large. Some are without a building.

    Mr. Dan Ross: My guess is that the Canadian Forces would have about 80,000 who are not housed by us, but 20,000 are here in Ottawa and we house most of them. The other 80,000 regular, reserve,and civilian members are in the regions, and we don't generally provide accommodations to them.

    The RCMP, I'm guessing, are about 15,000, and we wouldn't provide accommodations for them. For the rest it's still a big number.

    Mrs. Carol Beal: There are crown corporations such as Canada Post; we would not have them in our numbers, but they would be part of the employment figures for the Government of Canada.

    The Chair: So you do not provide any of that; there's no support for crown corporations.

    Mrs. Carol Beal: We're certainly capable of doing it, but they have their own mandate; for example, Canada Post has its own mandate.

    The Chair: Do you compete for that?

    Mrs. Carol Beal: No. Let me put it into different terminology if I may. We may at their request provide space through a memorandum of understanding with them, but where the crown corporation has its own mandate to acquire space and chooses to exercise that mandate, we will not compete, no.

    The Chair: In the same document you talk about the government environment, risks, and opportunities. You describe the challenge you face when your client departments are sort of deciding how they're going to approach their task, depending on budgets. Forecasting their space demands far enough in advance is always a challenge for you.

    Then you go on in that paragraph and indicate that you can mitigate the risk. I find it a bit contradictory. On one hand you're saying it's difficult to do the planning because you're driven by your client and the decision for space is usually at the tail end of the decision-making process. That doesn't leave you a lot of time to plan, yet you're able to plan.

    Mrs. Carol Beal: Perhaps I could help shed some light on that apparent contradiction. In the national capital area the density of public servants is fairly high. We know, for example, that we are having a period of growth in the public service in the national capital area. So without our knowing what a specific client requirement is, our best estimate of the pattern of growth is that we're going to need 20,000 square metres of space in the downtown core of Ottawa. We're going to need another 15,000 square metres of space in Gatineau.

    Would we sit back and wait for our clients to give us their demand built up on a demand-by-demand basis, or would we try to anticipate that demand and attempt to bring space into the inventory to take advantage of a market condition that may be quite favourable? It was our decision at the time--in fact, I guess it was my decision at the time--that it made good economic sense for the Crown to take advantage of the market situation, to anticipate the demand scenario, and to bring space into the inventory. Then when our clients had finally taken the decisions that were necessary to define their specific space requirements, we would have space in the inventory.

    I think the difference here, Mr. Chair, is the difference between managing a portfolio on a strategic portfolio basis and responding on a transaction-by-transaction basis to client demand. Historically we've responded transaction by transaction, and this has often led to dissatisfaction on the part of our clients because of the length of time it takes, because of our not having the space ready for them when they're ready for it, and so on.

    In the national capital area over the last 24 months we felt we had a situation that enabled us to take strategic advantage and to bring some space into the inventory. That was what we were trying to give you some assurance on, that there may be some mitigating factors we would take advantage of there.

¼  (1815)  

    The Chair: I just want to go back to when we talked about Canada Post as an example of a crown corporation and whether they're exercising part of their mandate. Is it possible to compare the cost-effectiveness of privately managed facilities with those of the branch?

    I'm just wondering, if it is and we are able to make the case that it's more cost-effective to have buildings managed by the branch rather than the private sector, why are you precluded from competing on a crown corporation building?

    Mr. Dan Ross: Is your question, Mr. Chairman, specifically about a crown corporation like Canada Post?

    The Chair: I'm interested in whether you can actually, just in terms of performance measurement, compare the cost-effectiveness of privately managed buildings with that of the buildings managed by the branch. I'm interested in knowing that.

    If you can make that comparison and if on average branch-managed buildings are more cost-effective, why could we not reap the benefit of that cost-effectiveness through our crown corporations since it's all taxpayer-driven at the end of the day?

    Mr. Dan Ross: There are several dimensions. One is the fundamental question, can you do it cheaper in the private sector? The second one is, can you do it cheaper and keep your clients happier than a private sector service deliverer could do?

    We have been managing about 3 million square metres of our space, which is about 50%, through an alternative service delivery contract for the past six years, and this is a performance base contract. By “performance base” we mean that essentially the company is guaranteed a certain minimum payment for their services if they achieve a certain level. If they exceed that, they get an extra payment, which represents their profit. If they fail to achieve that, they actually take a small loss, so what you have is a very attentive private sector supplier.

    Generally speaking, that large contracting experience has cost us less than what it previously cost us to have public servants do it. Now, many of the same public servants moved to that private sector supplier and worked for them, so there wasn't really a downsizing effect from that. They actually moved and worked for that private company.

    The second factor I mentioned was client satisfaction. If I recall our data correctly, the best we've ever achieved is about 89% of tenants who were happy or very happy with our service. That contract supplier has achieved 92%.

    So on both counts, if we play the role of an experienced and intelligent manager and assist other departments or agencies by providing a private sector service to them, if we manage that for them and manage that performance base contract, it's to their advantage, and in fact it's to the taxpayer's advantage to do so.

    Mrs. Carol Beal: Mr. Chair, I think the essence of the first part of your question was, can we do it as cost-effectively as Canada Post, or do they have certain things they can do more cost-effectively than we do? I have to tell you, I don't know the answer to that question. I know that for a long period of time we managed the Canada Post inventory on their behalf, and then that situation changed.

    We can look into seeing if we can get performance-based information from them on a cost-per-square-metre basis and so on and do it as a comparative with us. We do it with BOMA, the private sector. We compare our costs of operation to the private sector costs in general, and in some areas we're higher and in some areas we're not higher.

    It really comes down to what the standard of service is that's delivered in the space and the way in which that service is managed and actually implemented in the space. So for example, we would have certain cleaning standards we think are private sector comparable, and on that basis we're pretty much in the same ballpark as the private sector.

    On the other hand, our standard for lighting, our standard for building operation, or our standard for air quality circulation within the building during certain working hours might cause us to have a higher cost than the private sector when they more directly either control that or do not provide it without incremental costs. It is really a matter of making sure we are comparing apples to apples.

    Generally speaking, we are reasonably on a par with some of the things. As an example, we invest more in repair of our assets than BOMA invests in their assets. We have the older buildings and all the rest of it. On the snow clearing, the road maintenance, and those kinds of things, we are bang on. We spend the same kind of money they do because snow is snow; it has to be moved. Our administrative costs are slightly higher than the private sector's costs.

    So we do look for comparable-type indicators with the private sector, but we have not done it with BOMA. I am going to just check on Canada Post--I'm getting a frown back here, so I think the answer is no, we have not compared it with Canada Post recently.

¼  (1820)  

    The Chair: I'm just following up on Tony's line of questioning. You are saying, Mr. Ross, you have 3 million square metres that is managed by--is that the number?

    Mr. Dan Ross: That's what is managed under this alternate service delivery contract.

    The Chair: So you still own the property but they manage it.

    Mr. Dan Ross: Yes, that's right.

    The Chair: As you strive for your Kyoto targets, are you going to have to renegotiate some of those contracts?

    Mr. Dan Ross: We're in the process of beginning a new solicitation to renew that. In fact, that's one service provider that is in 13 provinces and territories coast-to-coast, but there will be another competition for that in the fall of 2004. Now, it may be one service provider who wins that or it may be 13.

    The Chair: You're setting your targets now and reporting too. How do you factor that in, or are we going to have another year or two-year delay?

    Mr. Dan Ross: No, that's going to be built into this.

    The Chair: So that will show up in the numbers we're going to see in the fall of 2004.

¼  (1825)  

    Mrs. Carol Beal: That is correct.

    The Chair: You haven't settled that negotiation yet, so are you just making an offer to them and saying, this is what we're giving you and that's it?

    Mr. Dan Ross: But you have to understand, what does that contract do? If you're going into a lease agreement with, let's say, a large insurance company to lease a building, that's where we're saying that we want a facility that meets certain greenhouse gas sustainable development objectives. Otherwise, we're going to crown-construct something brand new, and we'll go to a very high standard right off the bat.

    This contract is actually for basic building maintenance, cleaning and repairs, changing light bulbs, and a whole variety of things. They will actually do a lot of our fit-up work. They will build some walls and move wall dividers and chairs and that sort of thing.

    A lot of it is not sustainable development, although there are pieces. If you're going to buy a new carpet, we want to specify to that contractor, in this new contract we'll expect you to use certain recyclability standards.

    Mrs. Carol Beal: The wall finishings and the wall materials are to be free of VOCs and that kind of thing.

    Mr. Dan Ross: But they don't tend to do building envelopes and geothermal systems.

    The Chair: I understand that, but I'm just saying it has to be a significant number when you're talking about managing 3 million square metres and you start retrofitting all of that. All of that's coming into your plans we're going to see in 2004, yet you're just going into renegotiation with all of these management firms. Is it going to be your best-guess scenario?

    Mr. Dan Ross: This is a very rigorous process of putting together that new procurement, a very rigorous process of thinking through the sustainable development objectives we want and applying all the lessons we learned in that previous six, almost seven years of that previous contract; it's a performance base contract. We will have a dedicated team that will work on this for a year. This will be a very, very significant effort for us and we'll look at those things.

    Mrs. Carol Beal: We'll be specifying in the contract, if you're going to bid on this contract, this is the performance we want. This is the energy efficiency level we want. This is the type of approach we want you to take towards materials handling and those kinds of things. They will be in the contract. If they can't meet those terms and conditions, then they won't be a successful bidder.

    The Chair: I understand, but I'm looking at this one form in your package, greenhouse gas emissions. You started in 1998 and you're targeting through to 2010, where the first reporting is, and you're showing significant reductions already. If you've already hit your 2010 target, does that mean we set it too low or too high?

    Mrs. Carol Beal: No.

    The Chair: What percentage of the overall target is that?

    Mrs. Carol Beal: We were initially charged with meeting a target that was 19% of the 1990 emission levels.

    The Chair: That's 19% less.

    Mrs. Carol Beal: Yes, it's 19% less. We were then asked to take on 31% of the 1990 levels with the new Kyoto ratification. So where we started in 1990 was the 751 kilotonnes. Where we are today is about 600-plus kilotonnes, and where we are going to end up is clearly at 530 kilotonnes or less in terms of greenhouse gas emissions.

    Our challenge is one, dealing with our existing inventory, two, improving as we do projects within that inventory, but also, if we bring any new assets into the portfolio, making sure our acquisitions keep the downward trend on our greenhouse gas emissions. We're monitoring that very, very rigorously.

    The Chair: I just have a question about your plans and priorities, where you mention the events of September 11. Just in terms of security-related matters, is there a medium- to long-term forecast? Clients must be demanding more security. Is there anything along those lines, such as protection of information?

    Mrs. Carol Beal: Actually, we've just come from talking to our colleagues in the United States. We often tend not to be able to identify cultural differences; well, this is one area where there's a substantive cultural difference. They went through the Oklahoma City bombing, which had a substantive impact on their psyche as public servants. The Department of Homeland Security down there has approximately 50,000 employees. We have people who complain about having to wear identity cards to get into a building, so it's quite a different scenario.

    In our country we have taken a number of measures to deal with the security of facilities. By that I mean we're very conscious of the points of vulnerability in a facility, points where there could be intrusion in the air handling system, those kinds of things, and we've done as much as is reasonably and economically feasible to ensure they are secure. We've done threat and risk assessments of each of our facilities.

    Where we have really spent more of the exercise is on ensuring that access to our buildings is in a way that makes the employees feel comfortable. In some places it's as simple as showing an identity card when walking by a Corps of Commissionaires employee, or in another place it's putting a card into a card reader system and allowing the electronics to decide whether you should access it or not. For example, DND headquarters is very much one with that kind of double entry system, a Fort Knox approach.

    We generally work with our clients to establish what for them is a reasonable security arrangement with respect to intrusive access to their space. We have some areas in some of our client space that are secured to a point where there's a key code system and most of the employees in the department can't even get into that specialized space.

    It really depends on the type of operational requirement of the client. It depends on the type of organization the client finds themself in, and we have taken precautions with respect to the simple, cost-effective security measures one can do with respect to air handling and so on.

    The cost to our department for these extra security measures for our property was not high. I'm just going to say, it was somewhere in the two-digit figure; I don't think it was any more than that for our department.

¼  (1830)  

    Mr. Dan Ross: You have to realize of course that you aren't achieving security; all you're doing is achieving a fairly low level of deterrence. We can't absolutely protect a given site from an attack.

    The other comment I would make is that we do finance or fund the fit-up of a specific client. If we get a client like CSIS in a building, for example, normally that would cost over three and a half times what we would pay for the fit-up of a normal office facility. We respond exactly to--in this case a CSIS facility--what they want in terms of protection of air, protection from electromagnetic listening devices, security systems, motion detectors, and so on. We pay for that and we fit the building up to meet their requirements.

    The Chair: I just have one final question relating to when we as a committee were looking at plans and priorities and the performance reports themselves. For me, the easiest way to assess whether a branch or a department is meeting its objectives is by benchmarks and by seeing the quantitative information that says you're meeting your target 92% of the time or 98% of the time. Is it possible for you to include a lot more of that type of information in your plans and priorities and in your performance reports? That's the kind of information that's helpful for members.

    We can go through pages of narrative to explain what it is you're trying to do, but if you have a table that says, on a percentage basis I'm meeting my target or I'm falling below my performance standard.... Internal targets, internal performance, and the external are going to be very important for us to be able to see things in a very concise manner. Why isn't this information there?

    Mrs. Carol Beal: Mr. Chair, there's no easy answer to why it's not there. I have to start out by saying, if you looked at where we were two years ago in this process, you probably would have found very few quantitative measures at all. Over the last two or three years we've improved in both the quantity of quantitative measures and hopefully the quality of the quantitative measures we put in.

    Achieving the right balance for us in terms of telling the story versus inundating people with indicators, statistics, and so on is a very fine line. We followed the process that's been set out by the Treasury Board Secretariat, and we've tried to put the right balance in there.

    As I indicated to the committee the last time I was here, we have performance material by the gallon. We have 53 performance measures, and I'm not sure how relevant many of those would be for the purposes of parliamentarians looking at the estimates.

    Also, our report to Parliament is not the only place where we report on targets and on whether or not we're meeting our goals. We would be happy to include more. We think we do have a good news story to tell in some regards, and we'd be very pleased to have the opportunity to tell it.

    The challenge for us is making sure we don't end up giving a statistically fascinating portrait of how well we're doing our job while not really telling anyone what we do, how we do it, and what we're trying to accomplish there. So it's the balance we want to achieve, and we'd be happy to take any guidance we could get in that.

    The Chair: I appreciate that, and I know you're doing a great job.

    But I think the whole estimates process has to be more than just an exercise in, let us tell you how great a job we're doing. You might have said, when we don't meet our standard, it's not a good thing if we don't explain to Parliament how we are going to reorient ourselves. I don't think there is an error in failure, there's an error in how you recognize failure and remedy that failure. I don't see a lot of that.

    I was in the private sector before coming to Parliament, and in the private sector there are lots of failures. But the successful people are able to mitigate those failures, reorient themselves, and have an action plan in place. That's the part I keep missing in the discussion about plans and priorities and performance.

    I don't want to approach it in a negative way. From my standpoint, the quantitative information would clearly demonstrate those areas that might need work. Then the responsibility for the branches or the departments would be to explain how it is we're going to improve or how it is we're not meeting the private sector standard. You could say, well, let me explain why: we're not comparing apples to apples, that sort of thing.

    It's that kind of fruitful exchange. It's not just about how you tell Parliament how great a job you're doing. Now, I think public servants are extremely dedicated and they all do a great job--they all try to do a great job. But it's not, I think, a failure on the part of people in the public service when they don't meet a standard. I think that's reality. I think the failure is if we don't recognize that and do something about it.

    So I'm looking ultimately for more and more of this evolution to take place. We weren't in a very great space two years ago; we're in a better place today. But as we refine these documents, if we can provide the quantitative information and sort of target the action plans as to how we're going to deal with them, that type of information, then I think Parliament will be better served.

    You mentioned that you're following guidelines from Treasury Board. Do you find them helpful, and does Treasury Board do more than just put out the guidelines and have you follow them? Is there interaction? What happens there? Do you do your thing and say, oh, I followed the guidelines?

¼  (1835)  

    Mrs. Carol Beal: For the record, Mr. Chair, we always find the Treasury Board Secretariat helpful.

    Some hon. members: Oh, oh!

    Ms. Carol Beal: That having been said, I think this is a learning process for all of us. The reporting for Canadians is a new approach the Treasury Board Secretary is trying to put out. It has departments actually provide what they feel is some meaningful information to parliamentarians and hence to the Canadian public. The guidelines were a starting point to that. I don't think they consider themselves having finished that job. They, like we, are learning how to do it better.

    At one point we had the blue books, the main estimates, in which we were lucky if we described the organization of a department in there along with the budgets. I think we've come quite a way since then.

    I know you're going to have the Treasury Board Secretariat here next week, and that would be a very good question to ask them. I might like to come and listen to that answer.

    I think what they're trying to get us to do is to focus on outcomes for the dollars invested by the taxpayer. Somewhere between outcomes and dollars we get hung up on things like outputs and how you really describe what space does. I mean, space is space. They're either accommodated or they're not accommodated. Do we comply with the Treasury Board policies around accessibility and the Canada Labour Code with respect to a safe workplace? We either do or we don't, and we have information around that.

    It's kind of hard to come up with a process. We invented the balance scorecard because we felt, if we were in a business and thinking in a businesslike way about what we did, we had to satisfy ourselves on those scorecard quadrants or we wouldn't be in business very long. We approached the balance scorecard as a way of dealing with the asset condition and the financial condition of our employees and our clients as the four things we always have to keep in some sort of balance.

    Did that get reported in our report to Parliament? Well, yes, it did. It got reported in a slightly different way, not in the infinite detail the committee member earlier found kind of onerous. We put about six paragraphs in our report to Parliament around our balance scorecard and said what was important for us. We tried to show some trends in there. Again, maybe that's not relevant information in relation to the types of questions people voting our appropriation need to know.

    We did try to suggest, at the invitation of the committee, some questions you might like to pursue in that regard. For example, if we talk about meeting broader government objectives, how well are we doing?

    Earlier today we had a number of questions on sustainable development, meeting Kyoto, as a broad government objective. Maybe there'll be another government policy that talks about--and I'm not suggesting this is being considered--decentralization. At one point there was a government program on the decentralization of government services. Maybe as a broad government objective a question will be asked, how well is the department responding to that decentralization initiative, what is it costing, and those kinds of questions. To me, those would perhaps be logical things a committee would be asking in its investigation of whether or not the estimate should be voted if those programs were in place.

    I'm trying not to be in any way apologetic here, Mr. Chairman. I'm just trying to explain that it's a learning exercise, and we would very much appreciate the opportunity to sit down and say, does this cut the mustard for you? Is this what you'd like to see in next year's before we submit it? We'd be very willing to take a look at that to see if it told a better story than what we think we are providing by way of information right now.

¼  (1840)  

    The Chair: I think that's a very fair comment, and there's no question but that we're learning along the way as well. We're striving to decipher what information is more relevant for parliamentarians, given the amount of time we have in reviewing estimates and the estimates process.

    Seeing no further questions, I'm going to thank you for coming before the committee again. I appreciate the effort you put into providing the supplementary information along with your testimony this evening, so thank you.

    Meeting adjourned.