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37th PARLIAMENT, 1st SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Thursday, May 30, 2002

1530

The Chair (Mr. John Williams (St. Albert, Canadian Alliance))

Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General)

1535

The Chair

Mr. Philip Mayfield (Cariboo—Chilcotin, Canadian Alliance)

Ms. Sheila Fraser

Mr. Philip Mayfield

1540

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

The Chair

Ms. Sheila Fraser

The Chair

Mr. Ghislain Lebel (Chambly. BQ)

Ms. Sheila Fraser

Mr. Ghislain Lebel

Ms. Sheila Fraser

1545

Mr. Ghislain Lebel

Ms. Sheila Fraser

Mr. Ghislain Lebel

Ms. Sheila Fraser

Mr. Ghislain Lebel

Ms. Sheila Fraser

Mr. Ghislain Lebel

Ms. Sheila Fraser

The Chair

Mr. John Bryden (Ancaster—Dundas—Flamborough—Aldershot, Lib.)

Ms. Sheila Fraser

Mr. John Bryden

Ms. Sheila Fraser

1550

Mr. John Bryden

The Chair

Mr. Mac Harb (Ottawa Centre, Lib.)

Ms. Sheila Fraser

Mr. Mac Harb

Ms. Sheila Fraser

Mr. Mac Harb

The Chair

Ms. Sheila Fraser

Mr. Mac Harb

Ms. Sheila Fraser

Mr. Mac Harb

Ms. Sheila Fraser

The Chair

Mr. Pat Martin (Winnipeg Centre, NDP)

1555

Ms. Sheila Fraser

The Chair

Mr. Pat Martin

Ms. Sheila Fraser

Mr. Pat Martin

Ms. Sheila Fraser

Mr. Pat Martin

Ms. Sheila Fraser

Mr. Pat Martin

Ms. Sheila Fraser

Mr. Pat Martin

Ms. Sheila Fraser

Mr. Pat Martin

The Chair

Mr. Gerald Keddy (South Shore, PC)

Ms. Sheila Fraser

Mr. Gerald Keddy

Ms. Sheila Fraser

1600

Mr. Gerald Keddy

The Chair

Mr. Gerald Keddy

Ms. Sheila Fraser

Mr. Gerald Keddy

Ms. Sheila Fraser

Mr. Gerald Keddy

The Chair

Mr. Paul Forseth (New Westminister--Coquitlam--Burnaby, Canadian Alliance)

The Chair

Mr. John Bryden

The Chair

Mr. John Bryden

The Chair

Mr. John Bryden

The Chair

Mr. John Bryden

The Chair

Ms. Sheila Fraser

The Chair

Mr. John Bryden

The Chair

Mr. Pat Martin

The Chair

Mr. Robert Bertrand (Pontiac—Gatineau—Labelle, Lib.)

The Chair

The Clerk of the Committee

The Chair

Ms. Beth Phinney (Hamilton Mountain, Lib.)

The Chair

1615

Mr. Paul Forseth

The Chair

Mr. Mac Harb

The Chair

Mr. John Bryden

The Chair

Mr. John Bryden

The Chair

Mr. Alex Shepherd (Durham, Lib.)

The Chair

The Clerk

1620

Mr. Alex Shepherd

The Clerk

The Chair

Mr. Gerald Keddy

The Chair

Mr. Philip Mayfield

The Chair

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

1625

The Chair

Mr. Philip Mayfield

The Chair

Mr. Philip Mayfield

Ms. Beth Phinney

The Chair

Mr. Mac Harb

The Chair

The Clerk

Mr. Mac Harb

The Clerk

Mr. Mac Harb

The Chair

Mr. Ghislain Lebel

The Chair

Mr. Alex Shepherd

Mr. John Bryden

Mr. Alex Shepherd

The Chair

Mr. Ghislain Lebel

The Chair

Mr. Ghislain Lebel

1630

The Chair

Mr. Alex Shepherd

The Chair

Mr. Alex Shepherd

Mr. John Bryden

Mr. Mac Harb

The Chair

Mr. John Bryden

Mr. Philip Mayfield

The Chair

Mr. John Bryden

The Chair

Mr. Pat Martin

The Chair

Mr. Pat Martin

The Chair

Mr. Paul Forseth

The Chair

The Clerk

1635

The Chair

Mr. Alex Shepherd

The Chair

Ms. Beth Phinney

The Chair

Mr. Mac Harb

The Chair

Mr. Pat Martin

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

The Chair

Mr. Finlay

The Chair

1640

Ms. Sheila Fraser

1645

The Vice-Chair (Mr. Mac Harb (Ottawa Centre, Lib.))

Mr. Michael Nurse (Associate Deputy Minister, Department of Public Works and Government Services)

The Vice-Chair (Mr. Mac Harb)

Ms. Jane Billings (Assistant Deputy Minister, Supply Operations Branch, Department of Public Works and Government Services)

1650

The Vice-Chair (Mr. Mac Harb)

Mr. Scott Broughton (Assistant Deputy Minister, Department of Health)

The Vice-Chair (Mr. Mac Harb)

Mr. Patrick Borbey (Assistant Deputy Minister, Corporate Services Branch, Department of Health)

1655

The Vice-Chair (Mr. Mac Harb)

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Jane Billings

Mr. Philip Mayfield

Ms. Jane Billings

Mr. Philip Mayfield

Ms. Jane Billings

Mr. Philip Mayfield

1700

Ms. Jane Billings

Mr. Philip Mayfield

Ms. Jane Billings

The Vice-Chair (Mr. Mac Harb)

Mr. Philip Mayfield

The Vice-Chair (Mr. Mac Harb)

Mr. Ghislain Lebel

Ms. Sheila Fraser

Mr. Ghislain Lebel

Ms. Sheila Fraser

Mr. Ghislain Lebel

Ms. Sheila Fraser

1705

Mr. Ghislain Lebel

Mr. Patrick Borbey

Mr. Ghislain Lebel

Ms. Sheila Fraser

Mr. Ghislain Lebel

The Vice-Chair (Mr. Mac Harb)

Mr. Alex Shepherd

Ms. Jane Billings

Mr. Alex Shepherd

Ms. Jane Billings

1710

Mr. Alex Shepherd

Ms. Jane Billings

Mr. Alex Shepherd

Mr. Scott Broughton

The Vice-Chair (Mr. Mac Harb)

Mr. Paul Forseth

The Vice-Chair (Mr. Mac Harb)

Ms. Sheila Fraser

The Vice-Chair (Mr. Mac Harb)

Mr. Michael Nurse

Ms. Jane Billings

1715

The Vice-Chair (Mr. Mac Harb)

Ms. Sheila Fraser

The Vice-Chair (Mr. Mac Harb)

Mr. Ghislain Lebel

Ms. Sheila Fraser

1720

Le vice-président (M. Mac Harb)

Mr. Ghislain Lebel

Ms. Sheila Fraser

The Vice-Chair (Mr. Mac Harb)

Ms. Beth Phinney

The Vice-Chair (Mr. Mac Harb)

Mr. Michael Nurse

The Vice-Chair (Mr. Mac Harb)

Mr. Robert Bertrand

Ms. Sheila Fraser

Mr. Robert Bertrand

Ms. Sheila Fraser

The Vice-Chair (Mr. Mac Harb)

Mr. Tonks

1725

Ms. Jane Billings

Mr. Alan Tonks

The Vice-Chair (Mr. Mac Harb)

Ms. Jane Billings

The Vice-Chair (Mr. Mac Harb)

Ms. Sheila Fraser

The Vice-Chair (Mr. Mac Harb)

CANADA

Standing Committee on Public Accounts

NUMBER 057

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, May 30, 2002

[Recorded by Electronic Apparatus]

¹ (1530)

[English]

The Chair (Mr. John Williams (St. Albert, Canadian Alliance)): Good afternoon, ladies and gentlemen.

Our order of the day from 3:30 to 4 o'clock, pursuant to Standing Order 108(3)(e), is consideration of the report of the Auditor General of Canada dated May 8, 2002, on Groupaction Communications.

Our witnesses are from the Office of the Auditor General: Ms. Sheila Fraser, the Auditor General of Canada; and Mr. Ronald Campbell, a principal of the Office of the Auditor General.

At 4 o'clock we will suspend the meeting for a couple of minutes to introduce some new witnesses. From 4 o'clock to 5:30 we will take up, pursuant to Standing Order 108(3)(e), consideration of chapter 8, “Other Audit Observations (Health Canada and Public Works and Government Services Canada)” of the April 2002 report of the Auditor General of Canada. I will introduce the witnesses when they come forward.

We have half an hour on the issue of the Groupaction report by the Office of the Auditor General. I think there's all-party agreement--because I did consult with all parties--that we have the opening statement by the Auditor General, which is normally about five minutes long. Each party will then have five minutes each to ask questions of the witnesses. That should take us up to about half an hour. Do we have agreement on that?

Some hon. members: Agreed.

The Chair: On that basis, Ms. Fraser, I'll ask you to give us your opening statement.

[Translation]

Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General): Thank you, Mr. Chairman.

I am pleased to have the opportunity to brief the members of the Committee on the results of our audit on the government's handling of three contracts awarded to Groupaction, worth a total of 1.6 million dollars. As you mentioned, I am hear with Mr. Ronald Campbell, who is the senior director in charge of this audit.

The three contracts were awarded to provide advertising services related to visibility for the Canadian government. The second and third contracts stipulated that these services were required to recommend sponsorships. These were not sponsorships contracts like those that were audited in 2000 by the Public Works and Government Services Canada internal audit services.

The three contracts were awarded by parts of Public Works and Government Services Canada, namely the Advertising and Public Opinion Research Sector and the Communications Coordination Services Branch. Responsibility for public opinion research and advertising now rests with Communications Canada, while PWGSC remains the contracting authority for these services.

Our audit showed major shortcomings at all steps of the contract management process. Government files on the three contracts are so badly documented that many key questions regarding the selection of the contractor and the method used to establish the price and scope of services stipulated in the contracts remain unanswered. In our opinion, the government did not receive everything it contracted for.

The nature of the findings is such that I referred the matter to the Royal Canadian Mounted Police, and as you know, it decided to open a criminal investigation. I have also decided to undertake a government-wide audit of advertising and sponsorship programs. We plan to report on the results of this audit by the end of 2003.

Before discussing any further the findings of our audit, I wish to emphasize that the audit essentially focussed on the actions of public servants and not on the communication firm Groupaction, the contractor.

The Financial Administration Act and government contracting regulations are rules that apply to public servants and not to contractors. Senior public servants broke just about every rule in the book.

[English]

We identified several practices that did not comply with the law or with government regulations that apply to the government's financial transactions. In particular, we found the following:

The documentation Groupaction produced on the second and third contracts had similarities because the government itself called for similar work in both contracts. It is not clear why the government awarded the third contract in 1999.

The government did not receive everything it contracted and paid for. Key elements of what was specified in the contracts were never delivered, and no one has been able to find either a draft or an earlier version for the report of the second contract, for which the government paid $549,990.

Officials approved payments for work that varied considerably from what the contract specified. In a few cases payments were approved with the knowledge that the requirements of the contracts had not been fully met. Payments were made that we were told were for verbal advice, but no such advice was either stipulated in any of the contracts or documented as having been received.

We found that the first contract had been amended to double its value without any documentation to support the need for the amendment. None of the documents we examined contained any explanation of how the government had determined the need for the services or why it had decided that contracting was the best way to fill that need.

We found no evidence that a proper selection process was followed in awarding the first contract. We saw little documented support for the decision to award the second and third contracts to Groupaction, and officials did not comply with the requirements of the Financial Administration Act and contracting regulations and did not verify that the amount of time billed for by the contractor was an acceptable reflection of the work that was done.

I am troubled by the appalling lack of regard for rules and regulations we saw in the way these three contracts were managed. Equally disturbing is that it happened in the very department that is supposed to ensure prudence, probity, and fairness in contract management throughout the government.

In closing, I would like to recognize the efforts of my staff, who conducted this audit and prepared this report in less than six weeks, and I thank them for their diligence and their professionalism.

This, Mr. Chair, closes my opening remarks. We will be pleased to answer your questions.

¹ (1535)

The Chair: Thank you very much, Ms. Fraser.

As I mentioned at the beginning, there is all-party agreement that we have five minutes per party to ask questions.

Mr. Mayfield.

Mr. Philip Mayfield (Cariboo—Chilcotin, Canadian Alliance): Thank you very much, Mr. Chairman.

I also want to thank the Auditor General and her staff for being here today.

We hear about the bending of the rules quite regularly in these public accounts meetings, but it seems to me that what we're talking about today is something more serious than that, perhaps the breaking of the rules. I'm thinking of the government's contracting policy, where a list of suppliers of a particular service are to be identified and where contracts are let from that list of suppliers.

Are you saying that there was in fact not a list of suppliers in every instance, or are you saying that there was a list of suppliers but that it wasn't paid attention to? Or is there a difference in that, Ms. Fraser?

Ms. Sheila Fraser: I would like to start by reminding everyone that we are talking about an audit of three contracts, and I would not want to generalize beyond three contracts.

In the audit of these three contracts it was found that for the first contract there was no list of pre-qualified suppliers. The contract was given without a competitive process. For the second and third contracts there was a list of pre-approved suppliers, but government rules and regulations would indicate that there should have been a competition amongst those pre-approved suppliers. We saw no evidence that this competitive process had taken place.

Mr. Philip Mayfield: I want to touch on the matter of urgency. Now, is that defined in the legislation, what is urgent? I know in your report you do mention some examples of what may be urgent, but I'm wondering if those are your examples or if they come from some legislative authority.

¹ (1540)

Ms. Sheila Fraser: The examples we cite in paragraph 26 are given in the Treasury Board policy, which defines urgency. It talks about “actual or imminent life-threatening situations, a disaster”, or a situation that could result in significant loss or damage.

Mr. Philip Mayfield: So these are not your words?

Ms. Sheila Fraser: These are not our words. These are government regulations.

Mr. Philip Mayfield: It's interesting that the retired executive director talked about this was how business was done when he was responsible for the program. I would be interested in knowing if this is a general attitude he was expressing, or if this is simply the way this particular person did business. Can you comment on this, please?

Ms. Sheila Fraser: Thank you, Mr. Chair.

As I indicated earlier, we only looked at three contracts. So I can't indicate anything beyond what we found in these three.

This individual stated this to us. In fact, he has signed a statement to the effect that this was the way he conducted business.

Mr. Philip Mayfield: Because of the short time I have, I want to talk about payment. I believe the methods and terms of payment are set out in the Financial Administration Act. Am I correct in this? This is legislated, is it?

Ms. Sheila Fraser: Yes, there are very specific rules legislated in the Financial Administration Act, which basically reflect good practice in making payments. Civil servants have to ensure that the funds are available, the goods have been received, and authorize the payment--which is a practice you would expect almost anywhere. These are the rules and parts of the act we found had not been respected.

Mr. Philip Mayfield: There was another instance or situation in which I expressed concern about a lack of regard for the Financial Administration Act. I'm not bringing it up today. I don't believe you were in office at the time.

In your experience, is this a unique instance of not paying due regard to the Financial Administration Act regarding payments?

The Chair: I'm afraid we'll just have to have a yes or no answer there, Ms. Fraser.

Ms. Sheila Fraser: It's hard to answer yes or no. I really can't respond to that, I'm afraid. As I said, it was an audit of three contracts.

The Chair: Thank you very much, Mr. Mayfield.

Mr. Lebel.

[Translation]

Mr. Ghislain Lebel (Chambly. BQ): Thank you Mr. Chairman. Thank you, Ms. Fraser.

I think that I will address my questions to Mr. Campbell, since he performed the audit.

Do you have a list of witnesses or people working within the group who you questioned regarding this affair? I presume that you questioned public servants about this, well at least those who are still working.

Ms. Sheila Fraser: Mr. Chairman, we don't normally reveal the names of the individuals we speak to during the course of our audits. We believe that it is very important that we be able to conduct our audits confidentially. As for the current matter, I have already publicly mentioned some of the people we spoke to. These are the people named in our report. I will not refer to any other persons than those mentioned in the report.

Mr. Ghislain Lebel: Have the people you consulted as part of your audit, including those mentioned in your report, told you why they have broke just about every rule in the book, as you expressed it, in your report?

Ms. Sheila Fraser: As you know, our role is to establish the facts and observe what occurred. During our audits, we do not try to understand why anything may have happened. As already mention, one of the persons involved informed us that it was his way of working. We did not look any further.

¹ (1545)

Mr. Ghislain Lebel: Did you question these people to find if they were at least aware of the legislation that applied to them, namely the Financial Administration Act, or other applicable legislation? Were they aware of the limits of their actions.

Ms. Sheila Fraser: Yes, we questioned these people, and one of the executive directors informed us that he was aware. One other was probably less aware of government financial administration, because he was in his position for a very short time.

Mr. Ghislain Lebel: Aren't these positions filled through the competitive process? I would presume that such a position is an important one if it has the power to award such major contracts.

Ms. Sheila Fraser: Unfortunately, I cannot provide you an opinion on that subject; this is not an aspect that we reviewed during our audit.

Mr. Ghislain Lebel: You state in your report that the major contractual obligations were not fulfilled. I can give you an example, given that I read the contracts. In one part, it states (translation) “provide a qualitative assessment of events”. In what I read, I saw detailed lists of events, but almost nothing on the quality of these events.

What kind of quality was being asked for? What kind of quality was provided?

Ms. Sheila Fraser: Precisely, one of the problems we had was that the report for the second contract could not be found. I think that the documents to which you are referring are documents that were provided to us; these are working documents that were used in developing the report, and no one could find a copy of it, neither with the contractor nor with the department.

Mr. Ghislain Lebel: But when a contracts sends an invoice to these people, who you refuse to identify, and we can read, for example, “Johanne Archambault, three invoices, $111,000 dollars, for three months of fees”, is anyone in the department checking to see that the work was actually done? If I send in an invoice tomorrow, will they send me a cheque?

Ms. Sheila Fraser: This is precisely one of the problems we found during our audit. The invoices, in general, did not identify a specific individual, but rather a position or a level. Given that these were contracts paid on an hourly fee basis, we expected to find details on hours worked, which would have allowed calculating the fees. There were invoiced that absolutely did not provide those details, and we were clearly told that there had been no verifications.

[English]

The Chair: Thank you very much, Ms. Fraser. My apologies for interrupting. We are running on a strict time budget.

Mr. Bryden. I understand you're splitting your time with Mr. Harb. I'll give you an indication at two and a half minutes.

Mr. John Bryden (Ancaster—Dundas—Flamborough—Aldershot, Lib.): Thank you. I have one really key question.

We on this side--and I think all of us--are appalled by what we read in your report in your opening statement. Clearly, it means we need to bring before us the responsible officials, both those who made the decisions and those in more senior positions.

My question to you is simply this. You have an ongoing, broader investigation under way. If we bring these officials before us on this issue, in your view, will it in any way compromise the inquiries you have underway at this moment?

Ms. Sheila Fraser: No, it will not.

Mr. John Bryden: Then I have only a second question.

It seems clear that this committee ought to call these particular officials. We can identify them. They're the two people who made the decisions. Then there are the senior people who were around at the time. And possibly we might want to bring a current official.

Other than these officials, are there any other officials we should be asking? I'm thinking of anyone who might have been in charge of record-keeping, or be a responsible person in that respect.

Ms. Sheila Fraser: Normally, in reviewing one of our audit reports, the committee would call before it the current officials of the department. So the committee might want to consider requesting the current Deputy Minister of Public Works and the executive director of Communications Canada to appear as witnesses. Given the fact that neither of them were there at the time these two contracts were let, the committee might want to consider asking the two former executive directors--who we have made reference to in this report--to come forward.

I think these witnesses would be able to answer the committee's questions on these three specific contracts. Should the committee, of course, have other objectives in mind, it would have to determine the witnesses it feels appropriate to deal with that.

¹ (1550)

Mr. John Bryden: Thank you. Those are my questions.

The Chair: Mr. Harb.

Mr. Mac Harb (Ottawa Centre, Lib.): I'm quite interested in your comment, Ms. Fraser, that you think it will not compromise what you are doing if you call some of those officials. What about the police who might be in the process of investigating those individuals? Is it your view that calling a person for an appearance before the committee while he or she is under police investigation might compromise the committee and committee members?

Ms. Sheila Fraser: Mr. Chairman, the question addressed to me was about whether it would affect my audit work, and it would not. I can't comment on how it might or might not affect an RCMP investigation.

Mr. Mac Harb: Are you aware that you called the RCMP to do an investigation into this matter?

Ms. Sheila Fraser: I am very aware of it; I did not take that decision very lightly. I will remember it, I think, probably for a very long time.

I felt there were so many questions left unanswered. There was clear indication the Financial Administration Act had been broken, and it was my responsibility and my duty to refer the matter. They would determine, based on their review, if it was appropriate to conduct an investigation.

Mr. Mac Harb: Ms. Fraser, I have three questions to ask of you. First, as an officer of Parliament, are you satisfied that you can undertake a thorough independent report on your future investigation? Do you require any additional resources from this committee to help you to do your future investigation? As well, do you believe that if this committee were to do a parallel study to the one you are doing yourself, it could duplicate or interfere with your work as Auditor General?

The Chair: You have approximately one minute to respond, Ms. Fraser.

Ms. Sheila Fraser: Thank you, Mr. Chair.

I foresee no difficulties in doing the government-wide audit. The department, Communications Canada, have been very cooperative with us. Obviously there are limits as to what we audit and what we don't audit. I will conduct the audit within the scope of the mandate given to me by Parliament.

We do not require additional resources to do this. We will in fact delay other work in order to do this work. No, as I mentioned earlier, I do not see how any hearings the committee would hold would impede us or affect our audit negatively.

Mr. Mac Harb: Can you get to the bottom of the matter with the existing resources you have yourself? Can you get to the bottom of this issue?

Ms. Sheila Fraser: Can you define what you mean by “get to the bottom of this matter”?

Mr. Mac Harb: In other words, do you need any extra tools? Do you need more resources?

Ms. Sheila Fraser: No.

Mr. Mac Harb: What can we do as a committee to support you, so we don't duplicate what you are doing and we don't interfere with what you are doing?

Ms. Sheila Fraser: I appreciate the offer of help from the committee. What we will do is a normal audit procedure. We are not doing an investigation. Obviously, if we find investigations are needed, we will refer the matter to the appropriate authority.

The Chair: Mr. Martin, you have five minutes, please.

Mr. Pat Martin (Winnipeg Centre, NDP): Thank you, Mr. Chair, and thank you, Ms. Fraser, for being here yet again.

I'm going to go through some things quickly, because I have only five minutes.

As I understand the mandate of the AG, it's your job to investigate public servants who may have been in violation of the Financial Administration Act. The investigation we contemplate in this committee has a much different purpose: we want to see if there was political interference. In other words, when you mentioned that you don't really need to know what motivated these public servants to engage in some wrongdoing, that's exactly what we need to know. We need to know if some past or present minister, or somebody on their staff, directed senior officials to break all the rules. That's our goal.

Having said that, I think you would agree that we're going to need to call these senior witnesses and we're going to need their full cooperation. We're going to need them to feel perfectly comfortable to be forthright and open while they're here.

Later today I'll be moving a motion to pass a whistle-blower bill, if you will, on a microcosm scale for the purposes of this investigation only. Would you think it would be more likely that public servants would come forward and be forthright if they were guaranteed a general amnesty for sharing those facts regarding wrongdoing?

¹ (1555)

Ms. Sheila Fraser: Mr. Chair, I hope Mr. Martin will appreciate that I can't respond to that question.

The Chair: You have a minute and a half, Mr. Martin.

Mr. Pat Martin: That's fair enough. You've been helpful already in mentioning some of the witnesses you think we might benefit from hearing. Can I ask you if you interviewed the former vice-president of Groupaction in charge of the sponsorship division, a woman named Lise George?

Ms. Sheila Fraser: The only contact we had with Groupaction was through their lawyers. We did not meet any employees, past or present, of Groupaction. Everything we did was with their lawyers, and that was at their request. So no, we did not meet the individual you mentioned.

Mr. Pat Martin: Did you interview Charles Guité?

Ms. Sheila Fraser: Yes, we did.

Mr. Pat Martin: When he was still a public servant?

Ms. Sheila Fraser: No. Our audit was conducted within the last two months, so he had retired.

Mr. Pat Martin: Were you aware that he's leaving town for the next year, selling his house and going on the lam, as it were?

The question is, simply, do you think this committee would benefit from having Charles Guité as one of the witnesses before the committee?

Ms. Sheila Fraser: Well, as I mentioned earlier, because current officials would have little knowledge of those three contracts, the committee may want to call the two former executives, one of whom is Mr. Guité.

Mr. Pat Martin: Would our committee benefit from hearing Mr. Ran Quail?

Ms. Sheila Fraser: It is common practice to have the current deputy minister respond on behalf of the department. But I think that's up to the committee to decide.

Mr. Pat Martin: That's fine. Thank you.

The Chair: Thank you very much, Mr. Martin.

Mr. Keddy, please, five minutes.

Mr. Gerald Keddy (South Shore, PC): Thank you, Mr. Chairman.

Thank you, Auditor General, for coming.

There's a vein of material that runs through your report that's very straightforward and has very biting observations. Your report referred to exceptions in the advanced contract award notices--you talked about them earlier. But I read your report fairly closely, and there is no discussion there--unless I missed it, so I'll ask you again--of any advance payments made on these three specific contracts. Were there advance payments made?

Ms. Sheila Fraser: Mr. Chair, no, we did not see any evidence of advance payments made on these contracts.

Mr. Gerald Keddy: I'll try to look at it from another direction, then.

You mentioned in your report--and the people you interviewed--the shoddiness of the process. And that's the only way to describe it. In your discussions with the people involved in the file, and within the department, do you think there's any basis for trying to lay those mistakes at the feet of the civil servants?

I guess what I'm asking is, in your opinion, from the people you interviewed, was there sufficient training that they understood the process, they knew how the contract should be awarded? Did you feel their level of professionalism was high?

Ms. Sheila Fraser: Mr. Chair, I can ask Mr. Campbell to talk specifically to the interviews that may have happened, but these are senior positions, and the rules are very clear. In any case, one would have expected the people in these positions to have known the contracting rules. In addition to that, it's just basic good management practice that's encoded in these rules. They're not a lot of very complicated and detailed rules that are not relevant to any kind of normal business practice.

º (1600)

Mr. Gerald Keddy: Okay. Thank you for that answer, if I can interrupt you.

The Chair: Do you want someone on the panel to say anything?

Mr. Gerald Keddy: No, time is of the essence here.

I appreciate that. That's a very straightforward answer. I think there's been some discussion and some attempt to lay this at the feet of the public service, and I don't think that's deserved at all.

So if the officials were well trained, if the rules are very clear, then it begs the question that somewhere in this process there is obviously some pressure put on individuals to agree to contracts. That pressure, I would think, could come from only one place, and that would have to be political interference.

Ms. Sheila Fraser: I would just like to remind us all, Mr. Chair, that we are talking about three contracts only--

Mr. Gerald Keddy: That's understood.

Ms. Sheila Fraser: --so we cannot generalize beyond that. And as I've indicated publicly, there was so little documentation in the files that we cannot comment on what may or may not have been known by the minister.

Mr. Gerald Keddy: Given the span of time the contracts encompassed, from 1996 to 1999, and the fact that the rules were very clear, do you think it's possible there are other contracts out there that deserve wider investigation?

Ms. Sheila Fraser: I do, just because one of the former executive directors indicated that was the way he did business. It would lead one to be somewhat suspicious that there could be other contracts like this. That is why we are undertaking a government-wide audit, which we will be reporting on next year.

Mr. Gerald Keddy: Thank you.

The Chair: Thank you very much, Mr. Keddy.

That brings the round to a close. I'm going to suspend the meeting for a couple of minutes.

Mr. Paul Forseth (New Westminister--Coquitlam--Burnaby, Canadian Alliance): Doesn't the chair have any questions? The chair has 30 seconds left to ask a summary question.

The Chair: No. I could ask questions all day, but I think we're just going to go on. Each party has had five minutes, and if the committee decides, based on what we've heard today, we want to call other witnesses, no doubt we will have the Auditor General back, and I'll have time to ask questions at that time.

So the meeting is now suspended for a couple of minutes, to change the witnesses and bring in Health Canada.

º (1602)

º (1610)

The Chair: Okay, ladies and gentlemen, we will resume the meeting.

Pursuant to Standing Order 108(3)(e), we are considering chapter 8, “Other Audit Observations (Health Canada and Public Works and Government Services Canada)”, of the April 2002 Report of the Auditor General of Canada.

Our witnesses today are--

Mr. John Bryden: Mr. Chair, I'd like to make a motion before we get into the regular business.

The Chair: Okay.

Mr. John Bryden: If I may, I'll read the motion into the record: I move that this committee request the appearance of the officials suggested by the Auditor General in her testimony on the Groupaction investigation.

The Chair: I think you have to name the names. I think you're talking about Monsieur Guité--

Mr. John Bryden: There was Mr. Guité, and there are other officials. She didn't name them all, but I think it's clear that who we want to see are the two relevant executive directors, Mr. Guité--

The Chair: Mr. Tremblay?

Mr. John Bryden: I don't think Mr. Tremblay was one of the officials she interviewed in this report.

The Chair: We have the Auditor General here right in front of us. Perhaps you could tell us the people you were referring to.

Ms. Sheila Fraser: I was referring to the current Deputy Minister of Public Works. The past ones would be the two former executive directors, Mr. Guité and Mr. Tremblay.

The Chair: You're saying Mr. Guité, Mr. Tremblay, and the current deputy minister.

What was your motion again?

Mr. John Bryden: Let me repeat it. I move that this committee request the appearance of the officials suggested by the Auditor General in her testimony on the Groupaction investigation.

The Chair: You have heard the motion. Is there any discussion? Mr. Martin.

Mr. Pat Martin: If we vote for this, is this going to preclude calling other witnesses at a later time?

The Chair: No, I can't see that it would. It's not a restrictive motion; it's saying these witnesses. Anybody else can bring a motion to hear anybody we want, and we'll deal with that motion at the time.

Monsieur Bertrand, s'il vous plaît.

[Translation]

Mr. Robert Bertrand (Pontiac—Gatineau—Labelle, Lib.): Thank you, Mr. Chairman, I just wanted to ensure that if these people appear, it will not affect the Royal Canadian Mounted Police investigation that is currently taking place. Can anyone give me any information on this?

[English]

The Chair: I'm going to ask the clerk to give us advice on that. I did anticipate something like this, so I had him check it out.

Mr. Clerk, can you tell us some rules regarding this type of issue?

The Clerk of the Committee: Generally, the committee can request the appearance of whichever witnesses they like. Those witnesses are accorded the same rights members have in committee. Prosecution cannot be brought against them for the testimony they give in committee. They have the full protection of the committee.

How the members handle the question of a police investigation I think is a fairly delicate question. As you know, if the matter were before the courts, the committee would then have difficulty in conducting an investigation.

The Chair: Does that answer your question, Mr. Bertrand?

By and large, if I can paraphrase the clerk, he is saying that any witness who shows up before the committee has the full protection of the committee, and his evidence cannot be used in a prosecution against him. But the clerk also said that if a court case were ongoing, it would be difficult to have testimony here, testimony there, and so on.

Ms. Phinney.

Ms. Beth Phinney (Hamilton Mountain, Lib.): This is just a question of procedure. We had a steering committee last week and decided that at 5:30 today we'd have another steering committee meeting to decide which witnesses we'd bring in. Do we have no steering committee, or we don't use that committee any more, or is this just--

The Chair: No. I just have a motion to the full committee, and that's what I have to deal with. The motion is from Mr. Bryden, that we call Mr. Guité, Mr. Tremblay, and others who the Auditor General indicated have something to contribute to a hearing on this matter. There's still a steering committee, at whose meeting maybe more witnesses will be suggested.

Now we are going to hear from Mr. Forseth.

º (1615)

Mr. Paul Forseth: In addition to the comments that were made as advice to the committee about protections, it must also be remembered that when witnesses appear here, they are indeed considered under oath when giving testimony, regardless of who they are. Especially when they are government employees, they also have another oath, their oath of office. Everyone understands that when they give evidence before a committee, those are the historical rules.

The Chair: Mr. Harb.

Mr. Mac Harb: I find we are really jumping all over the map on this. I thought we would hear from the Auditor General. We're acting in good faith here. You have already scheduled the meeting for the steering committees. I don't know what's going to come up from my colleagues. Mr. Lebel may have other suggestions on the steering committees, and so on.

If my colleague would be kind enough to postpone his motion until five o'clock, we will have a chance to debate the pros and cons of what's being proposed here. I'm exceptionally alarmed that after the Auditor General has clearly stated that the RCMP may be investigating one or more, for us to suggest and subpoena individuals who are possibly under criminal investigation, as a parliamentarian and a member of Parliament, I find it highly....

The Chair: I'm going to hear from Mr. Bryden now on the response to Mr. Harb.

Mr. John Bryden: Thank you, Mr. Chair.

First, on the matter of the police investigation, I don't think the Canadian public can wait until the investigation goes forward, which may find no criminal wrongdoing whatsoever.

I was very careful in my question to the Auditor General. The real issue is whether calling the responsible bureaucrats before us compromises anything she is doing, and it does not.

As far as a criminal investigation is concerned, I don't think it should have a bearing here on this committee. All we want to do is have the relevant bureaucrats appear before the committee to answer some of the questions we have on the maladministration.

Perhaps as a compromise to Madam Phinney's remark, we can stay with my original motion that we request the appearance of the appropriate officials suggested by the Auditor General, and the steering committee can later decide on the ones she has suggested. She has also suggested some current officials, and I'm not sure that's appropriate.

I think we should stick with this motion and vote on it. The steering committee should then convene and decide on the final list.

The Chair: Read that motion again as you want it to be dealt with, Mr. Bryden.

Mr. John Bryden: I move that this committee request the appearance of the officials suggested by the Auditor General in her testimony on the Groupaction investigation.

The Chair: Mr. Shepherd is next, and then Mr. Keddy.

Mr. Alex Shepherd (Durham, Lib.): I think that's fine, to some extent. I guess your interventions, in my mind, beg a lot more questions than answers. When a person gives evidence here, they're provided the protection of the committee. I'm just concerned that the reverse is also true: that any evidence given here in committee presumably cannot be used in an investigation.

It seems to me, by definition, we're somehow compromising the police investigation. I'm very uncomfortable with proceeding down that road. I guess I am seeking some clarification.

The Chair: Let's hear from the clerk on this matter.

The Clerk: Let me quote from Marleau and Montpetit on this, and I'll go back to the start:

Witnesses appearing before committees enjoy the same freedom of speech and protection from arrest and molestation as do members of Parliament. At the committee's discretion, witnesses may be allowed to testify in camera....

Witnesses giving testimony may be assisted by counsel, although permission is seldom sought. Counsel, when permitted, is restricted to an advisory role and may not ask questions or reply on the witness' behalf.

In light of the protection afforded witnesses by Parliament, they are expected to exercise judgment and restraint in presenting their views to committees. Where witnesses persist in making comments which are deemed to be inappropriate by the committee, the testimony may be expunged from the record.

º (1620)

Mr. Alex Shepherd: The point I am raising is that the reverse is true in a criminal court. Evidence being used here cannot, presumably, be used against that person in court.

The Clerk: If the matter's in court, then the sub judice rule applies.

The Chair: I think the answer is that whatever evidence is given here cannot be introduced in court. But if it is given here and the courts or the prosecution get the evidence from another source, they can introduce the same evidence, provided they got it from a source that wasn't here. But I'm not the lawyer.

We'll go to go to Mr. Keddy next.

Mr. Gerald Keddy: Thank you, Mr. Chair.

This is quite simple. The point of Mr. Bryden's motion, which I quite frankly support, is we've already had a steering committee meeting. The decision of the steering committee meeting was to ask certain people to appear before this committee. If we don't vote on Mr. Bryden's motion, we'll go into another steering committee. It will be next Tuesday before this committee meets again--it's delay, delay.

Furthermore, the committee has a right to ask anybody they want to appear. This committee has a right to subpoena people to appear before it.

The Chair: The reason I've allowed this motion to be debated now.... As I say, the steering committee only advises the full committee. This motion has been made at the full committee. It was an appropriate motion. Therefore I cannot rule it out of order.

Mr. Mayfield, and then Mr. Harb.

Ms. Beth Phinney: No, I was next.

The Chair: No, Mr. Mayfield was next.

Mr. Mayfield.

Mr. Philip Mayfield: Thank you, Mr. Chairman.

I'm interested in the argument that we shouldn't be doing this while there's a police investigation going on. Mr. Chairman, I think this is again mixing the proverbial apples and oranges. I believe this committee has a responsibility concerning the accountability of the departments of this government.

Are we going to say we're not going to exercise that responsibility, when in fact it seems clear that these are two separate activities that are going on, that what happens here cannot be taken, as we have it, to the courts?

It seems to me it's important for us to take responsibly the serious allegations that the Auditor General has brought concerning the accountability of these departments, and to deal with it for the sake of the Canadian public and for the sake of parliamentary oversight. We cannot set parliamentary oversight aside simply because somebody may have done something of a criminal nature. We're not interested in a criminal investigation here; we're interested in the accountability of Parliament.

The Chair: Okay, thank you.

Ms. Phinney.

Ms. Beth Phinney: I still am not at all clear what the clerk was saying. If somebody says something in here, does that mean it cannot be used against them in court? If somebody says “I admit, I defrauded this--I gave this person money, they gave me back money, we did all these kinds of things”, that can never be used in court against them?

An hon. member: That's not the issue.

Ms. Beth Phinney: I'm not asking you. I'm asking the clerk through the chair.

The Chair: I'll ask the clerk to confirm this, Ms. Phinney, but whatever is said here, the testimony that's given here cannot be introduced in a court. Now, if the person is prepared--and I'll just use a hypothetical situation--to admit his guilt here, and he admits it in court, then that's fine. He can admit it in court.

Ms. Beth Phinney: If it he admits it here, he doesn't have to. It can't be used against him. So he can't be charged for something criminal if--

The Chair: The evidence given here will not be introduced in a court. Am I correct in saying that, Mr. Clerk?

That is correct.

Ms. Beth Phinney: If he says it here, it cannot be used against him in court.

The Chair: That's correct.

Ms. Beth Phinney: So if he admits here that, yes, he did something wrong, he should have thought about it twice, should have been more careful, and yes, that was his friend he gave that contract to.... I happen to know somebody who did this, by the way. It wasn't this particular case, but he got money for things he was doing--a civil servant, not the deputy minister. So this person can never be charged in court because we have talked to them here? That's what I understand.

The Chair: No, no. The point is that if the evidence is found outside of this room, a charge can be laid.

Ms. Beth Phinney: What if it's not?

The Chair: There's no charge.

Ms. Beth Phinney: No charge. So this person admits in here they've done it, and they can't be charged in court.

The Chair: If the evidence is found elsewhere than in this room, he can be charged.

Ms. Beth Phinney: Yes, but if it's not, he can never be charged, and he's admitted to it here.

Mr. Philip Mayfield: May I ask for clarification?

º (1625)

The Chair: No, no, we're going to go to Mr. Harb.

Did you want clarification?

Mr. Philip Mayfield: On this particular point, I'd like clarification.

Are you saying that if a witness is called here and he answers questions, he cannot be subpoenaed to appear in court and be asked the same questions?

The Chair: He could be asked the same question in a court, and how he answers is entirely up to him.

Mr. Philip Mayfield: So in fact he can answer questions here. What he says here has no relation to what goes on in a criminal court?

The Chair: That's correct.

Mr. Philip Mayfield: But if he's subpoenaed to a criminal court, he can be asked the same questions and be expected to give truthful answers there, too.

Ms. Beth Phinney: But if he does, it can't be used against him.

Mr. Philip Mayfield: But he can give the testimony twice.

The Chair: The point is he's expected to give the truth here, and he's expected to give the truth in the court. He could have two different answers, and if the court followed here, nobody would be able to say in the court, “Excuse me, at committee you said something else”. That would not be allowed. They would have to prove him wrong.

Mr. Harb.

Mr. Mac Harb: Mr. Chair, I don't know whether you're a lawyer with background in criminal law--

The Chair: No, I'm not a lawyer.

Mr. Mac Harb: I don't know if our clerk is a lawyer with background in criminal law.

I want to ask our clerk a point-blank question: Are you absolutely sure and confident that if this committee has a member of the public, public servant or otherwise, appear before it who is under police investigation--possibly, we don't know--and that person were to testify and admit, or others cause him to admit, to wrongdoing or otherwise before this committee, the justice system would not take him to task on that?

I just want to be unequivocally clear, because this is an extremely serious matter, Mr. Chairman. This is exactly why I'm saying to you that we are on a very, very slippery slope from here on. I want to be clear we have the proper answer.

The Chair: Okay. Let's get the proper answer from the clerk.

Are you absolutely sure?

The Clerk: I'll just quote again from Marleau and Montpetit.

Mr. Mac Harb: No, no, just tell us. Don't quote, just tell us.

The Clerk: “Witnesses appearing before committees enjoy the same freedom of speech and protection from arrest and molestation as do Members of Parliament.”

The same situation applies in the House when remarks are made, say during question period. Often these remarks are not made outside the House. It's that same sort of protection.

Mr. Mac Harb: When that witness is possibly under investigation....? We don't know whether he is or not. That's the key point here. We don't know exactly why.

Mr. Gerald Keddy: Then you can't call anybody.

Mr. Mac Harb: Precisely. That's the point.

The Chair: Order please.

[Translation]

Mr. Lebel, please.

Mr. Ghislain Lebel: I don't understand the questions by my colleagues across the room. Obviously, they don't want any testimony that may lead to revelations being made here.

[English]

The Chair: Okay. I think we're not going to go around forever. I think there's about....

Mr. Shepherd.

Mr. Alex Shepherd: Just one very quick question.

I do believe that if we're going to continue down this path we should seek the advice of someone in the justice department.

The Chair: Our House of Commons legal services are....

Mr. Bryden.

Mr. John Bryden: Mr. Chairman, I did seek the advice of House of Commons legal services. They did confirm what the clerk just said, which, simply put, is we can extend privilege to the witnesses. This is the same privilege we enjoy as parliamentarians, which means that anything that is said here cannot be introduced in a court of law against us.

Mr. Chairman, I think the clerk has answered the question adequately.

Mr. Alex Shepherd: But I think the question is whether this prejudices the process of gathering evidence for a criminal investigation. It could well be that's not the case, but I don't know.

The Chair: I'm going to give some direction to the committee. The motion can be tabled until such time as we have legal advice, or we can vote it up or we can vote it down.

[Translation]

Mr. Ghislain Lebel: Mr. Chairman, you gave me the floor earlier. I was cut off, and you went to Mr. Shepherd.

[English]

The Chair: Okay. Mr. Lebel.

[Translation]

Mr. Ghislain Lebel: When we speak about Parliamentary immunity in this committee, my colleagues across the floor know well what that means. If they say anything in the House, they know that they can't be sued outside the House. That is Parliamentary immunity, and that extends to this committee. If someone appears before this committee, what that person says cannot be used in a court of law. If the person appears and says nothing, that cannot be used, either. So let's go to a vote.

º (1630)

[English]

The Chair: Okay. I think we're about ready.

Are we ready for the question, Mr. Bryden?

Mr. John Bryden: Yes.

Mr. Alex Shepherd: I would like to amend the motion.

The Chair: We have an amendment to the motion.

Mr. Shepherd.

Mr. Alex Shepherd: I would propose an amendment: pursuant to the opportunity of the committee to talk to somebody from the justice department to clarify some of these legal issues before proceeding.

Mr. John Bryden: I think that's very fair.

The Chair: I think what you're saying, in essence, is a tabling motion--table it until we get some legal advice.

Mr. Mac Harb: A friendly amendment.

The Chair: Can I take this as a tabling motion, until we get legal advice?

Mr. Alex Shepherd: Okay.

Mr. John Bryden: What's the feeling across the way there?

Mr. Philip Mayfield: I think we need to deal with this. We can table it until when?

The Chair: Until I can arrange legal advice, which will be--

Mr. John Bryden: I think that's fair, because I did some pre-investigation.

Mr. Chairman, I'll speak for just a moment to Mr. Shepherd's suggestion.

I'm very keen to go forward with this. You obviously see this. But I have the advantage over others on this committee, in that I did some prior investigation of the legal consequences of what we're dealing with here. It is a somewhat unusual path, shall we say, in comparison to what has been done by committees in these situations in the past.

So I am prepared to support this motion, as it stands. However, we've always worked together as a non-partisan group when we're dealing with these issues. If it's simply a matter of getting good advice, I appreciate the concerns expressed by my colleagues. I think it's quite reasonable.

The Chair: As Mr. Harb pointed out, this is a sensitive issue for some people, if a criminal investigation is going on. Mr. Bryden has had the benefit of consulting legal advice. We haven't. As a group, the committee has not consulted legal advice.

Therefore, my recommendation to you is we table the motion. At the next meeting, we will review this matter. I'll bring in the House of Commons legal services to advise the committee.

No, it won't be next year, Mr. Martin. It will be next week.

I'm going to call the question on the motion being tabled.

(Motion agreed to)

The Chair: The motion is tabled. I would expect I'll have it on the agenda for next Tuesday, and we will have House of Commons legal services here.

Mr. Martin.

Mr. Pat Martin: I would like to introduce a motion as well, if you find it in order.

I move that the Standing Committee on Public Accounts recommend that the President of the Treasury Board announce a general amnesty for any public servant willing to come forward with information regarding the Groupaction sponsorship contracts.

I'd like to table it and circulate it, and then I'd like to speak to it.

The Chair: The clerk will circulate the motion.

Mr. Martin, you said you wanted to speak to it.

Mr. Pat Martin: Yes, I do.

Given that parliamentary privilege does extend to witnesses, certain problems are resolved. If we are going to be able to have public servants come forward with the information we need to hear about, we need to guarantee a safe place for them, an environment where they can share what they know without fear of reprisals or future problems in their workplace.

This is the type of thing we need. It's a whistle-blowing idea. We want this committee to be seen as a truth and reconciliation committee for public servants, where they can come forward without having to worry.

The Chair: Mr. Forseth, followed by Mr. Shepherd.

Mr. Paul Forseth: Mr. Chair, it says “Treasury Board announce(s) a general amnesty”. An amnesty from what? A motion must be in order legally.

I don't think the President of the Treasury Board can just unilaterally say what is or is not going to be in the rules. That's why we've had years of discussion about the legislation we've needed, so-called whistle-blower legislation.

Yes, that's a difficulty, and that's what Parliament and politics is all about. I think, on the face of it, the motion is probably out of order.

The Chair: Okay. Let me ask the clerk.

Is the motion out of order?

The Clerk: Procedurally, it's in order.

º (1635)

The Chair: The content is broad.

Mr. Shepherd.

Mr. Alex Shepherd: In much in the same vein, I'm really shocked and dismayed by Mr. Martin's motion, because it thwarts the whole business of the committee. Obviously, if a civil servant has done wrong, has created a fraud, that's the very purpose of the committee investigation in the first place. Here he is saying that we will present a general amnesty for any public servant. Well, if I were guilty, I'd be the first one here to come before the committee.

Mr. Chair, we have a public service integrity officer within the public service. We have a process within the civil service that protects civil servants, our own internal whistle-blowing system, which has only been in implementation for about seven or eight months. Surely to God we should try that system before we start creating new ones.

The Chair: Ms. Phinney.

Ms. Beth Phinney: My understanding from reading this report is that Mr. Martin is suggesting that the only people being looked at here are the political people, that they are the only ones who could possibly be guilty of anything, so we're going to give general amnesty to any civil servant, no matter what they've done. I just think this is weird.

The Chair: Mr. Harb.

Mr. Mac Harb: Mr. Shepherd touched on a very important point. Under the present rules, a public servant can call in with information and be protected.

While the intent of my colleague is a good one, at the end of the day I would suggest that this motion, Mr. Chair, is somewhat redundant and isn't going to serve the purpose.

The Chair: Mr. Martin says he wants some clarification.

Mr. Pat Martin: I can answer the reservations Ms. Phinney put forward.

The Auditor General will be looking into any wrongdoing by public servants. The RCMP will be looking into any criminal activity by the contractor. We need to know if there was any political interference. Those are the questions only we can have answered.

We need to know if some well-meaning public servant was coerced into breaking all the rules, as the report says, and that's the only question. This person won't come forward voluntarily if he or she is going to be punished or in any way....

The Chair: Mr. Murphy.

Mr. Shawn Murphy (Hillsborough, Lib.): Mr. Chairman, I would urge you in your capacity as chair not to spend too much time on this. This is a very silly motion; this committee would be the laughingstock of Ottawa if we considered it very seriously.

The general amnesty would mean there would be criminal amnesty, civil amnesty, and disciplinary amnesty. If I were one of those people being investigated, the minute this was passed, and if it was considered, I would be right in that door to give the information to you, get the general amnesty, and then I'd be home free.

I really think, as I've said, if we considered it seriously at all, we'd be the laughingstock of Ottawa.

The Chair: The final word is to Mr. Finlay, and then I'll call the vote.

Mr. John Finlay (Oxford, Lib.): My only comment would be that I agree with what Mr. Murphy said and what Mr. Shepherd said. I'm glad that Paul Forseth, my colleague, is on this committee, because every time we're on a committee together I agree with him, and I agree with him this time too.

The Chair: Okay, we've heard the debate.

(Motion negatived)

The Chair: Now we'll move on to the business of the day.

Our witnesses are from the Office of the Auditor General, Ms. Sheila Fraser, Auditor General of Canada, and Mr. Ronald Campbell, principal. From the Department of Health we have Mr. Scott Broughton, assistant deputy Minister, Population and Public Health Branch, and Mr. Patrick Borbey,assistant deputy minister,Corporate Services Branch. From the Department of Public Works and Government Services we have Mr. Michael Nurse,associate deputy minister, Ms. Jane Billings,assistant deputy minister,Supply Operations Service Branch, and Mr. Michel Rancourt,senior director,Science Procurement Directorate.

In the interest of time, I wonder if we could ask the people who are presenting reports to summarize them rather than reading them verbatim. They will of course be entered into the record and printed as part of the minutes of the committee meeting.

Ms. Fraser, you would have to read yours because you set out the statements, but the others could perhaps summarize their statements. If the committee is agreed, can we proceed on that basis?

Some hon. members: Agreed.

The Chair: I think we'll go on a four-minute round rather than an eight-minute round. Are we all agreed to that?

Some hon. members: Agreed.

The Chair: We'll start with the Auditor General reading her report. Ms. Fraser, please.

º (1640)

Ms. Sheila Fraser: Thank you, Mr. Chair. We thank you for this opportunity to discuss our audit observation on Health Canada and Public Works and Government Services Canada included in chapter 8 of our April 2002 report.

As you mentioned, with me today is Ronny Campbell, the principal responsible for this audit.

This audit observation focused on the actions of both Health Canada, the department acquiring the services, and Public Works and Government Services Canada, the department that is accountable for the integrity of the procurement process.

[Translation]

Health Canada and Public Works and Government Services Canada did not follow the rules and the regulations that apply to awarding government contracts when the spent 25 millions dollars for the Canadian Health Network. Health Canada created a web site, without any guarantee that it obtained maximum value for its money.

Health Canada made commitments and finalized contracts to create an information web site on health, without adequately defining its expectations regarding the contractors, or evaluating its options on how to best meet these objectives.

When Public Works and Government Services Canada, the contracting authority, awarded these contracts, it did not follow a certain number of rules and regulations that apply to awarding government contracts. By accessing the advance contract award notice, the department broke the rules. In fact, these are electronic notices in which the government informs potential suppliers that it intends to award a contract to an individual or a specific company. Mr. Chairman, none of the contracts that were awarded in this manner corresponded to the four exemptions mentioned in the government's contracting regulations or in the Treasury Board Secretariat's contracting policy.

The advance notices identified a requirement in the field of medical research and development. This was not the case. This erroneous classification could have discouraged suppliers, who otherwise may have contested the advance notices.

One of the advance notices was published on March 10, 1998; its closing date was March 20. This advance notice dealt with the development, installation and testing of a pilot telecommunications system, a web-integrated multimedia call centre. Mr. Chairman, all the work provided under this $300,000 contract had to be complete on March 31, 1998, the day the contract was signed.

The Public Works and Government Services officials asked Health Canada how this requirement could be met in just one day. Nevertheless, Public Works and Government Services Canada went ahead and awarded the contract without receiving any satisfactory response.

[English]

Furthermore, Health Canada transferred its responsibility for managing the initiative to the contractor without ensuring appropriate oversight. Program administration and contracting issues that arose could have been avoided if Public Works had adhered to sound contracting practices.

Both Health Canada and Public Works have written to my office agreeing with the facts contained in the audit observation. In addition, Health Canada provided us with an action plan through which it intends to strengthen contract management throughout the department. We have shared our views on the action plan with Health Canada officials and they have assured us that the final plan will address all of our concerns.

Mr. Chair, your committee may wish to monitor the implementation of that plan as well as the internal audit that Health Canada has promised to complete on the effectiveness of the plan's implementation.

Previous audits conducted by my office have raised questions on the role of Public Works in the contracting process. In my 2001 report we reported that in general government managers believe that accountability for contracts issued by the department is unclear, and accordingly management oversight of those contracts is weak. The 2001 report also noted that both Public Works and the originating department often work on the assumption that the other is exercising the appropriate oversight. In addition, our 1999 report noted that in only 25% of the cases we had looked at did we see evidence that the contracting authority had effectively challenged decisions made by managers in cases involving either sole-source justification or lack of compliance with the regulation.

Mr. Chair, Public Works' own supply manual is quite clear in relation to accountability for government procurement. It says that Public Works is accountable for the integrity of the complete procurement process, including all actions taken within the process. This also applies to actions originating from the client that are not in compliance with the Treasury Board or Public Works policies or applicable legislation. This is one of Public Works' guiding principles. This audit observation and previous audits conducted by my office suggest that full implementation of the principle has yet to be achieved. Your committee may wish to explore with Public Works how it views its role in the contracting process.

Mr. Chair, I'd also like to point out that we have provided to members of the committee certain documents as an appendix in response to questions that were raised when we tabled our April report.

Mr. Chair, that concludes my opening statement. We would be pleased to answer any questions the committee might have.

º (1645)

The Vice-Chair (Mr. Mac Harb (Ottawa Centre, Lib.)): Thank you very much, Madam Fraser.

Mr. Nurse, were you going to make a brief comment?

Mr. Michael Nurse (Associate Deputy Minister, Department of Public Works and Government Services): Thank you. We've been working on trying to summarize this, so I'm going to offer up a couple of paragraphs and then my colleague, Ms. Billings, will provide some summary of what we've said. So if you can be patient with us, we'll do this.

Good afternoon. I'm here to discuss chapter 8 of the April 2002 Auditor General's report regarding the establishment of the Canadian Health Network, CHN, a website that gives Canadians better access to health information.

Mr. Chairman, our department is known as a common service organization. Its role is to provide essential goods and services needed by more than 140 other federal departments and agencies to fulfill their mandates to Canadians. It aims to provide the best value for government, taking into account public policy of the day and of course with due regard to prudence, probity, and transparency. For each procurement the department undertakes, it will make every reasonable effort to satisfy the operational needs of their clients while obtaining best value in the procurement process.

Ms. Billings.

The Vice-Chair (Mr. Mac Harb): Ms. Billings, do you want to make some additional comments?

Ms. Jane Billings (Assistant Deputy Minister, Supply Operations Branch, Department of Public Works and Government Services): Yes, I do.

[Translation]

PWGSC is responsible for the integrity of the purchasing process. It must normally ensure that the measures that are compliant with the government policies or legislation. Clearly, these objectives and principles in awarding contracts allow the department to fulfill its obligation, which consists of getting the most value for taxpayers' money by ensuring a transparent, equitable and accessible process.

[English]

The department's procurement practices are intended as advancing the government's objectives in a number of areas, particularly in the area of socio-economic policy, consistent with the limits imposed by international trade obligations.

Equal treatment of suppliers is a guiding principle for contracting by the department. The electronic tendering service that was introduced a few years ago to more broadly advertise government procurement opportunities has been a major step forward in this regard.

Finally, on the principle of accountability, as the acknowledged procurement experts in government, PWGSC accepts full accountability and responsibility for ensuring the integrity of its contracting activities, including those undertaken on behalf of or jointly with other departments and agencies.

Mr. Chairman, in her audit note the Auditor General made a number of observations that are of concern, particularly the questions concerning the contracts and the report of the InnovAction website--the Canadian Health Network website--which has given place to the creation of a very important information tool on health, thanks to the Internet technology.

We value the work carried out by the Auditor General in this audit and believe the report helps the department identify areas where our performance can and should be improved. As such, the report is an excellent opportunity to further improve the quality of our services to clients.

In the case of the advanced contract award notices, ACANs, some of the comments made by the Auditor General reflect long-standing differences of opinion between the government and the Office of the Auditor General. It is our department's position that advanced contract award notices are an effective and appropriate procurement mechanism to be used in specific instances and that ACANs are part of a competitive tendering process. I believe the contracts we awarded using the ACAN process were in fact consistent with our interpretation of the policies defining the use of ACANs, the circumstances at the time, and the policies at the time. Since 1997, however, there have been a number of improvements and clarifications to the ACAN policy that I think have been the subject of discussion by this committee and of recommendations.

Mr. Chairman, that will conclude our summarized opening remarks.

º (1650)

The Vice-Chair (Mr. Mac Harb): Thank you very much, Mr. Nurse and Ms. Billings.

Mr. Broughton, do you have some opening remarks?

Mr. Scott Broughton (Assistant Deputy Minister, Department of Health): Thank you, Mr. Chairman.

[Translation]

My colleague, Patrick Borbey, Assistant Deputy Minister of the Management Services Branch at Health Canada, is here with me today, and he will briefly present the contractual aspects regarding the Canadian Health Network.

[English]

I'd like to pull out of my original remarks a few summarized comments with respect to the Canadian Health Network. It's a multi-layered collaboration and it is managed directly by Health Canada. We provide the technical platform and we ensure that information offered for use on the site is rigorously reviewed by credible organizations.

[Translation]

CHN has a regional component that ensure that local or regional health information sources are included and that people in remote locales are aware of this important resource.

[English]

The CHN engages affiliate organizations, who provide the content. These are well-known and credible health organizations such as the Canadian Mental Health Association and the Planned Parenthood Federation. They not only offer data for the CHN but prepare feature stories and answer questions from Canadians, which makes CHN a truly interactive service.

In principle, we believe in the value of this initiative, and in practice it's working for Canadians. To give a very small example, if Jane Somebody's mother who lives in Red Deer calls her at home in Halifax, worried about whether her hormone replacement therapy might cause concern, Jane can look up the answer on the CHN, ease her mother's worry, and refer her to resources in her local neighbourhood where she can get more information.

In conclusion, Mr. Chair, Canadians need not surf the Internet to find the health information they need. With the Canadian Health Network they will not be sold anything. They can search in confidence and with privacy. They are not bombarded with Internet advertising and they can be assured about the accuracy of what they find.

[Translation]

This is consistent with our mission at Health Canada and we feel good about the fact that five million hits are recorded every month on this site, that this is now the third most popular site for Canadians looking for health information. Our friends in the UK are looking to this initiative as a model for their own efforts in this area.

[English]

At this point I'd like to turn it over to my colleague, Patrick Borbey, who can summarize quickly for you the perspective in terms of the contracts.

[Translation]

The Vice-Chair (Mr. Mac Harb): Mr. Borbey.

[English]

Mr. Patrick Borbey (Assistant Deputy Minister, Corporate Services Branch, Department of Health): Merci, Scott.

Health Canada acknowledges that it has had some deficiencies in the management of its contracts.

[Translation]

As the Auditor General mentioned in her report, however, Health Canada has taken corrective action to address the issues raised. We are taking all the necessary steps to ensure that our contracting procedures are fully compliant with the standards set down by the Treasury Board.

Health Canada, over the past 18 months, has taken a number of steps to strengthen accountability. I would categorize our actions under these five headings: strengthened governance, improved authorities, new training programs, increased monitoring and reporting, and strengthened internal audit capacity.

[English]

You have the details on each of these areas in my speaking notes, so I will skip to what we're doing specifically with contracts.

º (1655)

[Translation]

Let me say a few words about how we have approached improvements in the management of contracts. A comprehensive review of the Department's procurement and contracting processes was completed in April 2002.

[English]

The review identified a number of issues, which the department is responding to. For example, we have clarified the delegation of authorities by clearly identifying them and prescribing mandatory activities for delegated officers.

[Translation]

The department instituted mandatory contract training for all managers exercising delegated authority. As a result, more than 800 managers at Health Canada involved in procurement and contracting activities received training 2001-2002. The balance will be trained this year.

In addition to training programs, we recently carried out focus groups with Health Canada managers across the country to discuss the action plan and implementation issues.

[English]

We are enforcing the use of contract review and control committees in each branch and region to ensure proper oversight. All contracts over $10,000 must be approved by a CRCC. This is also true of amendments to contracts.

Health Canada is strengthening the manager's tool-kit. You have a number of items I've listed in my notes.

[Translation]

We are actively engaging senior management in this process, including the Departmental Executive Committee, through regular briefings and reporting.

[English]

We are also reporting to the Treasury Board Secretariat on progress and implementation of the action plan. We would be happy to also share our progress with the office of the Auditor General and the public accounts committee.

It is anticipated that implementation of the action plan will be completed by March 2003. A full audit of the department's contracting practices will be carried out in 2003 to ensure that the action plan has been successfully implemented. Furthermore, audits will be conducted this fiscal year on issues such as the contracting process and the use of contracting authorities.

[Translation]

In conclusion, we clearly have had gaps in the management of our contracts as evidenced by the Auditor General's Report and our own internal reviews.

[English]

We are systematically addressing all these gaps through our action plan. The department is committed to meeting the highest possible standards in contract management practices. We will report back to this committee on progress on a periodic basis.

Thank you.

The Vice-Chair (Mr. Mac Harb): Thank you very much.

Mr. Mayfield.

Mr. Philip Mayfield: Thank you very much, Mr. Chairman.

I appreciated your comments, Mr. Borbey, toward the end. I was interested, though, in Ms. Billings' comments that they had some disagreements with the Auditor General's findings.

I was wanting to ask Ms. Fraser, were you aware of those disagreements? Had those been discussed with the Auditor General?

Ms. Sheila Fraser: In the contracting audit work we have been doing we do have a disagreement, one I believe we have brought before the committee several times, as to how these ACANs are considered. We are of the belief that ACANs are not competitive. Government is treating them as competitive contracts.

But that particular issue was not brought up in this audit note. We were in fact talking about the management of ACANs and certain rules. I did not know until quite recently that the department had any difference of opinion with us on any of the information we had published in this report.

Mr. Philip Mayfield: Thank you very much.

I'd like to ask, who is responsible for these particular contracts in Public Works? Would that be you, Ms. Billings?

Ms. Jane Billings: Yes, it's my branch that manages these.

Mr. Philip Mayfield: I see. And what is your role as the officer in the contracting process?

Ms. Jane Billings: My role is to oversee and lead the branch.

Mr. Philip Mayfield: Okay, that's fine.

Your supply manual states as one of the guiding principles that:

“PWGSC is accountable for the integrity of the complete procurement process, including all actions taken within the process: this also applies to actions originating from the client that are not in compliance with the Treasury Board or PWGSC policies, or applicable legislation.”

Could you tell the committee how the Department of Public Works has fulfilled the elements of this principle with regard to these contracts? Please be brief.

Ms. Jane Billings: I think that one of the areas we've been dealing with in terms of procurement reform is how to manage better these large projects. What we do in terms of our policy objectives of procurement is to try to balance with the best judgment possible.

Mr. Philip Mayfield: No, I'm not talking about how you do it. I want to know how you've done it. I want you to demonstrate how you have fulfilled the elements of this principle.

» (1700)

Ms. Jane Billings: In the case of the Canadian Health Network it started off as a very small project. I believe that Health Canada wasn't aware at that point that it would grow into this type of project. This is relatively typical of some IT projects in the heyday of the opening days of the web and Internet interoperability; the scope and capability were things we learned as we grew along.

Mr. Philip Mayfield: Now, it seemed that you had some experience with this, because there is this kind of growth you refer to. What would be your assessment of your department's performance on this particular issue?

Ms. Jane Billings: My assessment of the department on this contract, which we got not as a full set of all the contracts.... The Auditor General did have the benefit of looking at this as a whole. If we were to start again, knowing that we were going into this type of project, we would definitely look at a different procurement process. We'd be looking to work with the department very early, when this was just an idea they wanted to launch, to ensure that the appropriate procurement practices were embedded in their overall plan.

In this case we got the contract and the request for contract one at a time, after they had already initiated an arrangement with a non-profit organization that had proven to them that they were capable of carrying out this work and of interfacing with a lot of non-profit organizations providing content to the website.

The Vice-Chair (Mr. Mac Harb): Thank you, Ms. Billings.

Mr. Philip Mayfield: I would like to have it on the record that in response to my request, the health action plan and other elements you are going to provide to the committee will be forthcoming. Can I have your assurance of that?

Mr. Patrick Borbey: Yes.

The Vice-Chair (Mr. Mac Harb): Would that be okay, Mr. Borbey?

Mr. Patrick Borbey: Yes.

The Vice-Chair (Mr. Mac Harb): Thank you.

We'll move on to Mr. Lebel.

[Translation]

Mr. Ghislain Lebel: If I understand correctly, Ms. Fraser, in this case, somewhat similar to the previous ones, the normal rules that apply to the awarding of contracts were avoided. Perhaps not as dramatically as what we heard about earlier, but the rules were not followed.

Ms. Sheila Fraser: Mr. Chairman, we indicated in our opening statement that some rules were not followed, but I would not qualify it in the same manner regarding the contracts we have just discussed.

Mr. Ghislain Lebel: How would you describe it on a scale of 1 to 10?

Ms. Sheila Fraser: That would be difficult, but in the three contracts that we discussed previously, I found that there were serious problems, so much so that I referred the case to the proper authorities.

Mr. Ghislain Lebel: At least, in this case, there were no bad intentions. As Ms. Fraser says, it was perhaps the successive incoming contracts that cause the process to fail.

Ms. Sheila Fraser: I don't wish to comment on intentions, but I would be less generous in my interpretation. There are clear rules, nevertheless. There are problems. For example, a contract was signed on March 31 and all the services were not delivered. I think this raises questions, but obviously there was a service: a web site was developed. As for whether it provided optimal value and whether the departments complied with the fundamental government principle involved, which is to offer all suppliers capable of providing these services the opportunity to do so, the answer is that this principle was not applied.

» (1705)

Mr. Ghislain Lebel: Mr. Borbey, you have made some good resolutions; this is what you told us earlier.

Mr. Patrick Borbey: I hope that the action plan that we have developed will respond to all the observations that were made regarding contract management within the department.

Mr. Ghislain Lebel: Please don't take my question the wrong way. You speak about contract management within the department in matters of health. Suppose for example, that you are an engineer and that you receive an order from Health Canada. Without belittling you in any way, I presume that in the health field--and this reproach was made by the Auditor General--, you allow Health Canada, your client, to assess what you have delivered. I presume that if you are requested to supply an X-ray machine, you will not be responsible for determining whether it works properly; health specialists will inform you whether it meets requirements. Yet, the Auditor General reproaches your department on unloading this responsibility on your client department, if I understood correctly.

Ms. Sheila Fraser: Mr. Borbey is an official with Health Canada. Our reproaches are that all the rules for awarding contracts were not followed. Twenty-seven contracts were awarded without tender.

Mr. Ghislain Lebel: My colleagues are perhaps more interested, but that is not my problem.

The Vice-Chair (Mr. Mac Harb): We come back to you.

[English]

Next is Mr. Shepherd for four minutes.

Mr. Alex Shepherd: First of all, I visited the site, which is a very good one, but there are similar sites around the world. Have you looked at the cost of similar sites around the world? You talked about the United Kingdom and copying this one and so forth. The whole issue is value for money. Is $25 million a reasonable price to pay for a website like this?

Ms. Jane Billings: I think that would be a question for Health Canada. It's not our role.

Mr. Alex Shepherd: Wait a minute. That's not quite true. You're in the business of granting contracts, so presumably you would like to know whether you got value for your money, would you not?

Ms. Jane Billings: When we work in contracting with client departments, our role is to work very closely with that department, with the department as the technical expert and adviser. We have expertise in the various areas we were buying. We didn't go out with an overall approach to buy this type of interoperable website. We were asked to arrange a contract with a service provider that Health Canada stressed had unique capabilities for providing this type of service. They had worked for them before, and they already had arrangements whereby this organization, which eventually transpired to be InnovAction, would manage that for them. So our first spot in was whether we were getting value for money on the management services and the types of services being offered by InnovAction.

If we were now looking at it overall as one procurement for this type of website, we would be in a much better position to be able to look and compare, and at this point we would do it. So we came into this, really, with the individual contracts. Then at a certain point we looked at it and said we think there are issues with regard to the value for money you're getting from InnovAction. We worked with the department so that instead of extending a contract or putting new contracts in place, we found a different way of managing it.

That's how we exercised value for money in this case. But it was a totally different situation from being involved upfront and being able to bring that expertise to bear, which we indeed have to do. That is what we would likely carry out if we were working with the department on a new procurement of this type. But in terms of the specifics, I can't answer on this one.

» (1710)

Mr. Alex Shepherd: You're saying that you didn't define the scope of the original program in the first place and you sort of muddled your way through it. Is that what you're saying?

Ms. Jane Billings: Defining the scope of the project is part of the planning of the client department. The scope of the project in this case was different at the beginning from what it was at the end, and I think the Auditor General remarked on that.

Mr. Alex Shepherd: To the Department of Health people, they're saying you asked for one thing and then changed it, and this is why this became an inefficient operation. Can you explain why you did that?

Mr. Scott Broughton: In terms of the outset of the project, as Ms. Billings has explained, what the portal might have ended up being was not exactly known at the beginning, so quite an effort was made with Heath Canada, the various NGOs, and the health organizations that would be participating.

What we've ended up with is a portal. It has good information. There are 20 major health organizations, and the information the health organizations use, such the Canadian Cancer Society, comes from thousands of organizations across the country. Consolidating the information in this way required a substantial effort. Through the process of developing the Canadian Health Network, we had to go through a learning process, and we did that.

We now have five million hits a month. It's the third most-used website for health information in the country. We have 85,000 unique users a month.

In terms of other countries, the comment we were making as to what we're aware of is that other countries, such as the United Kingdom, are using CHN as a model. They think that the approach we're using is correct. The information I'm unable to provide you is what the costs would be, as they're developing it, relative to the costs we have here today.

The Vice-Chair (Mr. Mac Harb): Mr. Forseth.

Mr. Paul Forseth: As you describe it, it sounds as if you got into something you didn't understand. It's like the old bait and switch or the mechanic who keeps finding things and adding to the bill. That sounds like what you got into. Even though the final product may be wonderful, we're talking about processes and overall ability to manage.

I'm wondering about the Auditor General's statement in number five. It says “Mr. Chairman, none of the contracts awarded using ACANs met any of the four exceptions stated in the Government Contracts Regulations or the Treasury Board Secretariat's Contracting Policy.”

I want to ask about that contracting policy. When rules are broken, is there any regime of penalties beyond perhaps general political embarrassment that the rules were broken? Knowing human nature, if there are never any consequences, then the likelihood of violation will be large, and we just keep coming back to the same things over and over again. So it might have to do with something that is inherently deep in the system whereby we say we have a lot of rules, but we don't really have a way to enforce them, and there really are no consequences. Perhaps the Auditor General and the other officials could talk about what are the consequences for breaking the rules described in the Treasury Board Secretariat's contracting policy.

The Vice-Chair (Mr. Mac Harb): Ms. Fraser, and perhaps anyone else.

Ms. Sheila Fraser: I'm not aware of what the consequences are. I'm afraid I can't respond to your question. I don't have that answer.

The Vice-Chair (Mr. Mac Harb): In the case of Ms. Billings, you just administer the process, so do you want to answer? Or perhaps Mr. Nurse would answer.

Mr. Michael Nurse: Let her answer.

Ms. Jane Billings: There are four rules, four conditions for issuing a sole-source contract, one of them being that only one person or firm is capable of doing the work. The Treasury Board manual of contracting rights then goes on to expand on that, to describe the cases where one can use that in terms of patent or copyright requirements, technical compatibility, technological expertise.

In this case we felt we had sufficient grounds, in concert with the Department of Health, that we were indeed getting a unique capability that only could be provided by one particular body. When we put the ACAN out, in fact, I think we had four challenges over three ACANs, and that in fact endorsed that position. The Auditor General has taken the view, and we respect this view, that we did not challenge hard enough on whether there were other providers of this service.

At the time we certainly felt we were issuing these ACANs properly and they were reasonably done. In broader terms, though, over a number of the reports that Madam Fraser mentioned in her opening statements, 1999-2000, certainly across government there have been deficiencies in the administration of the ACAN instrument.

With the Treasury Board we've brought in a new policy. We've seriously enhanced the training and we've greatly clarified the requirements. For example, when a lot of these ACANs were in place the Treasury Board requirement was that they be posted for a reasonable amount of time, and at one point they had a guideline for 15 days. But it was a guideline.

In our supply policy manual, which governed the activities of my officers, it was a seven days' posting, so they certainly felt they were adhering at the time. Over time we've clarified, strengthened, and tightened, and we've put in a lot of mechanisms for monitoring and audit, including a follow-up audit last year on ACANs that showed we were in fact much improved in how we administer and invoke these.

» (1715)

The Vice-Chair (Mr. Mac Harb): Unfortunately we've run out of time, Mr. Forseth, but the Auditor General wanted to make a comment on your question.

Ms. Sheila Fraser: The four exceptions are quite clear, and we've actually laid them out. We were concerned in this case. One of the requirements is that if there is a sole-source contract, it should be justified in the files. We did not find that documentation. As well, the ACANs were posted as being for research and development, for medical, not for the development of a website. So I would question if the process was really as open as it should have been, even under an ACAN process.

The Vice-Chair (Mr. Mac Harb): Colleagues, we still have another five minutes before we allow for a wrap-up.

[Translation]

Mr. Lebel, do you wish to take the time that Mr. Bertrand has generously offered you? You each have two minutes.

Mr. Ghislain Lebel: Just now, you did not understand my question, and that is somewhat my fault, because I had confused...

In paragraph 12 of your presentation, you state:

Previous audits conducted by my Office have raised questions on the role of the PWGSC in the contracting process.

This is clear.

...we reported that in general, government managers believe that accountability for contracts issued by PWGSC is unclear and, accordingly, management oversight of those contracts is weak.

You state this. To be fair to people appearing before this committee, because I know it isn't easy...

Take for example, Mr. Nurse, with Public Works and Government Services Canada. Suppose we ask him to order an ambulance, but it's Mr. Borbey who processes the order. What competence does Mr. Nurse have to state that the ambulance is perfect and meets the client's requirements, if he doesn't ask the client if he is satisfied with the ambulance?

That's how I interpret that paragraph. I am not criticizing your intervention, Ms. Fraser, but I want to be fair. Where is the line, or who is more competent to establish that a contract is satisfactory? That is the essence of my question.

Ms. Sheila Fraser: Thank you, Mr. Chairman. I understand the question better, now.

I would like to state that Public Works and Government Services Canada has two roles. One of these roles consists of helping the department with the purchasing process. The second role, which is very clear, is to act as the contracting authority. At certain times, there can be a conflict between these two roles; one is a service function and the other is a control function. I would have hoped that we could discuss this in committee, but time is passing and I don't think we will have that discussion today. I think that this issue should be discussed, and what the department's role should be. It is not always easy to clearly come down on one side or the other.

However, when the purchasing of more specialized equipment is involved, the role of Public Works and Government Services Canada is to ensure, along with the department concerned, that the requirements are very specific and that the rules and procedures are followed. Obviously, this requires collaborative interventions from both parties.

» (1720)

Le vice-président (M. Mac Harb): You have exactly 30 seconds.

Mr. Ghislain Lebel: To conclude, I would like to come back to one point, Ms. Fraser. These people have to be careful, in the long run. One is satisfied with the standard and informs Ms. Billings, who doesn't know anything about ambulances, but who takes the time to say that the ambulance is fine. The Auditor General's official, for his part, believes that this was not the type of ambulance...

Ms. Sheila Fraser: We never questioned the type of ambulance. We questioned the rules for awarding the contracts, which require that the contracts be awarded through a public and competitive process. This was not done. We made no comments on the effective value of the web site. That was not our role, and it was not the audit's objective to do so.

The Vice-Chair (Mr. Mac Harb): Sir, you unfortunately have run out of time. Mr. Bertrand will ask the last question, and then we will go to the Auditor General.

[English]

Ms. Beth Phinney: Mr. Nurse would like to speak.

The Vice-Chair (Mr. Mac Harb): Mr. Nurse, make your comment now.

Mr. Michael Nurse: Yes. I didn't want to interrupt the exchange, but I think there is a very important point that has been raised about the issue, and that is the matter of providing a service, which is a fundamental responsibility we have, versus the monitoring or the need to provide control. And I'll tell you, this is a fine line that involves judgment. We are a large department providing a wide range of services beyond contracting, and as you see by the summary notes, that covers a great number of contracts.

In working with our client departments, we want to provide the service. We do have clear lines of delineation in terms of how we operate these. We provide the advice in this area. It requires judgment on the part of people. They receive good training in this area. Sometimes in this judgment there is an interpretation that ends up not being correct. This is a process observed by our colleagues at the Auditor General or indeed by our own very, very strong internal audit function inside the department. That is why this is important. They are lessons learned, and we take those lessons seriously and improve them.

There have been tremendous improvements in this process over the years, and it's the input that has been provided, the observations that have been made, and the very good exchanges that take place that have helped make this a better system. Will there be these issues in the future? I believe there will be, and when there are, the observations are important and our response is very important.

I'm sorry, I just wanted to....

The Vice-Chair (Mr. Mac Harb): That makes sense.

Mr. Michael Nurse: I think this is a very important intervention.

The Vice-Chair (Mr. Mac Harb): It's important for the clarification for the committee and for the public at large.

Mr. Bertrand and Mr. Tonks, you have four minutes between both of you. Why don't you split them--each one two?

[Translation]

Mr. Robert Bertrand: Ms. Fraser, if I understood correctly, you mentioned earlier, that there was tension between Health Canada and Public Works and Government Services Canada.

Ms. Sheila Fraser: No, that is not what I meant to say. I said that tension could exist between a control function and a service function.

Mr. Robert Bertrand: Are there tensions between the two departments?

Ms. Sheila Fraser: No, within Public Works and Government Services Canada, because they accomplish both roles.

Mr. Robert Bertrand: OK

[English]

The Vice-Chair (Mr. Mac Harb): Alan.

Mr. Alan Tonks (York South--Weston, Lib.): Thank you, Mr. Chairman.

I come from a municipal background, and when we are going into a conceptual area in terms of technology applications where it's difficult to be specific in terms of what the request for proposals, or the RFP, is going to be, we have another methodology, which is to put out a proposal call. It is then evaluated and then the judgment is made as to whether it should be a tendered process or whether in fact it falls into that category where there are a whole series of components to it, each of which is put out on the basis of the contractor who can provide that service or that contribution to the overall proposal.

Is there that kind of a process in the federal experience?

» (1725)

Ms. Jane Billings: The rules that govern procurement at the federal level are very stringent. They're among the most stringent in the world. Our ability to go out for proposals, accept them, and then do something else is really quite limited. A company could have reasonable grounds for grievances and complaints if they thought we took ideas from them and then changed our procurement method on the basis of what we saw. So unfortunately there is not.

Mr. Alan Tonks: I understand that, but I'd like to pursue that a little bit. If there are two phases.... If there is a request for proposals, everybody takes their chances in terms of letting each other know what their price is. The rules of that process are upfront, and if you don't wish to be part of it, you're not.

Of course hindsight is always 20/20. The camel's a horse designed by a committee, and if you knew that was the way it was going to be, that's what you would have asked for in the first place. I'm wondering, using a little bit of hindsight here, and not to oversimplify it, whether there is in fact a more appropriate two-phase approach to some projects, each with their own proposals, in which you get a whole bunch of people coming in with what they think the design of the website should be and the degree of interactivity and so on, and then the second part of it is the evaluation of the proposal and then putting that out for tender.

The Vice-Chair (Mr. Mac Harb): Very briefly, Ms. Billings, we're running out of time.

Ms. Jane Billings: Indeed we've become a lot more creative on how we approach these IT projects. We have a number where we've gone out first with staging of ideas and discussion with industry to see if what we're doing is feasible to get us ideas and shape.

We're far more likely to go out with the solution we want and then ask companies to bring us proposals on the solution and then do it in stages so that we can off-ramp out of a project. Our major secure channel project at the moment for government online is one where we started off with--after a fairly lengthy process on ideas--going into contract with a consortium at a relatively small amount and then, if successful and we get the performance, we'll go to the next stage, which is a little bigger.

We're trying to mitigate our risk. We're also asking for solutions where we don't really know if what we want is out there, so we're working it through as we go. We're finding that those are challenging to do, but so far they're giving us much better results. The trick is to plan upfront for how you're going to do it. It's fairly demanding for industry, but the projects are paying back.

The Vice-Chair (Mr. Mac Harb): Seeing that it's 5:30, on behalf of my colleagues I want to thank all of our witnesses for appearing today. I wanted to turn to Madam Fraser to ask her if she has any closing comments to make.

Ms. Sheila Fraser: Thank you, Mr. Chairman.

I would just like to say to the committee that we are pleased with the action that Health Canada has taken and the seriousness with which they are dealing with the issues raised in this audit observation.

I believe it would be worth while at some point in the future for the committee to have a discussion on the role of the Department of Public Works in the contracting process of government and the service versus control functions. I think that would be an interesting discussion, perhaps, for some future time.

Thank you.

The Vice-Chair (Mr. Mac Harb): Thank you very much.

As it is now 5:30, we will adjourn until the call of the chair.

PACC57-01-E

PACC57-02-E