TRGO Committee Meeting

STANDING COMMITTEE ON TRANSPORT AND GOVERNMENT OPERATIONS

LE COMITÉ PERMANENT DES TRANSPORTS ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 13, 2001

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[English]

The Chair (Mr. Ovid Jackson (Bruce—Grey—Owen Sound, Lib.)): Ladies and gentlemen, I see a quorum.

Today we have the deputy minister, Jim Stobbe, and—

Mr. Jim Stobbe (Assistant Deputy Minister, Government Operational Services, Department of Public Works and Government Services): I just got a promotion, Mr. Chair.

The Chair: Assistant deputy. Did I give you a promotion?

Mr. Jim Stobbe: Yes, you did.

You don't mind, do you, Mr. Chair?

The Chair: As the committee will remember, we said that since they have too many new members, we're probably going to have some form of orientation. Members of the opposition did ask that we have a contract, and I hope that... I understand Ms. Billings is such, so we've been accorded what we've asked for.

The committee likes to have presentations of about ten minutes. We don't like when people come to our meetings and it ends up that they give a total presentation, and then there are no questions and answers. I think members really want to ask questions and hear answers. Although it's an orientation, we might use a little bit of discretion here. I would prefer that you give your presentation in about ten minutes, just generally about the function of the department, and then we'll go to questions in the usual fashion. The first round is ten minutes, and then the second round is five minutes. Thanks.

Mr. Jim Stobbe: Thank you, Mr. Chair.

We have a presentation. It can take 10 to 15 minutes, and then we can answer questions, or, if you like, if there are any questions as we go through it, we could respond to questions at the time. It's entirely up to you.

The Chair: Yes, it probably would be better if members made notes and then asked the questions after.

Mr. Jim Stobbe: Okay.

The Chair: Thank you.

Mr. Jim Stobbe: I believe we made copies available to members of the committee. It's an overview of the department. You'll see on slide 2 that indeed the Minister of Public Works and Government Services Canada has significant other responsibilities besides the department. But for the purposes of today's presentation, we're speaking strictly to the Department of Public Works and Government Services.

The Chair: It might be helpful if you refer to the pages to keep people on track.

Mr. Jim Stobbe: Okay.

The Chair: Thank you.

Mr. Jim Stobbe: Moving to page 3, the department was created in 1993 by the merger of the former Department of Public Works, the former Department of Supply and Services, the government telecommunications agency from the Department of Communications, and the Translation Bureau from the Secretary of State. We provide common services to over 100 departments and agencies, the largest ones being CCRA, Human Resources Development Canada, and the Department of National Defence. We're organized in five regional offices located in Halifax, Montreal, Toronto, Edmonton, and Vancouver, and we administer 18 federal acts directly and are impacted in whole or in part by 41 additional acts, including things such as the Real Property Act, the Expropriation Act, and the Payments In Lieu of Taxes Act.

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On page 4 we try to define our goal: to provide the best value for taxpayers, in terms of common and central services, with due regard for the importance of government values of prudence, probity, and transparency. By focusing on what we do best, we allow line departments to deliver services to Canadians.

In some respects we're not exactly masters of our own house. What we do in large part depends on what line operations do, and how, and the demands they put on the system for accommodation for payments, for procurement, or for translation.

On page 5 we list the various business lines that the department is involved in. Real property services—our minister is also the Receiver General. We provide compensation services to government, and so on. We'll go through each one of these services' business lines independently.

As to the real property services business line, the department is custodian for about $6.8 billion worth of holdings. That's about one-third of the federal government's total. Other major custodians are the Department of National Defence, Agriculture and Agri-Food Canada, Fisheries and Oceans Canada, and the Department of Foreign Affairs and International Trade. We administer about 6 million square metres of office space. Of that, 54% is property that the government owns; the remaining is leased property. We administer about 2,000 leases with an annual rent of $450 million.

We accommodate approximately 179,000 employees in roughly 2,000 locations in Canada. We administer payments in lieu of taxes to municipalities across the country. We provide professional and technical services such as architectural and engineering services and real property and facilities management. We have $1.7 billion annually of contracts with the private sector.

On page 7: as the Receiver General for Canada, we receive and disburse all public moneys. The annual cashflow is about $1.2 trillion. We manage daily cash balances of about $8 billion. We maintain the public accounts of Canada and produce monthly and annual financial statements for the Government of Canada. We issue approximately 200 million payments annually. About two-thirds of those are electronic and one-third is paper. We depend heavily on Canada Post and the Canadian financial institutions to deliver that service.

On page 8: as the government's administrator of compensation we administer payroll for about 251,000 employees. We issue about 7.5 million payments annually valued at about $12 billion. We provide pension administration for 358,000 contributors and 329,000 annuitants, issuing about 4 million payments valued at $5 billion. We administer the interface on the various health insurance policies with insurance companies that provide those services.

At this point, for supply I'll turn it over to my colleague, Jane Billings.

Ms. Jane Billings (Assistant Deputy Minister, Supply Operations Service Branch, Department of Public Works and Government Services): At Supply Operations Service Branch we issue over 50,000 contracts worth $8 billion annually for goods, services, and construction. We issue these contracts to approximately 25,000 suppliers across Canada for 17,000 categories of goods and services.

We're responsible for working, largely with DND, on major crown projects. These are projects that are valued at over $100 million and have major implications for industrial and regional benefits. One of our prime raisons d'être is a common service in supply, which is to ensure that the procurement system of the federal Government of Canada offers fair, open, and equitable access in a competitive environment to ensure that we get the best value for Canadians.

We do this partly through electronic advertising of opportunities on the government electronic trading system, which is trademarked as MERX, and we encourage the openness and fairness of the competitive environment within the trade agreements of the Government of Canada.

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In addition to the procurement work carried out in my branch, we manage the disposal of surplus crown-owned assets. We manage and dispose of property, seized or restrained, in connection with criminal offences.

My branch is responsible for travel services. We negotiate the airline discounts, and we run the hotel and car directory. We actually offer the travel management service through Ryder.

Through the Canadian General Standards Board, we have the ability to develop standards, specifications, manuals, and guides for government and others, and we manage industrial security and personal security screening services for the Government of Canada.

On the next page we've laid out public service procurement across Canada, which totals $71 billion: provinces and territories, $32 billion; local government, $17 billion; hospitals, $6 billion; and the federal government, $16 billion.

So the federal government is not spending as much as some of the other components, but as a consolidated spender it certainly is one of the largest. However, through Public Works and Government Services, we handle approximately half the value of the federal government's procurements. The rest is handled by other departments and by the crown corporations.

On page 11 we've laid out the delegations. The Minister of Public Works and Government Services has a very high delegation for contracting goods, services, and construction—$20 million for each of those—whereas other ministers have a limit now at $25,000, if they opt to go that high, on goods. Many departments stay within $5,000. Services delegation is $2 million to other departments and construction delegation is at $25,000.

Turning now to other service lines...

Mr. Jim Stobbe: The department manages the government telecommunications and informatic services. That's basically the delivery of information management and information technology and telecommunications services to departments and agencies. That would include data centre operations, electronic networks, satellite services, and electronic messaging infrastructure and directories.

In conjunction with the Treasury Board Secretariat, we're very heavily involved in the development and delivery of the secure channel for government online initiatives, as well as managing the delivery of key government online projects within the department. We deliver electronic commerce services to line departments on request.

The communication coordination services branch supports government communications by providing Canadians access to Government of Canada information and services through the Canada site and through the 1-800-O-Canada telephone service, as well as through government publishing, the depository services program, and the Canada Gazette.

We provide departments and central agencies with communications services such as advertising and project coordination and procurement services. We manage the Publiservice, which is the government's Extranet site that facilitates communication between departments, and we manage the government's sponsorship initiatives.

Consulting and Audit Canada is a professional consulting and auditing service that provides management consulting and audit services to federal departments and agencies across Canada, and on request to foreign governments and international organizations. These services are provided on a fee-for-service basis. There is no appropriation for Consulting and Audit Canada.

Similarly, the Translation Bureau provides translation, interpretation, and linguistic services to Parliament and the federal public service, and again, on request, to international organizations. They offer services in Canada's official and aboriginal languages and in over 100 other languages, and they provide standardization and dissemination of terminology in the public service. Again, these services are provided to other government departments on a fee-for-service basis. The services to Parliament are appropriated.

We have a corporate management component that is probably generic to every department, such as policy and planning, financial management, human resources, and communications. A big component of this group is information management and information technology, which provides support to the departmental programs.

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In terms of our current challenges, maintaining current level of services, these services are to a great extent mission critical, a major and constant preoccupation of the department. We have to react to new government programs and initiatives such as the recent energy rebate. We were required to issue cheques to basically every Canadian who filed an income tax return last year.

Government online is a basic initiative of the government. We're very heavily involved in the delivery of government online.

Most of the structures in the department have been designed with the maintenance of public trust in mind, whether that's payments, procurement, or real property. Quite clearly, the department shares with other government departments in town a preoccupation with an effective workforce. These preoccupations will manifest themselves in the future. We're increasingly focused on where we provide value-added, and therefore we have the discussion on how much is delegated, which Jane referred to.

We're very interested in enhancing public-private partnering. We've done a lot of work in the area of real property management. We're trying to lever our departmental expertise to do that. As a common service area, we're well positioned to deal with issues that are common across all departments, and we play on those files.

Adapting to the new technology of the Internet is a major preoccupation, and attracting and retaining the appropriate staff for the department continues to be a major management challenge.

Thank you, Mr. Chair.

The Chair: Thank you very much. We'll go to our first round of questions.

Andy.

Mr. Andy Burton (Skeena, CA): As a brief comment, Mr. Chairman, the public works department has reporting responsibilities for Canada Post, CMHC, the Mint, and various other programs. I understand this is just public works and contracting today. I suggest that we as a committee need to hear from the other crown corporations as well for the benefit of those who aren't familiar with their operations, and in that respect this could be somewhat incomplete as far as a briefing goes.

So I'd like to make that point. I think the other members need to hear from the various other departments under Public Works and Government Services.

Are we only going to be asking questions on contracting today?

The Chair: No, you have five minutes. It's your time. You can use it for comments or for whatever questions you have.

Mr. Andy Burton: All right.

The Chair: I'm sorry, you have ten minutes.

Mr. Andy Burton: First of all, on page 9, I notice that we're responsible for a huge amount of dollars in contracts. I want to know what percentage of those are sole-source and ACAN-type contracts.

Secondly, how do we get the best value for dollar on it when we're sole-sourcing?

Ms. Jane Billings: In terms of sole-sourcing, 83% of our contracts last year were competitive. Of those, 19% were ACANed. The remaining 17% or 18% were sole-sourced. We consider ACANs to be a competitive means of procurement, because we post an advance contract award notice up on MERX. It's out there for a minimum of 15 days. If an ACAN is challenged, we take it very seriously in terms of somebody coming forward to say they can offer this service and would like the chance to compete. As as I mentioned earlier, we're looking to have a competitive environment.

If, after discussion with that company, we determine that, yes indeed, they can, then we'll open it up for competitive purposes. So the 17% or 18% that were ACANed in the last year for which we have data were areas where nobody came forward and said they would like to compete for it.

In terms of getting best value on sole-sourcing, both the government contracting regulations and the trade agreements are very restrictive on where we can sole-source. It's only in certain circumstances: unusual urgency, which we can't manufacture. It has to be a real situation of urgency—only one supplier, or intellectual property, for example. When we have a sole-source request, we have to make sure that those particular conditions are indeed satisfied. When we go to negotiate the contracts, I have in my area cost analysts who help assure us that we are working within the Treasury Board's profit guidelines and that we're getting transparency through the books, to see that the rates are reasonable and that the profit is in line. On the bigger contracts we will go in and audit after, to ensure that we are indeed getting taxpayer value.

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Mr. Andy Burton: Okay. In the 1999 Auditor General's report, he stated that only 11% of 50 contracts, randomly selected from 552, met the conditions for sole-sourcing; 89% should have been put out to public tender. This represents over $1 billion in sole-source contracts. So what are we doing to ensure that proper procedures and best value for dollar have been achieved?

Ms. Jane Billings: Part of that question really needs to be referred to the Treasury Board Secretariat when they appear in front of you. I think they were supposed to be here later this week, but it's now been postponed.

When the Auditor General did his review, he drew a sample of contracts from across the government, and as I noted, we only do a portion of the contracts. We do about half of them. Most of that sampling was indeed in other departments, and Treasury Board has taken steps—we did a review of the contracting procedures—and the departments where they found most of those, in fact, they've gone back to work for. The sample within Public Works and Government Services was in fact in pretty good shape.

The Chair: Go ahead, Brian.

Mr. Brian Fitzpatrick (Prince Albert, CA): I'm curious to know, in terms of the structure of government, how does your department relate to the Privy Council and the Clerk of the Privy Council? Does your department report or deal with that department a fair amount?

Ms. Jane Billings: The Clerk of the Privy Council is the person to whom all the deputies report in a structural manner. We're a department, like the Privy Council Office. The Privy Council Office gives central coordination and direction to departments on a vast array of issues.

Pragmatically, we handle their supply operations, speaking from a parochial supply perspective. We offer and provide them services to the same extent we do every other department.

Mr. Brian Fitzpatrick: As a follow-up question on that, if this department wanted to do something innovative, had looked at a problem or an area they had been dealing with in the past and realized the way they were doing things could be improved, and your department thought up new and better ways of doing things, would you have to go back through... Does the deputy in your department have to go back to the Clerk of the Privy Council and get approval for that change, or can you do that internally in your department?

Ms. Jane Billings: There are many things that we can do internally in our own department and have indeed been done or are doing. A lot of the webbing of our services, for example, and some of the innovations we're undertaking are totally within our own prerogative.

Where we have an issue we think raises major policy concerns, which is less frequent in an operational department than, say, a policy department, or something is bumping into legislation—we have a mass of legislation we work under—then we would have to go back through the process for getting an amendment to the legislation, and then of course the Privy Council Office would be involved.

The Chair: Did you have a question, Dale? Okay, go ahead.

Mr. Dale Johnston (Wetaskiwin, CA): Thank you for your presentation.

I would like you to enlighten me on the process to dispose of surplus government articles.

Ms. Jane Billings: It's interesting that you ask. We've just gone through a major change in how we're offering surplus products. Until quite recently Crown Assets Disposal, which is in my branch, disposed of all surplus goods on behalf of the government and liaised with Industry Canada with respect to the surplus of computers for the schools program. In the past couple of years what we've done is respond to views of other departments, particularly departments with large regional presences, that they would like to be able to dispose of their goods themselves. We started a pilot with vehicles, particularly those of RCMP and DND, where the disposal activities were auctioned out to auction houses—those vehicles go straight to the auction houses, with the money flowing back into the departments.

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On the lower end of goods as well, now ministers have the ability to decide themselves how they're going to dispose of goods and whether to dispose of goods to the listing of priority receivers for government surplus.

The policy for government surplus is that we are obliged, whether it's my department or other departments, to get best value—fair value—for the taxpayer. But in disposing of property, we turn first to other federal departments and crowns to see if they're interested. Then we turn to provincial governments, then municipalities, and then we turn to non-profits and charities. But in all of those cases, we're looking for fair value, so there is that hierarchy in there.

But departments, ministers, can determine in which cases they would like to perhaps donate in certain circumstances within that policy.

Increasingly, the way crown assets are now being disposed of is that the department determines whether they would like to dispose of them themselves or whether they would like to go through us. We have a contract out, in fact, that has just closed looking for bidders who want to manage local disposal services for us; we're in the process of handling that.

So whereas five years ago, you would have seen in the newspaper ads with the Canadian flag on them, saying “crown assets disposal public sale”, those will become less and less frequent, but we're in a period of flux right now.

The Chair: You have probably a minute left, Andy.

Mr. Andy Burton: Okay, a quick one then, and again on contracting.

In the 2000 Auditor General's report, there were $320 million in missed contracts and in 501 contracts testing found that $126 million of the contracts had been incorrectly classified. This is a very substantial amount of money. I just wonder what's being done to ensure that contracts are properly classified and that the procedure is correct.

Ms. Jane Billings: That, too, is one that you'll want to ask Treasury Board about when they come.

The $300 million supposedly lost item—with the year-end transition over, we've corrected that. And we've gone through our processes to try to ensure that we get the data properly coded both in our department and in other departments that generate those reports.

The Chair: Thank you, Mr. Burton.

Who's going to ask questions? We can go back to the opposition if there are no questions.

Mr. Paul Szabo (Mississauga South, Lib.): Just further to Mr. Burton's intervention about the crown corporations, possibly Jane or Jim could simply inform us of the relationship between those crown corporations and the minister or the department, and what reporting or accountability lines exist. It's probably worth noting.

Mr. Jim Stobbe: Okay.

The crown corporations report through the Minister of Public Works and Government Services Canada. They all have separate governance arrangements. They don't report through the departmental structure to the deputy head. They all basically have a board of directors to which the chief executive officer reports. Their administration reports to the CEO and, through him, to the board of directors.

Basically, the operation of all of these crown corporations is at arm's length from the department.

Annual reports are produced for each of the crowns and are tabled by the minister—again, in his capacity as the minister responsible for those crown corporations and not in his capacity as the Minister of Public Works and Government Services Canada.

The Chair: Are you through?

We'll go back to the opposition.

We'll hear from the Bloc Québécois.

[Translation]

Mr. Ghislain Lebel (Chambly, BQ): From what I see here, on page 2, the Canadian Information Office reports through you, right?

[English]

Mr. Jim Stobbe: It reports through our minister but not through the department.

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[Translation]

Mr. Ghislain Lebel: Therefore, the Canadian Information Office activities, sole source contracts for example, do not come under your jurisdiction.

A voice: No.

Mr. Ghislain Lebel: This is part of the category of contracts, as Madam was saying, 50% of which don't come through us. I'm not criticizing you but it is a bit illusory to put that on your list of... Of course it reports through the minister but not through you. If I understood correctly, we must also add the Crown Assets Disposal Corporation to this list. Am I right?

Ms. Jane Billings: Absolutely.

[English]

Crown Assets Disposal is simply a unit in my branch. It is within the Public Works and Government Services department and reports fully through me to the deputy, and to the minister in turn.

[Translation]

Mr. Ghislain Lebel: So, if I understand correctly, it reports through you.

Ms. Jane Billings: Yes.

[English]

Crown Assets Disposal.

[Translation]

Mr. Ghislain Lebel: Okay, it's what I wanted to know. So, in the case of sole source contracts, when you talk about the choice criteria for a sole source supplier, you are talking about the urgency but also about the number of suppliers I assume. If there is only one offering a good or service, we don't have much choice.

There is also the intellectual property except that it seems that I cannot ask you any questions regarding the Canada Information Office. We know for a fact that CIO awards a large number of contracts to few people to accompany ministers, make presentations and so on. Are those people chosen in accordance with intellectual property? I am thinking of Tremblay-Guittet and several other people whose names came out recently. So you are not aware of that aspect of CIO activities.

Ms. Jane Billings: No.

Mr. Ghislain Lebel: But I presume that you are aware of the fact that its budget suddenly went from $22 million to $50 million. Can you tell us why? Things are looking good for CIO. I don't know. There is something that... Things are looking good for CIO, don't you think? It bothers me.

[English]

Ms. Jane Billings: We're not in a position to answer questions with respect to the Canadian Information Office or the budget.

Mr. Paul Szabo: I may be able to help, Mr. Chairman. The Canada Information Office... According to the estimates, the member is quite right, but the increases were a direct result of the transfer of existing programs out of Public Works into CIO, so that in fact the base budget of CIO hasn't changed. Its other activities that were formally included in Public Works and Government Services have now been put under the umbrella of CIO.

[Translation]

Mr. Ghislain Lebel: I was asking Madam. Can she confirm the answer you just gave me? It's not that I don't believe you, Mr. Szabo.

Mr. Paul Szabo: No. I understand.

[English]

Mr. Jim Stobbe: There was a transfer of responsibility with respect to the organization of exhibitions and fairs across the country, from the Department of Public Works to the CIO. There was a budgetary transfer associated with that. I'm sorry, I don't have the precise numbers with me but I believe it was in the order of magnitude of $25 million or $30 million. That transfer was made about a year ago, I believe.

[Translation]

Mr. Ghislain Lebel: As I have time left, I would like to ask a question to either one of you, Sir or Madam. The Canada Customs and Revenue Agency comes under you. Leases and books also come under your jurisdiction.

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There is a call for tenders for the building that houses so to speak Canada Customs and Revenue Agency in Laval that has been occupying the same premises for at least ten, maybe twenty years. Less than two years ago, more than $1 million has been invested in electrical cabling for the Internet and new computer technologies, and there was a call for tenders, which is the right way to go. Now, the present lessor is submitting the lowest bid among five or six bidders and it is rumoured that your department is very seriously considering awarding the contract to the highest bidder. You know, I don't believe any of it personally because I am convinced that you practice sound management but I would like you to put an end to those rumours.

[English]

Mr. Jim Stobbe: It's my understanding that Canada Customs and Revenue Agency in Laval is housed in three buildings today. There was a requirement to consolidate this space into one, and we went to tender. This was done in a fair and open manner—in fact, the evaluation of the bids was reviewed by a fairness adviser. The contract will be awarded to the company that meets the mandatory requirements and has the best price. My understanding is that's Garadex Inc. and First National Funding Corp. of Montreal.

[Translation]

Mr. Ghislain Lebel: But I was told that Treasury Board is deliberating over the choice of the future supplier. Is it normal procedure or should it not come administratively under you or under a branch of your department?

[English]

Mr. Jim Stobbe: Depending on the size of the lease, the department has authority to sign it. In this situation, I believe we had the authority. I understand the competition has been run and that the results have been...

[Translation]

Mr. Ghislain Lebel: This is not what I am asking, Sir. He is telling me, and I believe him, that he has the authority to award the contract except that at one time not so long ago, maybe two or three weeks ago, the decision was being taken by Treasury Board. Therefore, it is a departure from standard procedure. It is unfortunate but it seems to me unless I am wrong that Treasury Board is a political body.

[English]

Mr. Jim Stobbe: The size of the contract is in the area of $40 million, I believe. That would require Treasury Board approval. The competitive process itself was run by the department.

The Chair: Thank you, Mr. Lebel. We'll have to come back with some questions later on. I'll go to Serge on the Liberal side. Serge, are you awake? If you don't have any questions, we'll go—

[Translation]

Mr. Serge Marcil (Beauharnois—Salaberry, Lib.): It is more like a remark about the role of Treasury Board. There must be guidelines requiring that above a certain amount the expense be approved by Treasury Board. That's why I don't understand why one should ask such a question.

Mr. Ghislain Lebel: Mr. Chairman, we should clear up one thing right away. When I address the witnesses, I don't need the intervention of the member from the other side.

Mr. Serge Marcil: Mr. Chairman, we are entitled to a certain freedom of speech here. We have the right to make whatever comments we want.

[English]

The Chair: In order for a meeting to run properly, whether in the House of Commons or here, it's always a good idea for questions to come through the chair. In this particular case, we have witnesses. I think the members are asking the witnesses questions, and they don't necessarily want to hear from us. We can comment, I think, when it's our turn.

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The Liberals have ten minutes. If they don't want to use it now, I'll go to Bev—oh, okay, Marcel Proulx.

Mr. Marcel Proulx (Hull—Aylmer, Lib.): I don't think it's very clear, but we want to use our time.

Good morning. Thank you for your presentation.

I want to get to the practical side of things. Can you tell us what the client relationship is with the different departments? For example, Customs wanted to lease new premises and went through Public Works to manage the tenders. Can you explain briefly how this works?

Mr. Jim Stobbe: On page 6 of the presentation, we outline the department's responsibility with respect to real property services. The Department of Public Works and Government Services Canada is responsible for the administration of all office accommodation for the federal public service. So if CCRA or any other department or agency requires office space, we provide it.

They come to us with a requirement—in this case, for consolidated space at Laval. We work with them to define the requirements for that space, and then we decide whether to build a federal building or lease the space. In this case, we went to tender for a lease to meet the consolidation requirements of Canada Customs and Revenue Agency in Laval. The lease is with us—we are the property managers and we house CCRA, as we do Human Resources Development or Canada Immigration or any other department.

Mr. Marcel Proulx: And you decided what space the client department required, and the different conditions, as per Treasury Board guidelines?

Mr. Jim Stobbe: As per the Treasury Board. It has guidelines on basic requirements, although every department has different operational requirements. CCRA is a big department with a lot of public interaction. To a great extent, that drives the kind of accommodation it requires.

Mr. Marcel Proulx: How about vehicles? I'm very curious about that, because my riding—just across the Ottawa River—has approximately 25% of all federal government operations in the national capital region. Yet probably less than one-tenth of 1% of NCR vehicles are purchased there. How does that work?

Mr. Jim Stobbe: Maybe I'll address it from the requirements point of view and Jane can address it from the procurement point of view.

Mr. Marcel Proulx: I'd appreciate that.

Mr. Jim Stobbe: Again, just as requirements for space vary, so do requirements for vehicles—depending on the nature of a department's business. Individual departments determine their own requirements for vehicles. At that point, they requisition what they need through our department—because they probably don't have sufficient delegated authority to buy vehicles.

Mr. Marcel Proulx: Unless they buy them one by one.

Mr. Jim Stobbe: Well, the delegated authority is $25,000 for goods.

Ms. Jane Billings: And the $25,000 is just coming into effect.

Mr. Jim Stobbe: Not all departments have it yet.

Mr. Jane Billings: Four departments picked it up a few years ago; a number are coming back in. Most departments work under $5,000.

In terms of vehicle purchases, every year we ask the automobile manufacturers to make proposals on what categories of vehicles they will offer to us, at what prices. We then keep that list of offered prices and make it available for departments that come in. When we get the requisition, we match it against the list of available vehicles and then provide those.

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Essentially we get excellent prices because we buy directly from the manufacturers and the manufacturers treat these as add-ons to their runs. For anything over $25,000, in terms of a requirement, we go out and compete. So there is an interest on the part of the manufacturers to offer us vehicles under that $25,000 threshold.

Mr. Marcel Proulx: And who decides how it's delivered, in the sense that the manufacturer doesn't drop it to the department; they deliver it through their dealership network? Who decides what dealerships are used?

Ms. Jane Billings: That information I don't have. I can provide it to you later.

Mr. Marcel Proulx: Would you, please? I'd appreciate it. Thank you.

The Chair: Any information on that comes to the committee.

Mr. Shepherd, you have maybe two minutes if you want it.

Mr. Alex Shepherd (Durham, Lib.): I notice two points in your presentation—and I'm sorry I missed your presentation, but I did read it—that interest me. One is the whole initiative of government online, and I know we have a guillotine date of 2004 by which we're supposed to have all government services online. I'd like to get a general update as to where we are with that. Are we going to meet Joe's deadlines? Are the objectives of government online such that they're going to see all government services online by that date?

Secondly, as you know, the Auditor General has had some disparaging words about the public service these days. And I notice that as the very last point on your last page you have, “Creating an exciting place to work”. How so?

Mr. Jim Stobbe: With respect to government online, and in particular with respect to the Department of Public Works and Government Services Canada's role in government online, we basically have two initiatives underway. One is to provide what we call the secure channel. The secure channel is essentially infrastructure. It's infrastructure that will allow Canadians to conduct transactions over the Internet and be assured about the privacy, confidentiality, and security of those transactions, to be assured that the information has not been compromised in any way and it has not been available to people who have no authority to see it and no need to see it to process transactions.

The Government Telecommunications and Informatics Services branch is responsible for that. They will be contracting for the delivery of that service. It will not be a made-in-government solution, but in fact the private sector will have a big role to play in the delivery of the secure channel.

Maybe Jane can give us an update on where that procurement is.

The second piece, indeed, is providing a procurement supply chain that's consistent with government online objectives. Again, Jane has direct responsibility for that.

The Chair: Jane, you have 30 seconds so that Mrs. Desjarlais can ask her questions.

Ms. Jane Billings: On secure channel, the bids closed at Christmas time. We're in the process, the black box process, where we're evaluating and negotiating, which will lead to Treasury Board approval. We hope to have a contract in early to mid-May and to make the announcement then as to how we'll go forward.

With respect to the electronic supply chain, it's a really exciting project that has us both challenged and anxious because it is a very large undertaking that we're doing in stages. At the end of it we'll have the government procurement approach embodied in a web-based system that will allow us to put up requests for proposals and to receive bids, to do all of this from the start to the finish, essentially by Internet access, Internet-enabled tools.

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There will always be parts on the really large procurements that will have to have the value-added of people involved, but to the extent possible, every aspect of the procurement process that can be sped up through technology will be.

The Chair: Thank you very much.

Mrs. Desjarlais, you have the floor for ten minutes.

Mrs. Bev Desjarlais (Churchill, NDP): On page 6 you mention the 179,000 employees in 2,000 locations in Canada. Is there a breakdown as to where those employees are located? I don't need it today, but is it possible to get that by percentages, just roughly, say 50% in the Ottawa region, 5% somewhere else?

Mr. Jim Stobbe: There's not a good central repository of that information. We provide payroll services out of five different offices across the country. It is really up to individual departments to organize themselves to deliver pay and benefits, so one department might be providing pay and benefit services out of one office in the country for all employees across the country and our numbers would show those in whatever office was doing the administration.

Other offices have adopted a very decentralized approach to pay administration and so the accounts would show in various parts of the country. Treasury Board, I believe, maintains some records on the geographical dispersion of public servants. Certainly I don't have, as part of pay administration, that information.

Mrs. Bev Desjarlais: I would have thought that in this day and age, with all this wonderful new technology, all you'd have to do is zap in a postal code and you'd pretty much know where everybody was, if you have them on the payroll. Whether you are in one department or the other, that information should be available through the main administrative agency, but I guess that would be in the world where we could fly people to the moon and stuff.

Mr. Jim Stobbe: We can fly people to the moon.

Mrs. Bev Desjarlais: It's questionable now.

Mr. Jim Stobbe: One of the challenges we have on pay administration in fact is that our computer systems that support this are 25 years old. They work. People get paid. Indeed, we administer payroll for members of Parliament, and I presume all members of the committee get paid. But in terms of massaging information, sometimes they are not as effective as one would hope.

As I said, I believe Treasury Board does maintain records on geographical dispersion, as the employer.

Mrs. Bev Desjarlais: On page 7, it mentions that it depends heavily on Canada Post and Canadian financial institutions for service delivery. Being that you are the overall body of Canada Post, if I have that correctly, and also the cost of delivery of the goods is through Canada Post, I'm curious as to what the breakdown of the cost of delivery of the services is, split up between the financial institutions and Canada Post. Again, I don't necessarily need it today.

Mr. Jim Stobbe: No, I can tell you that.

Mrs. Bev Desjarlais: Okay.

Mr. Jim Stobbe: We pay the same postage rate as anybody else. We do a lot of pre-sorting. We're paying a blended rate of about 42¢ or 43¢ a cheque to Canada Post for every one we put in the mail. We don't pay any of that when we do direct deposit. We pay financial institutions about 10¢ to negotiate a cheque. Actually, we pay them about 7¢ for a normal cheque and we pay them significantly over $1 if they cash a non-customer cheque. The blended rate is about 10¢. We pay 1.7¢ to the financial institutions to negotiate a direct deposit, so there are considerable financial savings to the government associated with the conversion from paper to direct deposit and a subsequent decrease in revenue at Canada Post, which is something we discuss with them on a service provider basis and on a regular basis.

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Mrs. Bev Desjarlais: Thank you.

In regard to travel and relocation management services, I'm often curious about how the Ryder service agreement works, and how it ultimately ends up being cost-effective. You know, if we were dealing with strictly the ones for members of Parliament, we would be dealing with something we all know about.

How do we go about seeing the savings or the value-added aspect of those agreements?

Ms. Jane Billings: First, I should make it clear that the Ryder contract that you know through the House of Commons is not the contract we manage. The House of Commons manages its own contract with Ryder. We have a contract with Ryder as well, though, so that often causes some confusion.

But many of the elements are the same. What we do with the government travel services is go out and make it competitive. We have a competition for essentially a transaction-based service. We ask the provider to come in and bid to us what it will cost us in terms of a transaction such as a face-to-face booking, an online booking, a hotel reservation, and so on. The one that comes in with the best bid is the one we take.

We build into it a lot of service standards in terms of, for example, the number of rings before a phone call is answered, how one deals with clients' complaints, or the fact of whether or not we get the lowest bid, the lowest price, and the lowest fare on an airline. All of those come into play.

We then bring in an outside firm to assess client satisfaction and all the other aspects of our service requirements. So we very much have a transaction-based, performance-based contract. With the Ryder deal with the Government of Canada, they are hitting their performance targets at this point.

Mrs. Bev Desjarlais: Is an audit of the services done to make sure you have been receiving the best fare available?

Ms. Jane Billings: Absolutely, and the catalyst there is that if Ryder doesn't get us the best fare, and we can show there was another fare, they'll pay us double the difference and we refund that to the client department.

Mrs. Bev Desjarlais: Okay.

That's it for now.

The Chair: Thank you, Bev. That's great.

That ends the first round of ten minutes. We're on to five minutes, and we go to Mr. Shepherd first.

Mr. Alex Shepherd: Maybe I'll give you a chance to answer my question.

From reading many budgets over the years, I've discovered the best stuff is in the back and that you should go forward. The Auditor General has mentioned the problem of hiring in the civil service and the fact that the civil service is not considered an exciting place to work any more. In fact, I think something like 40% or 60% of all our civil servants are going to retire in about six years. We're having great difficulty attracting new people to the civil service, or having it seen as a career course.

I think you said in your opening remarks that one area you are sadly lacking in is in the investment in new equipment, and you talked about your 25-year-old computers. I wonder how that's an influence on people working in that environment.

More importantly, I guess there's the human aspect. What are we doing to make the civil service a more attractive place to work?

Mr. Jim Stobbe: First, maybe I can tell you a little bit about the demographics of the department. The average age in the department is slightly over 45 years. About 62% of the employees are over 45. When you look at those demographics, the majority of the people currently in our department will be gone within ten years.

The key to this is recruitment. We have to recruit new employees. In various branches, we have very active recruitment programs for functional specialists. In my own branch, it's accountants. In supply operations, it's purchasing. In real property services, it's engineers and architects. We are recruiting very aggressively, keeping in mind the government's desire that recruitment be reflective of the diversity of the Canadian population and that some of the representation in the public service is not in fact representative of the Canadian population. So first off, we have a very aggressive recruitment campaign.

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Secondly, our department has an awful lot of interesting work. In some respects, some of the work we do requires an expertise that's certainly unique in the public service, if not unique in the world. The government compensation system we were talking about earlier is a classic point. We're going to have to revamp that system. It's going to be interesting work that's going to involve a lot of knowledge and expertise. And that's true throughout the department.

The Internet is a reality. The commitment to government online is a reality. People want to work with new tools and new technologies. There will be a place for doing that in Public Works and Government Services Canada.

Finally, if we recruit them, we have to keep them. If we're going to keep them, we may not always be able to match compensation with the private sector, but we have to give them lots of learning opportunities. Training and development is therefore a very big component of our human resource strategy in order to retain new employees.

So recruitment, providing interesting opportunities in which people can do some interesting work, and learning, are basically the three components of our human resource strategy.

My own personal experience is that people want to come to work in the public service. Over the past year, we did a recent competition for qualified accountants for junior positions. We ran an ad in four papers and we got 1,100 applications, and we have recently staffed 50 new accountants into the public service. So it's my view that indeed people do want to come to work in the public service, and that we can provide what is certainly an interesting—perhaps “exciting” overstates it—place to work.

Mr. Alex Shepherd: You used the words “exciting” and “accountants” in the same sentence.

Mr. Jim Stobbe: Careful.

Some hon. members: Oh, oh!

The Chair: If you're through, Mr. Shepherd, we'll move to Mr. Burton. Before we do, how many classifications are there now?

Mr. Jim Stobbe: How many classifications are there now?

The Chair: Yes.

Mr. Jim Stobbe: The current compensation system has 72 different kinds of classifications. It does add some complexity to our compensation system, because each one of those is governed by a separate collective agreement that has unique provisions in it, so there are lots of...

The Chair: And you haven't reduced this at all? There's been a lot of talk about it.

Mr. Jim Stobbe: You might want to address that with the Treasury Board Secretariat, which acts as the employer.

The Chair: Okay.

Mr. Burton.

Mr. Andy Burton: Mine's just a quick one, Mr. Chairman. There are a number of questions that have been asked that haven't been answered, so I assume we will get responses to those questions in some written form later on. For instance, there were a number of Treasury Board questions that weren't answered. Can we expect answers to those?

Mr. Jim Stobbe: Not from us.

The Chair: The Treasury Board should be here, and they should be advanced those questions. In cases in which they say they will provide answers, those answers come to the chair and the whole committee gets those. Anything you say you promise us will come to the clerk of the committee, and the rest of the committee will get it, yes.

Mr. Andy Burton: All right.

In the AG's reports from 1994 to 2000, there were 11 chapters that criticized Public Works and Government Services contracting procedures. You stated it was Treasury Board that dealt with a number of contracts regarding the $320 million in missed contracts, but the AG's report states:

We found at least $320 million (about 2.4 percent) in missed contracts that should have been included in the 1998 Report.

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Can you tell me why the AG would specifically say they were Public Works and Government Services contracts, rather than Treasury Board?

Ms. Jane Billings: The way the process works for developing the report the AG was auditing is that Treasury Board puts out a call letter. They ask the individual departments to report on what they have purchased, because we don't handle a lot of the contracts—approximately half of the contracts don't come through us. That material then comes to us and we consolidate it. So it's a report we prepare on behalf of Treasury Board, and it's tabled.

So within the AG's report, the locus of responsibility was moving, but ultimately the work and the contract and the data come from the departments through us for consolidating into a report that goes to Parliament. The contracts that were missed in there, which were really quite small in the overall scale of what we were gathering, were ones that departments hadn't reported in their year-end pick up and had slid over into the following year. Delays in transferring the data in fact caused that particular problem.

Mr. Andy Burton: So, Mr. Chairman, has perhaps some process been initiated that would ensure these reports are up to date at the appropriate time, rather than slipping by?

Ms. Jane Billings: What Treasury Board has undertaken to do is issue the call letter earlier, to try to get more robust data and to encourage departments to have better tracking systems.

Mr. Andy Burton: Okay. I have another question, Mr. Chairman.

The main estimates indicate that the budget for CIO is increasing by approximately $30 million in 2001-2002, a 145% increase. That's a very significant increase, so could you perhaps explain what's involved here?

Mr. Jim Stobbe: That's very similar to a question posed earlier. There was a shift of resources from the Department of Public Works and Government Services Canada to the CIO for some program-specific activities associated with the management of fairs and expositions across the country. That money, which shows up in the CIO, was originally made available to the department, but the responsibility shifted and the funding shifted as well.

Mr. Andy Burton: Okay. How much time have I got, Mr. Chairman?

The Chair: You've got about three minutes, Andy.

Mr. Andy Burton: Okay, we'll go back to sole-sourcing again. I'm sorry if I sound repetitive, but this is a real concern, I think, to ourselves, and it certainly should be to any responsible member.

The November 1999 AG report stated that only 11% of 50 contracts, randomly selected from 552, met the conditions for sole-source earning. This represents over $1 billion in sole-source contracts. Again, what's been done to tighten this up? This is a huge sum. I know you've talked about sole-sourcing already, but it seems like an awful lot of money to be giving to anybody without going to public tender.

Ms. Jane Billings: Certainly, in the contracting we do, we have very stringent procedures for sole-sourcing, and we ensure that the officers, when they're issuing contracts, are challenging the departments to validate the need for a sole source, to see that it is well documented and stands the test. We use the approach that in many cases, if it's a matter of a department suggesting to us that there's only one supplier, it is appropriate for the market to determine that; we will issue an ACAN because we feel our information is not necessarily totally accurate.

Mr. Andy Burton: So before you sole-source, you would issue an ACAN?

Ms. Jane Billings: We have a difference of view with the Auditor General in this case. The Auditor General will look at a contract that has had an ACAN issued before it and call it sole-source. We're of the view that when we've issued an ACAN, we've done it to test the presumption that there is only one supplier or that there are operational, intellectual property issues that would justify a sole source. We then test it to see whether or not the market is going to tell us that it's wrong or that there is a competitor out there, in which case we will openly compete. Or if the market comes back and says there's nobody there, we'll go ahead and issue the contract.

Mr. Andy Burton: That's through MERX?

Ms. Jane Billings: This is through MERX. We usually post a notice for 15 days.

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Mr. Andy Burton: So what sort of assurances... I understand what you're doing, but it still seems to me a little loose in making sure that's the only game in town. Canada is a huge country, and there may be somebody in B.C. or Alberta or somewhere else in Canada, in Nova Scotia, that is not up to speed on this MERX process. How do we know that everybody is in tune with the MERX process?

Ms. Jane Billings: We spend an inordinate amount of time talking to potential bidders and suppliers. We run fora across the country through Contracts Canada to ensure especially that small and medium-sized businesses have access to the procurement system and that they understand how to get visibility, where they can go, and if they're not coming through us, where other departments put their notices—all government departments use MERX. And then we make sure there is a visibility about who the purchasing officers are. People and companies can come and talk about what might be coming up as well.

The Chair: If the Liberals don't have any questions, we will go to Mr. Laframboise of the Bloc Québécois.

[Translation]

Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel, BQ): Eight billion dollars worth of contracts are awarded to 25,000 suppliers, according to what you say on page 9. You are the ones awarding them. Obviously you are the ones controlling contract award. Do you have a breakdown by province of money awarded? Do you have a distribution internally?

[English]

Ms. Jane Billings: We use competition for contracts, we don't allocate them on a fair share or on a share basis, and we don't keep data by provincial allocation of contract. But I think, more importantly, if we were to try to do so, that would be totally distorting what work is going where. When we collect contract statistics... For example, the $8 billion for last year, for the contracts that we issued last year, all the value of that contract was allocated to that one year. We don't spread it over the cashflow of the program, so you don't get any sense of what's coming into a particular area over a period of time.

The other issue is that in many cases we don't know where that contract money is being spent. So if the contract goes to Bombardier, for example, it is probably coded into Bombardier in Montreal, but it in turn spends through its subcontractors or others, so that money is disbursed across the country. But our approach on this is that we do not keep contracting numbers by province.

[Translation]

Mr. Mario Laframboise: It could be done anyway. In fact, this gentleman gave us the example of Laval earlier where the contract has been awarded. You know the name of the recipient. It is Garadex and First National Building Corp. They must have an address. This way, it would be easy for you to know who you award contracts to and in which province.

I understand that the money can be spent anywhere in Canada but we can still know where. As my colleague from Hull—Aylmer was saying earlier, for example, you must deal with the manufacturers for the purchase of vehicles. Their head offices are surely in Ontario. Consequently, few vehicles are purchased in Quebec.

I did not see many civil servants driving around in a Camaro or a Firebird. It is not material built in Boisbriand that is purchased by the federal government. Therefore, it would be easy for you to know about the state of the contracts, by province. It would be easy because you know the owners, the suppliers and the addresses where the cheques are sent. It is the question I am asking: would it be easy for you to know?

[English]

Ms. Jane Billings: Not with that computer system.

We think the procurement and contracting system, in all its facets, benefits Canadians across the country, and because of the many flaws in identifying where a contract was issued or the address of the issuance, with perhaps benefits for that particular area or city, we don't give, nor do we collect, contracting statistics by province. We have been asked, but it is totally misleading in terms of the economic benefit.

[Translation]

Mr. Mario Laframboise: I repeat my question: would it be easy to establish statistics by province? Even if you don't have the cheque in hand, Madam, you sign a contract and there is an address for the supplier. I hope that you have the addresses for every contract you sign; you must have the address of every supplier you deal with. If not, you have a problem. Would it be easy to find out in what provinces the contracts are awarded, to divide up the contracts and the matching amounts among the provinces using the suppliers addresses?

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[English]

Ms. Jane Billings: It's an issue that we... In terms of whether it would be easy to do, I don't know. I don't think it would be particularly easy to do. It's not an exercise that we have pursued for the reasons that I have stated.

The Chair: Mario, you're out of time. Hopefully, we will come back to you in a while. I don't see anything again from the Liberals.

Mr. Jim Stobbe: Mr. Chair, if I may, the Laval procurement exercise we were talking about was for a lease. We can tell where leases are because they relate to physical properties. So we know, on the leasing side, what property we lease and the geographic area they are in by the nature of the business. The issues around geography don't pertain to leases in the same way that they relate to goods and services.

The Chair: Thank you very much. I'm sure Mario will pursue that.

Marcel.

Mr. Marcel Proulx: I just want to clarify one point, Ms. Billings. When we're talking of MERX in relation to his question—I think some of the sense was lost in the translation—we're talking coast to coast to coast. Are there any requests for any contracts, any purchases—we're not talking about leases—that specify they're only for one region or specifically exclude a region such as a province or a region within a province?

Ms. Jane Billings: On some occasions when we send out a request for standing offers in a local area, we'll ask for the suppliers to be able to deliver in that area. The request will go up on MERX so it will be visible across the country. But in fact, it will specify in the documents that the delivery is in an area. If they are small-value commodities or services, then it's unlikely there will be somebody from across the country or from the other end of the country who will want to go after that. So we do set up arrangements that stipulate where the delivery is. Then the suppliers themselves can determine how they want to meet that need if they have a delivery point in that area.

Mr. Marcel Proulx: Okay, but generally speaking, there are no objections or there are no specifications as far as an area not being able to compete. So whether the company is from Quebec or Ontario or British Columbia, MERX is an open process; anybody can bid on it.

Ms. Jane Billings: MERX is essentially our means of making available to all bidders what the opportunities are. But we also operate under the trade agreements, and the Agreement on Internal Trade, which was put into effect in 1996, essentially says that we can't discriminate among regions in the country.

Mr. Marcel Proulx: Thank you.

The Chair: We'll go to Bev Desjarlais from the NDP.

Mrs. Bev Desjarlais: I have a couple of things and I'll try to be quick.

Under number 11, where it mentions the maximum contracting authorities—just so I'm really clear—the ministers can sign up to $25,000, and anything above that they have to go for additional approval; say, for the Minister of Public Works and Government Services, it would be $20 million, and if it's above that, it would have to go for approval.

Mr. Jim Stobbe: On goods—and as Jane pointed out, only certain ministries have delegation to $25,000 because the others haven't taken advantage of that delegation.

For those that have, they could procure goods of $25,000. If it was more than $25,000, they would come to Public Works and Government Services Canada and we would procure on their behalf up to a limit of $20 million, at which point our department would require Treasury Board approval for a contract in excess of $20 million.

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The operation of all departments is governed by a delegation of authorities from the ministers. Each minister delegates authority to his own department in accordance with, usually, departmental recommendations.

Mrs. Bev Desjarlais: Are you aware of a figure that's out there in any of those departments?

Mr. Jim Stobbe: I would suspect for most departments this limit is delegated at least to the deputy level and maybe to lower levels in departments.

Mrs. Bev Desjarlais: Is it possible to get information... I guess it follows along with some of the comments that have been coming up. I know you said it's hard to get the specifics on different contracts. But is it possible to get a list of all the contracts—who the contracts were awarded to—of all the sole-source contracts. Not the specifics of the contracts but a list of which businesses per se got the sole-source contracts... I mean, we could put a limit—ones that were, say, over $1 million.

Mr. Jim Stobbe: All contract awards are posted on Contracts Canada. There is a list of all contract awards that the department makes, including the company and the amount.

Mrs. Bev Desjarlais: Just to save me from having to dig for it—is it possible to get a list?

Mr. Jim Stobbe: I don't know whether—

Ms. Jane Billings: We don't compile such a list on a regular basis.

Mrs. Bev Desjarlais: At the request of the committee, can we request that, Mr. Chair?

Ms. Jane Billings: If you make the request, then we would comply. But as Jim said, we do run a very transparent process so that as we issue them, one can go into MERX—and one doesn't have to be a member. You just go onto the Internet onto MERX and you can scan around it in terms of seeing what's happening at a point in time.

Mrs. Bev Desjarlais: Can we look to request that list if it's possible?

The Chair: If the process is transparent, as you said, and whatever information you have you could share with us, send it to the clerk of the committee from that department.

Ms. Jane Billings: It would be helpful if I could have some bounds around that, like how large and how far back.

Mrs. Bev Desjarlais: Anything over $1 million. Is that fair enough?

Mr. Marcel Proulx: A point of order, Mr. Chair.

Ms. Jane Billings: The last year? Why don't we go for the last couple—

Mr. Marcel Proulx: A point of order.

Ms. Billings is saying that this is all available through the Internet. I apologize, but why waste their time and our money to dig it up if it's already available to all of us on the Internet?

The Chair: The committee members are saying they are talking to the witnesses and they really don't need comments from our side. So if the witnesses—we're not supposed to badger them—could give us information and it's shared information, we should get the information.

Mr. Burton.

Mr. Andy Burton: If I could, Mr. Chairman, this information is available on the Internet, but I don't believe it specifies whether it was an ACAN—advanced contract award notice—or a sole-source, and that's the information I think that needs to be picked out or specified.

So you get this huge list, we've tried—

Mrs. Bev Desjarlais: And that's what I was asking for.

Mr. Andy Burton: You get this huge list of contracts but it doesn't help you. So we need to specify which are sole-source and which are ACANs.

Mrs. Bev Desjarlais: And could that be based on the Auditor General's view of what sole-source is, not the departments'? Because you had indicated there was a difference between what you thought—

Ms. Jane Billings: What you're asking for in that case is a list of ACAN contracts, contracts that were issued after an ACAN was posted for over $1 million, as well as the sole-source contracts. We feel very strongly that a contract issued after an ACAN has offered full competitive opportunity to the citizens and the businesses of Canada. It's a very transparent means that we developed in fact to enhance the transparency of the system.

The Chair: Thank you.

Again, if the Liberals do not have any questions, we could probably... we still have some time left.

Andy, you had some further questions.

Mr. Andy Burton: Another question then, and it's a bit of a statement, not a question. We're in a global economy and the regulations of WTO and NAFTA affect how the Canadian government issues contracts. The Canadian International Trade Tribunal adjudicates complaints from countries concerned with protectionist practice in Canada.

So how many complaints regarding contracting have ever gone to CITT? How many of those has Canada won? Are there any pending, and if so, what?

Ms. Jane Billings: That's a fully loaded question.

Mr. Andy Burton: Four questions. Sorry.

Ms. Jane Billings: The CITT has become a fact of life for us. It was initially set as the dispute mechanism process under free trade. It was also identified under the Agreement on Internal Trade. We run about 40 or so complaints a year that are in fact heard by the CITT. Sometimes CITT dismisses applications and we don't hear about them, but on average we get about 40 we deal with. This year we're running around 60. Their year runs from April 1 to March 30.

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Interestingly, most of the complaints that come before the CITT deal with procurement in the federal forums. These simply deal with one company in Canada complaining about another, perhaps about a contract that was won by another company in Canada under the auspices of the Agreement on Internal Trade. Certainly since I've been ADM of supply operations, I've been aware of only one case that deals with a foreign-based company.

We win a good number of them. This year we've only lost about four or five, ones held over from last year. Last year I think we lost about 10 out of 40. I can provide you with a report on what we've won in the last few years.

Mr. Andy Burton: Yes, please.

Ms. Jane Billings: You'll know what was won and what was lost.

Mr. Andy Burton: Thank you.

Ms. Jane Billings: It takes a huge amount of our time to deal with them.

Mr. Andy Burton: Okay. We'll leave that topic, then.

As to leasing the rental space that's managed by Public Works, you say 54% is owned by government and the rest, I presume, is leased. Have you ever done any sort of study or obtained any information as to the benefits of owning versus leasing? Why is it 50-50, or could it be at some other ratio? Are there benefits to leasing rather than owning?

Mr. Jim Stobbe: No. As a matter of fact, all our studies indicate that where we have both critical mass and the requirements, it's more cost beneficial to the government to own than to lease. Of the 46% that is leased, I believe about 10% of that is leased to purchase, so that in the end we will end up owning it. All of our studies have shown that it's a better deal for the government to own the building than to lease it.

Mr. Andy Burton: I'm a bit surprised to hear that because I've been in that sort of business most of my life—on a very small scale, mind you. When you determine your costs, do you factor in all your costs, such as maintenance, the cost of paying a guy to go around and change a light bulb?

Mr. Jim Stobbe: Yes.

Mr. Andy Burton: All those things are very, very expensive.

Mr. Jim Stobbe: We factor in the cost of money and all that.

Mr. Andy Burton: Thank you for your answer. I really question it, but I thank you.

The Chair: Paul Szabo of the Liberals.

Mr. Paul Szabo: I'd just like to follow up on this. Purchase versus leasing is obviously an issue that comes up all the time, whether for individuals and cars or whatever. Obviously one of the components in a leasing scenario is the return on investment, and certainly in a purchase situation there is no component for that. It really gets down to the cost, whether or not you have the capital and how much borrowing will cost. Presumably the Government of Canada can borrow as cheaply and effectively as anyone, so your statement makes eminent sense, that your studies have shown that ownership is preferable to leasing in the vast majority of cases. Notwithstanding Andy's experience, government does have cheap capital.

Mr. Andy Burton: I just have a question here. Should the government be looking to make a profit on investment? Maybe the private sector should be doing that and paying taxes to government.

Mr. Paul Szabo: Oh, internal profits.

Mr. Jim Stobbe: Even on government-owned property, though, we contract out a lot of maintenance and facilities management. We have big contracts that provide maintenance services in crown-owned facilities.

The Chair: Are you through with your comments and questions, Paul?

Mr. Paul Szabo: The officials might want to make a general statement with regard to Treasury Board guidelines. That always seems to be part of the dialogue with regard to the operations of Public Works because it's such an enormous responsibility to provide services to every other department. I think it's important to have the officials confirm the relationship of the department and how it operates vis-à-vis Treasury Board guidelines.

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Mr. Jim Stobbe: I think it's quite clear. Treasury Board is the policy centre. They operate as a management board. Public Works and Government Services Canada constitute the operational arm. Basically, we put administrative practices in place that are consistent with the policies as established by Treasury Board. That's our job.

Mr. Paul Szabo: The other aspect is the internal audit function. The Auditor General obviously provides input for improving the efficiency and effectiveness of departmental operations, but Public Works also has an audit function that works with the same objectives. Maybe you could just comment on the role and the importance of that function in the department.

Mr. Jim Stobbe: We have two audit capacities in the department. First, we have a very active internal audit group in the department itself that does internal audits on the various departmental operations, which is supported by an audit review committee, and which in fact functions in a manner very consistent with the recent Treasury Board policy on audits.

Second, we also have, as a common service to the government as a whole, Consulting and Audit Canada. It is a special operating agency and provides audits to other government departments—and on occasion to ourselves—on a fee-for-service basis. It's a professional organization that has—I don't know what the breakdown between audit and consulting is now—about 300 professional consultants and accountants. Indeed, they provide the capacity to do a lot of the internal audits that are done by various line departments in town, and that is done on a fee-for-service basis. We do the work and departments pay for it.

The Chair: Okay, you're up. We'll go back and hear from the Bloc Québécois.

[Translation]

Mr. Mario Laframboise: First, I will just make a comment because it makes me smile. Even though there is a lot of auditing, every year the AG's report outlines things that are not working out. There is a lot of auditing but there is still a lot to do because the Auditor General, a neutral person who can make comments, often finds fault with your service.

I will get back to supply contracts, Mr. Chairman. Are 100% of the purchases made in Canada? Must you sometimes purchase things outside the country? Are 100% of your procurements, suppliers and everything you have from Canada?

[English]

Ms. Jane Billings: Under our trade agreements, the government has in fact obtained access for Canadian suppliers to sell to governments abroad. In exchange, we have opened much of our government procurement opportunities to suppliers from other countries. This is done under the World Trade Organization's GATT Agreement on Government Procurement; under NAFTA, which consists of Canada, the U.S.A., and Mexico; and under expanding agreements we now have with other countries.

There are various thresholds that kick in, but as long as procurement is what's called “covered” under those agreements, it's open to any supplier from any country that's a party. In many cases what we're buying is something we can't obtain in Canada. That's particularly true in defence production, for example, and in those agreements on purchases that are under the Agreement on Internal Trade, which is mainly for Canadian suppliers and which has lower thresholds. As long as a company has a presence in Canada, it is covered and is able to sell, regardless of whether it is acting strictly as an importer. So there is very limited scope for the Government of Canada to in fact impose that type of restriction.

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[Translation]

Mr. Mario Laframboise: This is what I thought. For the last year, for example, do you have the amounts for procurements outside Canada?

Ms. Jane Billings: No, not at all.

Mr. Mario Laframboise: It is impossible for you...

Ms. Jane Billings: I think that our system does not keep track of such data. Not at all.

Mr. Mario Laframboise: Your system is not as performing as it should be, Madam. It does not make any sense. In this age of technology, we will need to change the system in order to know where we make our purchases.

Thank you, Mr. Chairman. I have no other questions.

The Chair: Thank you, Mario.

[English]

Then we go back to Bev Desjarlais of the NDP.

Mrs. Bev Desjarlais: Just to follow with that again, would the Canada Customs and Revenue Agency keep track of what goods were being procured outside of the country?

Ms. Jane Billings: Canada Customs keeps the data on what's imported and exported generally, to a degree that they are familiar with and able to talk to you about, but they don't track government procurement separately in terms of it being separate from other goods crossing the border.

Mrs. Bev Desjarlais: Canada Customs and Revenue wouldn't keep a client file as to which agency, so to speak, is purchasing from what area? That seems pretty strange to me. If they can keep track of letters coming to lawyers, I find it hard to believe there would be no record kept. I guess it's something we all have to deal with, with the Canada Customs and Revenue Agency.

The other question is... sorry, I have it written here, but I'm just kind of baffled since you told me they couldn't track it.

In regard to the Canada Information Office, it doesn't answer directly to you; it goes through the minister. The information that's done through the Canada Information Office and the amount that was transferred over for exhibitions and fairs—I think that's what you said it was... Since you're here, I'm just curious if you would know specifically what types of exhibitions and fairs we were talking about. I know it's not your area, and if you don't know, that's fine. We can ask them.

Mr. Jim Stobbe: I'm sorry.

Mrs. Bev Desjarlais: That's okay.

My other question is in regard to RCMP facilities in communities. Would they fall under your department in terms of the leasing or ownership of them?

Mr. Jim Stobbe: No, the custodian for detachments is the RCMP themselves. On occasion, we would procure to acquire new accommodations on their behalf, either through leasing or through a build, but they are the custodian at the detachment level.

Mrs. Bev Desjarlais: Okay, thank you. That's it.

The Chair: Does anyone have further questions for the witnesses?

Mr. Andy Burton: I do, Mr. Chairman.

The Chair: Go ahead, Andy.

Mr. Andy Burton: The last report of the Standing Committee on Government Operations was tabled in 1997. What, if any, of the recommendations that were put forward at that time have been instituted or initiated by Public Works and Government Services? There were numerous recommendations made at that time.

Mr. Jim Stobbe: On contracting?

Mr. Andy Burton: On the whole operation of government services, with contracting obviously being a major part of that.

Mr. Jim Stobbe: I'm sorry, but I'm not familiar with... There was a report—

Mr. Andy Burton: It's on government contracting.

Mr. Jim Stobbe: The standing committee did do a report on contracting.

Mr. Andy Burton: On government contracting, in April 1997. Perhaps we could get some information on that, then.

Ms. Jane Billings: In terms of that particular report, for every recommendation that's prepared, we certainly look at it and we provide a response. I don't have with me exactly—

Mr. Andy Burton: I guess my question is what the response has been and how many of those recommendations are still outstanding, if any.

Mr. Paul Szabo: Just for clarification, Mr. Chairman, we're referring to a standing committee report that was tabled in the House, and it probably requested a government response within a certain period of time. I'm not sure of the timeframe, but I think there should be a formal response by the department.

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Mr. Andy Burton: I think there was an election called shortly thereafter and it probably—

Mrs. Bev Desjarlais: April 1997.

Mr. Paul Szabo: And the election was June.

The Chair: The witnesses will try to find the information. If the thing died on the order paper because an election was called, or whatever happened, they will tell us when they find the pertinent information. A request has been made and hopefully you will investigate and get back to us with that information as far as you know.

Mr. Andy Burton: Fair enough. Do I have a little time here?

The Chair: Yes, you do.

Mr. Andy Burton: I have another question. On current challenges, I believe you mentioned that you dealt with the natural gas rebate cheques going out.

Mr. Jim Stobbe: Yes, we did. You say natural gas; there was an energy rebate cheque.

Mr. Andy Burton: An energy rebate cheque.

Mr. Jim Stobbe: Yes.

Mr. Andy Burton: There were some difficulties with that process. Obviously that's not going to happen again, but there may be similar processes, and I'm wondering what sort of moves you would make to ensure that this type of thing didn't happen again. For instance, people in jail were getting these cheques. Dead people got them, things like that. It's a little bit off the side here.

Mr. Jim Stobbe: We issued the payments in accordance with instructions we received from CCRA, who were working from income tax files. The criteria for Revenue Canada selecting who they selected, I can't comment on.

I can tell you, though, that of the eight million plus cheques we issued, we got 140,000 of them back because the address was wrong, and the address was wrong because a lot of those people are on direct deposit now and indeed the banking information is more important than the home address. So that is something we are definitely pursuing with CCRA, how to ensure that the home address is better. But in terms of the criteria for who was selected I can't help you.

Mr. Andy Burton: That's fair enough. I appreciate that if you don't have good information it's hard to respond more. That's fine.

Do I have any more time, Mr. Chair?

The Chair: Sure you have.

Mr. Andy Burton: I'm wondering if any of the researchers have any particular questions they'd like to ask. I'd be prepared to give some of my time to them. No? If not—

The Chair: I have one as chair. You get inquiries. You have a procurement, let's say, for ballpoint pens, and I put my dibs in and Andy puts his dibs in. Andy happens to get it and I feel there was something wrong with it, that he shouldn't have gotten it. Is there a transparent process whereby I could appeal and you would send me information as to why that would occur?

Ms. Jane Billings: In situations like that, in the first instance, we offer a de-brief to unsuccessful bidders in terms of why they didn't make it. If the bidder is still unhappy, if you still think you were treated unfairly, there is the CITT process.

We try to ensure that we resolve disputes and address those types of issues early on, but that redress mechanism for federal procurement is in fact the CITT.

Mr. Andy Burton: Does that answer your question, Mr. Chair? I have nothing more right now.

The Chair: I don't see any further questions. Oh, sorry, Bev.

Mrs. Bev Desjarlais: I have one following up on the 140,000 cheques that were returned. Is there then a process that you now follow to make sure this money gets out, or is it just returned to Revenue because they didn't update their files?

Mr. Jim Stobbe: All returned cheques are delivered to our cheque redemption and control division in Matane. We will destroy those cheques and we will notify the Canada Customs and Revenue Agency that the intended recipient did in fact not receive those payments. If they want to give us a new address, we will reissue the payment.

Mrs. Bev Desjarlais: Thank you.

The Chair: Andy says he has a quickie.

Mr. Andy Burton: It's a question to you, Mr. Chairman. I understand we're being briefed by Treasury Board on Thursday.

The Chair: Apparently Treasury Board can't be here, so I was going to say, after we dismissed our witnesses, that I would like to have a working committee that day so we could look at—

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Mr. Andy Burton: When we are briefed by Treasury Board, whatever day it is, I would like to be sure that we have the blues from this. There were a number of questions that referred to Treasury Board.

The Chair: The blues are available. You probably should get your staff to highlight the issue.

Mr. Andy Burton: I thought if Thursday was the day, maybe we wouldn't have them quickly enough. But that's fine. Thank you.

The Chair: Are there any further questions of our witnesses?

Thank you very much for coming today. We appreciate your work and input. Before I adjourn, I want to say that we will meet on Thursday as a committee of the whole to discuss future business. We have requests in to the clerk and hopefully we can accommodate the requests.

Mr. Andy Burton: One more comment, Mr. Chairman. We do need to be properly briefed by CMHC and the other Public Works groups that weren't here today. So I would hope that this would occur—

The Chair: So you would like a briefing from Public Works and CMHC.

Mr. Andy Burton: CMHC, the Royal Canadian Mint, and Canada Post—especially CMHC. I think there are some very pertinent things to ask them.

The Chair: All right. We'll try to put that in the work plan.

We're adjourned until Thursday at 11 a.m.