Thank you very much, Madam Chair.
[English]
Thank you for inviting me here today to discuss my department's work to transform government procurement. I obviously welcome the opportunity to update the committee on this project.
Let me first say, Madame Chair, that my department is carrying out a number of important reforms touching procurement, which is the topic today. Another of these reforms involves real estate, which we are also looking at, as you know. One could argue that real estate is as important as procurement given our significant foothold in the Canadian real estate world.
All this work is aimed at strengthening management and accountability, increasing transparency, and ensuring good value for taxpayers. Procurement reform is therefore only one element of the department's renewal agenda, and it is clear that procurement is an area that needs improvement.
[Translation]
Madam Chair, on October 19, this committee heard from industry representatives. The message that came out of the meeting—and out of the many consultations Public Works has held with the supplier community—is that in its current form, our procurement system needs improvement and our procurement practices need to be streamlined. Dealing with the federal government can and should be simpler.
Year in and year out, the Government of Canada spends some $20 billion buying goods and services to support its operations. PWGSC handles only about 10% of the total number of transactions, but these represent about 55% of the total value.
The transformation of federal procurement represents a big change, not only for the government, but also for its suppliers. A number of them have participated in the consultations held by Public Works and have helped to identify possible improvements.
And that is why I directed my department to undertake further consultations with suppliers and industry associations before proceeding with some elements of the initiative.
[English]
The new round of consultations was launched on September 20, and a broad range of procurement issues was discussed. The only issues not on the table were our commitment to reform procurement and our commitment to achieve value on behalf of taxpayers.
I'm also pleased to announce that we are following up on the request of suppliers and are creating new permanent government-industry committees in the areas of temporary help services and office furniture.
Madame Chair, we are also making procurement simpler and ensuring fair and open access for all suppliers--large, medium, and small--right across Canada. We are listening to what suppliers have to say. For example, in the furniture industry, suppliers explained to us the challenges imposed on them with orders coming in at the end of the government's fiscal year. As a result, we are finding solutions for them.
We must take advantage of the government's buying power. We will do this by consolidating the purchase of goods and services across as many departments as we can. This means buying fewer models of certain goods that are purchased by federal departments and agencies. Consolidation not only will make purchasing simpler for everyone but will also will lead to better prices.
In fact, based on the experience of other private and public organizations, we believe we can achieve important savings as well. Through these and other procurement changes, we will ultimately improve the delivery of services to Canadians.
[Translation]
Reducing the cost to Canadians is not the only objective of Procurement Transformation. Procurement savings will be reinvested for the benefit of all Canadians.
Our strategy to reform procurement is based on improved access to goods and services from competitive suppliers, more efficient purchasing for all government departments, and an improved ability to account for taxpayer dollars.
Businesses will benefit from having fair, simple and open access to compete for standing offers and other procurement opportunities across Canada. Winning a standing offer competition to supply the government will actually mean winning business.
[English]
Procurement transformation also means ensuring that social and economic considerations are integrated into the procurement process, such as encouraging green procurement, supporting aboriginal businesses, and ensuring that companies right across Canada have an opportunity to compete.
In terms of green procurement, we share a heightened responsibility to purchase products and services that have a lesser effect on human health and the environment when compared with competing products or services that serve the same purpose.
The transformation of government procurement also involves adopting procurement practices that reduce the cost of doing business for suppliers, regardless of their size. I am particularly committed to ensuring fair access to government business for small and medium-sized enterprises across Canada. In fact, my department has already taken a number of steps to address the specific needs of SMEs.
[Translation]
Public Works has established six new regional Offices of Small and Medium Enterprises to ensure that small vendors and vendors in all regions of Canada receive due consideration in bidding for government contracts. These are now all in place and ready to work with SMEs in each region of Canada.
PWGSC also previously reduced the cost of bidding by eliminating fees for the tender documents suppliers order through MERX, the Government of Canada’s electronic tendering system. We have simplified the language in bid documents and contracts, and established a toll-free helpline and a website to respond to enquiries from SMEs. We have also developed procurement best practices, as well as training with the Canada School of Public Service.
[English]
The transformation of government procurement requires information technology so that the government can speed up the ordering process and eventually improve its ability to track what is being bought. It requires time and training, and it requires that departments adapt to new tools. My department will introduce two critical procurement-related tools that will help us save considerable amounts of taxpayer dollars.
The Government of Canada marketplace simplifies procurement by giving departments access to pre-approved goods and services using electronic catalogues. Public servants from all departments will be able to consult and ultimately order from a catalogue those goods and services they require.
The shared travel services initiative will improve the purchase and reimbursement of travel services within government.
[Translation]
I mentioned at the outset that improved accountability goes hand-in-hand with saving money as a fundamental goal of procurement transformation. As the Committee knows, the Federal Accountability Act will legislate the principles of equity, openness and transparency, so that they are permanently imbedded into federal procurement practices.
The Act provides for the appointment of a Procurement Auditor, and a Code of Conduct for Procurement is being developed to clearly outline for employees and suppliers what is acceptable conduct when contracting with the Government of Canada.
[English]
In closing, Madame Chair, let me reiterate for the committee that we are sensitive to the concerns that have been expressed in some quarters about the potential impact of procurement transformation on suppliers, and we will do our best to resolve those issues, but we will not take our eyes off the ball. We will achieve significant savings while also improving service delivery and ensuring that companies in all regions of the country are able to do business with the Government of Canada.
Merci beaucoup.
:
Thank you, Madam Chair, I appreciate it.
Good day to you Mr. Minister and to your key staff members, and welcome. I am pleased that you spoke about SMEs, as that will save me at least a minute and a half, since I won’t need to introduce the subject.
Mr. Minister, in the documentation you provided it says that SMEs are important to your department. Yet, suppliers tell us that almost all the Public Works and Government Services Canada bidding processes involve so much red tape that it is very difficult for them to consider doing business with the Government of Canada.
I presume that your reforms will take into consideration the enormous burden that all this red tape represents, because not only does it mean considerable costs for SMEs, it also costs a lot for your department to prepare all this paperwork and then analyze it.
Unfortunately, the Government of Canada has the bad habit of only considering businesses of a certain size or with certain total sales, arguing that, if by mischance, the business could not meet its commitments, the Government of Canada would be the loser. Your department is in the best position to put an end to this bad habit. Furthermore, smaller businesses are not being given the opportunity to build on or improve their expertise, or to win big enough contracts to be able to hire additional personnel.
We’re shooting ourselves in the foot, because if we don’t give SMEs a chance, they will never become big enough to do business internationally and to create a large number of jobs. We will have to do business with international or foreign companies.
The winter 2006 issue of that fine publication Doing Business with PWGSC refers to a well-protected piece of Canadian heritage, the Canadian National Vimy Memorial.
The Government of Canada refused to let the repair or renovation work on our monument in Vimy be done by Canadian contractors. It insisted that European contractors be put in charge of the work. If my memory serves, the contract was awarded to a Belgian contractor, even though Canadian contractors said they had the necessary expertise and as much access to the materials needed as any other contractor in Europe, as the materials were European. That was an opportunity for your department to help Canadian contractors be better considered by the Government of Canada.
I am listening very closely, because we do not often have the opportunity to hear you in the House of Commons. We do not ask questions about the Department of Public Works and Government Services because, even though your Parliamentary Secretary does the best he can, he does not have all the information. That’s why we seize the opportunity when you are before us.
:
Thank you for your question. If you will permit, I will answer your first two questions at the same time, because I believe they are related.
Even though it isn’t what it should be, the picture for small and medium-sized businesses isn’t as dark as you think it is, even though, as I said, it could be better. According to the available information on the participation of small and medium-sized businesses in Government of Canada purchasing, SMEs make up 29 or 28% of the market.
I am pleased to say that a large number of these SMEs deal with PWGSC, but there is a 15-point gap in the SMEs’ contribution to Canada’s GDP. Our long-term objective should be to close this gap. If SMEs contribute 40 to 43% of the GDP and government procurement comes to $20 billion, it would be a laudable and necessary objective to try to give SMEs sufficient tools to close this gap.
The goal is not necessarily to throw out statistics and say that since SMEs contribute 43% of the GDP, let’s give them 43% of federal business. It goes beyond that.
I worked for 20 years in the private sector for a number of small and medium-sized businesses and I can tell you that they are very creative. We need their products and their services. We’re not helping them, we’re helping ourselves. That’s why, when we launched the Office of Small and Medium Enterprises, I repeated during numerous press briefings that when I open offices, my objective is to give them many more opportunities within the federal system.
As for the documentation and contracts they are obliged to read, I need to be responsible and prudent in my reply. I’ll give you an example in a few seconds, but let me assure you, Mr. Proulx, that I share your concern regarding the paperwork burden.
Department lawyers will claim that several contract clauses have been added, over the years, as result of court decisions. One article becomes 10, and 10 articles grow into 100. I experienced it myself this summer, when we launched the process to hire two advisors to give us information on our real estate properties. In the summer of 2005, your colleague and my predecessor, Mr. Brison, sent out a 300-page request for the same services.
It lapsed, because no one could qualify. I examined the document in question, which had at least 50 or 75 pages. We can try, and my officials have been informed that one of my goals was to streamline the paperwork. I appreciate your raising the question, which comes up on a regular basis, in fact.
I have no information regarding the Vimy monument. Perhaps one of my colleagues could—
:
Thank you, Mr. Marshall.
Mr. Fortier, earlier, in your speech, you talked about the concern for the environment that is part of the procurement reform, and that is obviously a good thing.
How do you now ensure, and how will you ensure even more in the future, the Canadian content of purchased goods? That is the first question.
Here is the second question. In reference to the procurement process, I note that Conference Board documents provide figures concerning some provinces. I’d like to know if your department is also concerned with different regions. I’m certain that you are aware of the manufacturer’s general status at the national level, and perhaps more in some areas in particular. You must understand that, like other colleagues, I come from a region distant from yours. Personally, I don’t consider that we are distant.
Is there such a concern? These are my two first questions; I will have others.
:
Thank you for the question.
As I indicated earlier in French, this is a concern of mine. Like you, I come from that world. I'm more from the advisory front than that of running a business, but still....
It seems to me that we, as clients, are the big losers, and ultimately it's because of our economy. As taxpayers and as Canadians who want to create more wealth in our communities across the country, it seems to me that we should have more of these folks at the table, bidding for business and winning business. Not in all respects, but in many respects, they are quicker to turn around and quicker to adapt their products or their services to our needs, because our needs are changing. I also believe they are more constructive or more creative in terms of pricing goods and services. So that sounds like a winning formula to me in terms of a client-supplier relationship.
We have created those offices, and I certainly don't expect that by the mere fact that we have fifteen people around the country calling themselves heads of small and medium-sized enterprise offices, that will do the trick. These people have been instructed to be proactive, to go out there, to meet chambers of commerce, to meet small business leaders, and to help them access our business. We haven't done that in the past. It comes back to what Mr. Proulx was saying. It also has a direct link to plain language and simplifying the contracts that we're proposing these folks enter into.
:
Thank you, Madam Chair.
Good morning, Mr. Minister, and good morning to the other witnesses, guests, we have this morning. It's a pleasure to see you.
It's important for us, obviously, to have the opportunity to find out what your plans are with respect to the changes that seem like they're quite substantial to the procurement process and the way government does business in purchasing goods and services, and, as you rightly point out, managing real estate on behalf of Canadians.
I want to ask you bigger questions about that, but I do want to begin by raising an issue that occurred sometime back in the summer. There were media reports about a contract that was initiated under the previous government last November, awarded to A.T. Kearney Inc., and when that contract was finally completed, the costs had gone up, according to media reports, almost fourteen times what the contract was worth when it was awarded. It had gone up to $24 million in nine months. Now, that's a lot of money.
We had the President of the Treasury Board in here a few weeks back, and I was asking him about the $2 million that was cut for the entire funding for the court challenges program, which is an important program on behalf of people who want to secure their rights within Canada under the Charter of Rights and Freedoms. That $2 million was completely cut, but $24 million was awarded to A.T. Kearney in nine months.
I guess more troubling were media reports that a person named Mr. Rotor, who was identified as a special adviser to you, Mr. Marshall, had been with a colleague, Mr. Tipple, in London, studying public-private partnerships and the British experience with these. There were meetings with British officials that were cancelled or postponed, and ultimately Canada's Deputy High Commissioner felt compelled to send letters of apology to those parties who had meetings with these folks that never took place.
At the time, Mr. Minister, you had said that you would get a report on this--the media reported that. I'm wondering if you did a get a report on the specific visit that I was describing and also the overall report with this contractor. Can you share that with our committee?
:
Well, if you've had private conversations with folks who believe I should be running sooner rather than later in the general election, and that as a result thereof, procurement will be the better, allow me to doubt that.
I can tell you what some have told me privately, though. Over the past five or six years, as a result of, among other things, the ad scam, they've indeed seen this department being immobilized, with ministers who would do nothing except play rope-a-dope. The previous minister, frankly, was the best example of that, spending all of his time answering questions on Gomery in the House of Commons and doing nothing to move the ball with these people.
When I became minister, I found a set of people in the upper echelon hoping that for at least the next several years ahead they would have somebody who would actually be implementing things, rather than playing defence.
I'm happy to answer...I will run in the next general election; I made that clear. Once I've said that, I'm happy to answer questions about procurement. I understand you probably don't know much about it because you really haven't spent the time, unlike others among your colleagues, who have received briefings. You believed that not to be necessary, so I guess for you, discussing whether I will run in this riding or that is more interesting.
:
Thank you for the question.
If I left that impression with you, I misspoke. These offices are based in those cities for two reasons. One is that there are rather large clusters of SMEs around those cities. In terms of saving money as well, we already had offices in some of these cities and we could move people.
But as I said earlier, Madame Chair, I made it clear to my people and to the people running the Office of SMEs that they're supposed to be on an outreach program. I want them to go out there and meet as many boards of trade as they can, reach out to SMEs to tell them we're open for business, and explain to them how they can access the MERX system, which is our electronic tendering system.
And by the way, we have eliminated the fee for MERX. Under the previous government, there used to be a fee to access MERX, but there isn't one any more. For people accessing MERX, it doesn't cost them a penny. They can do it from their home, their business, or their basement.
So that message has been transmitted to the people running the office.
:
Mr. Minister, the question period is about the procurement of services. We’re going to widen the subject a bit to include office space, buildings, etc. in services.
A few months ago, your government entered into a review of the policy on the sharing of procurement contracts, in the National Capital Region, between the Ontario side of the river and the Quebec side. Before you leave, I will give you a copy of the motion I had tabled in November 2005, motion M-316 that I am certain you know well, to the effect that the calculations are based on the wrong numbers. I don’t mean that the numbers are false, but that all the numbers about Government of Canada-related jobs were not included in the calculations.
I give you the example of the Canada Mortgage and Housing Corporation, of Canada Post, of the various museums that are not included in the calculations of the Department of Public Works and Government Services because the latter is not in charge of finding them premises. Moreover, Treasury Board does not consider these bodies as coming under its rule, so that employees of these Crown corporations or agencies do not report to Treasury Board as their employer.
Could you please tell us where you are regarding the sharing of contracts between suppliers on both sides of the river, a division that will be set, one hopes, at 75%-25%? You made a decision that had an enormous impact on the balance wanted when you proceeded to lease, or rather purchase, the JDS Uniphase building for all sorts of reasons that seemed good to you. So, where are we?
:
If you will allow me, I will answer your question.
The procedure is called a contract award notice. It is a very useful tool, because it allows all the competitors to know exactly what the customer—in this case, the Government of Canada—wants and the data that needs to be taken into account when purchasing and leasing property., You are aware of it, since you noted it, but I would like to stress that I doubled the period during which the contract award notice was in effect.
I’d like to get back to your question about the balance of land ownership. Mr. Proulx, you were part of the party in power, and what I inherited as Minister of Public Works and Government Services—our friends from the Bloc Québécois often refer to fiscal imbalance, and we speak of it too—is a great real estate imbalance. You had 13 years to resolve it. I therefore inherited a distribution of 77%-23%, and now you ask me to consider the geographic location of Crown corporation buildings. The fact that we don’t take the real estate property of the Canada Post Corporation and other Crown corporations into account, is not a whim. This is the way it is because during your government’s administration, you decided that in terms of governing, these corporations would be dealt with at arm’s length.
We have to exclude these corporations from our calculations because we can’t say on one hand that the Canada Post Corporation is autonomous, and on the other hand tell it to set up its offices on the corner of First Avenue and Twelfth Street in L’Ancienne-Lorette. That makes no sense. These corporations operate at arm’s length or they don’t.
However, because I know what you’re getting at, I firmly believe that there will be improvements in the balance in favour of the Quebec side of the Ottawa River, if only for economic reasons. We will probably need to expand our real estate portfolio. All things being equal, the possibility of our going to the Gatineau area is very good, given the financial terms offered. I would like to remind you that I inherited a situation that could have been much better, and I am sure you will agree with me on that.
:
Thank you, Madam Chair.
Mr. Fortier, Mr. Marshall, Mr. Bennett, good day.
Today’s meeting is about a specific point: the Department of Public Works and Government Services’ new procurement strategy. There are people in the room whose livelihoods are at stake. I would like to debate this question and make sure we can continue in this vein.
Mr. Fortier, last summer, people who work for businesses that provide services to the government—I am thinking, in particular, about temporary personnel services—had a shock when they learned in June that there would possibly be changes in the way that businesses deal with the government. It was such a shock that they told us that they felt the government was treating them like adversaries. This is obvious upon reading the minutes of the October 19 meeting. The relationship of trust was disrupted.
My intention, and that of the industry, is to find solutions with the government, so that everything is done properly. We have seen your objectives, and they are very laudable. There were references to reducing the time spent on procurement processing by up to 50%, reducing the in-house costs of procurement by 10%, etc. However, when the industry asked for details—and I’m thinking here of A.T. Kearney—, it was told that there was a report and it could not be made public for certain reasons.
If I understood you correctly, you said there was no report. The fact remains that people—responsible people—made an access to information request. It would have been helpful to tell them what was what at that point.
I want to know why your department did not approach the industry directly. End-of-August deadlines were announced in June, which is very difficult, especially in summer. That’s a deadline that even the government considers too short.
I’d like you to explain to us how you tried to find alleged solutions that involved losing jobs. It was calculated that about 5,000 people were involved. Was your goal really to reduce the number of temporary help agencies from 144 to 7? That’s catastrophic. How did you come to put forward and put into practice this type of thinking?
:
Madam Chair, when the contract was put in place, it was given the scope to take the whole period of what we thought the transformation would require--five years and maybe even a bit longer--so that it didn't restrict us from accessing that resource. At the same time, the contract specifically provided that if we had needed to re-profile it and accelerate work, that was envisaged and authorized to take place. If we look at the general view about what the transformation would cost over five years in the budget of 2005, a provision of about $90 million was made for that period. It was provisionally allocated to take place at about $20 million or $25 million a year over four years.
As we got into it and understood the magnitude of what needed to be done in the early years in order to be able to reap the benefits of transformation--the government, as the minister has pointed out, is a very complex and large organization--we prepared business cases and received Treasury Board approval to spend $76 million of the $90 million in the first two years. That's a signal that showed it was necessary to build up the transformation in the first two years in order to be able to reap the benefits later.
Of course, A.T. Kearney advised us during that period in making a number of changes. To describe a bit about what they did, they had over 60 people, consultants, on our premises through long hours over a six-month period. They brought in experts, including from their European and U.S. operations, without charging us for travel, in order to advise us. What they contributed to us was the very complex analysis of what the government is spending--because the systems are not there to tell us that--in order to be able to analyze how to improve procurement. For $20 billion of spending, 12 million transactions, 51 departments, they built the analysis. They gave us guidelines and helped us consult with specific departments to see what the pattern was in those departments. Then they helped us shape our strategies for 11 major categories of goods and services that covered almost $4 billion of government spending. There was an enormous amount of value obtained.
I should also point out that this kind of transformation work is very hard to undertake with our regular staff, who have, at the same time, every day, to process thousands of transactions.
I would like to make a comment addressed to the committee members. At the start of this legislature, when we met for the first time, Mr. Kramp and I said that the worse thing that can happen to a committee is that the members behave in a too partisan manner. That is a personal comment. We hear witnesses and it must be rather distressing to see that we spend 20 to 25 minutes simply exchanging partisan remarks with them during a two-hour meeting. Obviously, Mr. Poilievre is not a permanent member of this committee.
I wanted to ask you, Mr. Minister, if you are aware of the article that appeared in the Globe and Mail. This isn’t too much of a digression, because in your opening remarks you spoke of the fact that your department has undertaken major reforms. You also spoke of the Shared Travel Services Initiative. I would like you to tell us something about that.
Furthermore, the budget of public servants—members of the armed forces or other public servants—who travel to a new home is also considerable. I was wondering if this was a good opportunity for you to give a few explanations about the article in the Globe and Mail. Are you thinking of doing another call for bids? It is my understanding that the report will be released at the end of the month, but since there have been leaks, will you agree to go to the second, third—?
My third question is the following: how will you make sure this type of thing does not happen again?
With regard to the platform for employee travel, I believe it is important that we have an electronic tool available to the largest possible number of government employees. Obviously, the majority of them do not travel. However, it would be useful if these who are called upon to travel have a tool that would enable them to make airline ticket reservations, if they travel by plane, reservations for an automobile, if they are driving, or reserve a hotel room, using an easily accessible system. The system should also enable them to be reimbursed quickly and efficiently, without having to fill out all sorts of forms that must be submitted to the supervisor. In my opinion, the time it takes for people to be reimbursed, in some cases, is not reasonable. It is the paperwork involved, especially, that bothers me.
As for the travel expenses, I believe I spoke of it earlier to this committee. If not, I will talk about it now. It seems to me that we should insist that employees use the government American Express credit card. We negotiated an agreement with this company further to a call for bids. I find it regrettable that employees reserve vehicles and take out insurance using their own credit cards, when the insurance is already included in the agreement we have with American Express. We’re not talking about billions of dollars!
I’d like to get back to the point Ms. Nash raised a bit earlier. Nineteen thousand dollars, that’s a lot of money. One hundred ninety dollars, that’s a lot of money. Employees are not using government credit cards for all sorts of reasons, and it’s unacceptable. We will have to find a way of ensuring that these men and women do it because, in the end, they are travelling at taxpayers’ expense.
With regard to the leak in the Globe and Mail, you will understand that I have no intention of commenting on a leak from a report that will be made public at the end of the month. It will be my pleasure to come back and talk to you about it, once the report—
:
Thank you, Madam Chair.
Mr. Fortier, it is difficult to be able to ask you questions because--and I'm saying this frankly--you're not in the House, so we do appreciate that you are here today.
I would like to say that because of the changes.... And I didn't just put out a press release; I got the support of this committee to get a motion passed. We would like to see you again, because I'm sure I'm not alone in having a number of larger questions about procurement and the direction of your ministry, which, as they evolve, we would like to be able to discuss with you.
And I do want to ask a question, but I want to finish with my line of questioning in my earlier few minutes, just to say that I find it really troubling that at a time when moneys are being cut from programs that are important to women, to people who are studying literacy programs, to the court challenges program, to arts programs, museums, etc., there is a contract for which, according to reports I have seen--and I haven't seen the original contract--the final implementation was almost fourteen times what it was when it was awarded. To see then the mismanagement of that contract because people were off supposedly attending meetings but didn't attend meetings--and we don't have a report of that investigation of their trip. We don't have a report of the actual contract for the $24 million. I find this troubling, given that this contract was designed to save the procurement process money.
You have answered questions here on this, and I would like to use the remainder of my time to ask you about the broader procurement strategy of your government, because I believe procurement is obviously important for Canadian business, large and small. It can stimulate business. There were concerns expressed here by others that perhaps there was going to be a greater consolidation of the contracts so that the large enterprises would disproportionately benefit, and perhaps some of those contracts then might increasingly go to companies south of the border or offshore. There were concerns about job loss. And obviously these contracts can stimulate the economy. They can also stimulate investment in green technology. You had briefly mentioned that before.
Maybe you can just tell us about how the changes, the reforms, you want to make to procurement policy will actually work with a broader strategy, what it will mean for jobs in Canada, and what it will mean for environmental progress.