Thank you, Mr. Chair.
Good morning, again. It's still morning.
We are here to present and discuss with the committee the measures that Public Works and Government Services Canada has put in place to uphold the public's trust in procurement and real property transactions.
With me today is Barbara Glover, the assistant deputy minister from the departmental oversight branch. Barbara's branch encompasses the sectors that we call operational integrity, special investigations, forensic accounting, and industrial security. It also includes our office of internal disclosure, under the PSDPA.
Pierre-Marc Mongeau has appeared before you many times. He is here with me today as the assistant deputy minister, real property.
Pablo Sobrino is the associate assistant deputy minister, acquisitions. He was before you recently with regard to the integrated relocation program. Those are the colleagues with me today.
As deputy minister, I am proud of the key role my department plays as a common service provider so the departments and agencies can obtain the goods, services and accommodations they need to serve Canadians. The department is also the primary interface between government and business on a wide range of business activities.
Over the past three years, we have overseen an average of 49,000 procurements a year with an average value of $14 billion; we house some 270,000 public servants in more than 1,800 locations across the country, involving about 500 real property transactions per year.
As you can well imagine, the procurement processes by which we make these acquisitions and transactions can vary from the immensely complex, involving significant dollar values and sophisticated equipment and services, as is often the case with military procurements, to those of lower dollar value or greater volume and more recurrent requirements, such as supply arrangements and standing offers for a wide range of goods and services.
Given our roles and responsibilities, Public Works and Government Services Canada has a strong history of working to protect the public interest from those with criminal or corrupt motives. My department has a framework in place that supports accountability and integrity in procurement, with strong governance, codes of conduct, fairness monitoring, audits, financial controls, and internal investigations. These mechanisms apply to all those involved in our procurement activities.
I understand the committee has expressed interest in the fairness monitoring program and our integrity framework.
So I will start with the fairness monitoring program, which is a component of our integrity measures. The program was formally instituted in 2005 and expanded in 2009 to provide management, client departments, suppliers, Parliament and Canadians with independent, third-party assurance that our large or complex procurement activities are conducted in a fair, open and transparent manner. The program covers all complex or major departmental procurement and real property transactions. The findings are publicly released on our website.
Our policy on fairness monitoring requires a mandatory assessment for coverage with regard to activities in which risk related to sensitivity, materiality, or complexity is such that fairness monitoring coverage is warranted, as well as for all departmental activities subject to ministerial or Treasury Board approval.
Other departmental activities, for which an enhanced assurance of fairness, openness, and transparency is desired, can also be covered for fairness monitoring, whether mandatory or optional. The assistant deputy minister for oversight reviews these assessments and makes her recommendations to me on whether or not to proceed with fairness monitoring.
The most recent improvement to the program is a new standing offer for the services of fairness monitors, which will be issued shortly with a start date of June 10, 2013. This includes formal terms of reference for fairness monitoring engagements. I believe the committee had asked for the statement of work for the procurement of those services, which I understand we have provided.
The terms of reference will ensure alignment between fairness monitors and the department on the standard of fairness to be used, and the standard of conduct for fairness monitors to follow during fairness monitoring engagements.
I will now turn to our overall integrity framework.
All PWGSC employees must adhere to the department's code of conduct that includes specific provisions for the proper management of procurement activities through compliance with all available practices, controls and policies; and to prevent situations of real, potential or apparent conflict of interest. Employees must disclose when considering or engaging in outside employment and/or ownership of businesses, and comply with guidelines related to gifts, hospitality and other benefits.
Over and above this general code, the department implemented in 2007 and then updated in 2012 a code of conduct for procurement that applies to suppliers and to departmental staff and that outlines what is acceptable conduct when contracting with the government. Our goal is to ensure that the department conducts its business to the highest ethical standards, standards that Canadian citizens expect us to uphold and protect. It is a role that we take very seriously. And we have implemented significant compliance measures.
Let me give you an overview of these significant compliance measures.
Starting in 2007, as part of the Federal Accountability Act and its action plan, Public Works and Government Services Canada included a code of conduct for procurement in its solicitation documents, which included “payment of a contingency fee to a person to whom the Lobbying Act applies” to existing offences, which rendered convicted suppliers ineligible to bid on procurement contracts. The code also included frauds against the government under the Criminal Code and under the Financial Administration Act. Bidders formally certified with their bids that they had read the code and agree to be bound by its terms.
Building on these measures, in 2010 the department added anti-competitive convictions under the Competition Act to its list of offences that render bidders ineligible. These convictions include corruption, collusion, bid-rigging, or any other anti-competitive activity.
In July 2012, the department further expanded the list of offences that, if convicted, would render companies ineligible to do business with PWGSC. These offences include money laundering, participation in activities of criminal organizations, income and excise tax evasion, bribing a foreign public official, and drug trafficking.
For the first time, PWGSC also applied its integrity provisions to all real property transactions, which includes leasing arrangements for all uses, letting of commercial crown-owned space and the acquisition and disposal of crown-owned properties.
In November 2012 the department further clarified its integrity measures by removing the leniency exemption and introducing a public interest exemption. Leniency provisions allow an applicant to come forward, cooperate, and plead guilty in exchange for lenient treatment in sentencing. Given the seriousness of the infractions identified in the integrity provisions, the department no longer does business with individuals and companies found guilty of these offences unless exceptional circumstances require it for the public interest. This applies even when leniency may have been granted to the company through a program.
Under these provisions, the department can no longer enter into a contract or real property transaction or accept bids from individuals, companies, and the current members of their board of directors, including company affiliates, convicted of listed offences. These measures do not apply to company employees.
Should a company or a member of its board of directors obtain a record suspension—it used to be a pardon—or have its capacities restored by the Governor in Council, they would become eligible to do business with Public Works and Government Services Canada. In instances of public interest such as health and safety, emergencies, national security, or if there is only one supplier, the department could maintain the contract.
Successful bidders are required to maintain relevant information and their certification for the duration of the contract. Bidders and their officers must remain free and clear of convictions specified in the code of conduct, which is incorporated into their contract.
If a company is convicted of an offence after a contract has been awarded, the department may cancel the contract for default if the terms and conditions of the contract include our enhanced integrity provisions.
However, these provisions are not retroactive. So in cases where the provisions are not in the contract, the department is legally obligated to honour the contract. In such instances, heightened scrutiny and oversight and rigorous controls may be imposed for the remainder of the contract to protect taxpayers' interests.
Should we suspect wrongdoing, the department will not hesitate to take action, including procurement and administrative reviews to detect any irregularities; examining all invoices to ensure their accuracy; requesting the voluntary inclusion of the department's integrity measures in contracts; audits; and formal or departmental investigations.
If the department suspects wrongdoing, we will not hesitate to take the necessary measures, including requesting formal investigations by the RCMP or the Competition Bureau.
These measures apply only to Public Works and Government Services-managed procurements and real property transactions. The department manages approximately 83% of the value of all government-wide procurement. Departments and agencies have a delegated authority to contract for goods up to $25,000. Some departments have exclusive authority for goods contracting. Departments and agencies may contract for services under their own delegated authorities. However, a number of organizations that have such delegations or authorities, such as the Canada Revenue Agency, have entered into a memorandum of understanding with our department so as to be able to benefit from our integrity provisions.
The department has put in place numerous measures that demonstrate its commitment to doing business with companies and individuals that respect the law and act with integrity. The department will continue to build upon these measures. That is our responsibility as stewards of public funds.
We continue to enhance our approaches and measures. For example, last month we entered into a memorandum of understanding with the Competition Bureau of Canada to promote cooperation between our two organizations on the prevention, detection, reporting, and investigation of possible bid-rigging or cartel activity. Our minister has also asked us to explore improvements to the framework and to see how it could be applied more broadly across government.
Mr. Chair, this concludes my remarks.
Thank you for the opportunity to present our integrity measures and fairness monitoring program.