Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs
Issue 10 - Evidence, September 28, 2006
OTTAWA, Thursday, September 28, 2006
The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-2, providing for conflict of interest rules, restrictions on election financing and measures respecting administrative transparency, oversight and accountability, met this day at 9:05 a.m. to give consideration to the bill.
Senator Donald H. Oliver (Chairman) in the chair.
The Chairman: Honourable senators, I would like to call this meeting of the Standing Senate Committee on Legal and Constitutional Affairs to order. This is our 23rd meeting in relation to Bill C-2, providing for conflict of interest rules, restrictions on election financing and measures respecting administrative transparency, oversight and accountability. This is more commonly known as the accountability bill.
As senators, our witnesses and members of the public, both here in the room and across Canada on television know, this bill reflects a central portion of the new government's agenda and is one of the most significant pieces of legislation brought before Parliament in recent years. The committee is giving the bill the extensive, careful and detailed study that this bill deserves. During over 70 hours of meetings to date, we have heard from 108 witnesses. This week we are considering various aspects of the bill, including whistle-blowing, audit powers and procurement.
To begin this session on procurement, I am very pleased to welcome Ian Bennett, Jane Meyboom-Hardy, Jonathan Higdon and Mr. Joe Wild from the Acquisitions Branch of Public Works and Government Services Canada. This branch provides Canada with relevant and timely value-added acquisition and related common services.
On behalf of the committee I want to thank you for joining us. Without further ado, I will turn the floor over to you, after which we will go to questions and have some discussions which no doubt will prove very helpful to committee members.
Ian Bennett, Acting Assistant Deputy Minister, Public Works and Government Services Canada, Acquisitions Branch: It is a pleasure to meet with you today to discuss the proposed federal accountability act and how it will impact the operations of the Department of Public Works and Government Services Canada. We appreciate the opportunity to make these brief remarks before accepting your questions.
As the committee has heard, Bill C-2 will bring about significant changes on many fronts, some of which are directly related to the mandate of Public Works and Government Services Canada. Most notably, Part V of the proposed legislation aims to improve the accountability of federal procurement and contracting — two of the department's principal activities.
As the Government of Canada's main procurement arm, Public Works and Government Services Canada manages some 40 to 60,000 transactions annually. In 2004, the department purchased approximately $17 billion worth of goods and services on behalf of the federal government, its departments and agencies. As you can appreciate, the upcoming changes in the areas of procurement will have very significant implications for our department. To put federal procurement accountabilities and activities into perspective, I will mention that in 2004, the government entered into approximately 416,000 contracts of which about 95 per cent were valued at less than $25,000.
However, this 95 per cent of the total number of contracting transactions represents only 5 per cent of the total value of contracts. Virtually all of these low-dollar value contracts were handled by departments themselves.
The federal procurement system operates in an open, transparent and fair manner. Approximately 91 per cent of all government contracts are awarded on a competitive basis with strict criteria governing the situations where non- competitive contracts may be considered. These criteria include considerations such as, the national interest, where issues such as security are considered; national emergencies; items where only one supplier may be considered due to proprietary rights or interests; and, as I mentioned, contracts valued at less than $25,000.
Typically, Public Works and Government Services Canada handles only about 10 per cent of the total government contracting transactions, but these represent more than 90 per cent of the total value of all contracts and supply arrangements put in place by the government.
The acquisitions function of Public Works and Government Services Canada is accountable, first, for handling high dollar value, high complexity transactions on behalf of the government; second, for putting in place supply arrangements that can be accessed by all departments and agencies of the government; and third, for developing operational policies, practices and procedures.
Public Works and Government Services Canada is already working hard to improve and modernize our procurement processes in order to achieve increased efficiencies and ensure that we make the right business decision for government and taxpayers. As part of a broader procurement transformation agenda now underway in the department, we are adopting a corporate government-wide view toward government procurement. We are aiming to cut in half the time it takes to conduct procurement transactions, to reduce our internal operating costs by 10 per cent and to achieve savings for the government in the order of $2.5 billion.
As an organization that is committed to the highest levels of ethical conduct in all of its business activities, I can assure the committee that PWGSC welcomes the reforms set out in the Federal Accountability Act. We believe these measures will further enhance transparency and accountability which are inherent values in a fair, open and accessible procurement system.
The federal accountability bill will create the new position of the procurement auditor with a mandate to review procurement practices across government on an ongoing basis to ensure fairness and transparency. The mandate will also include the authority to make recommendations for improvements to relevant department. It will include the mandate to review complaints from potential suppliers for procurements less than $25,000 for goods and less than $100,000 for services. It will provide the authority to review complaints with respect to the administration of contracts, and it will provide the authority to manage an alternative dispute resolution process for contracts.
I would point out that the procurement auditor will have the authority to review specific complaints but not to recommend the cancellation of a contract. Although we want complaints to be addressed fully, fairly and openly, we need to ensure fairness for all bidders. It is important that we not jeopardize the integrity of the procurement process on the basis of a single complaint, which may or may not prove valid. Additionally, procurement processes for goods and services are usually undertaken with specific time frames in mind. If these processes were to be stopped every time a complaint was received, the government would have difficulty in meeting its procurement needs. Addressing a complaint after contract award will allow for a thorough and complete review of the process. If the complaint proves to be valid, the procurement auditor could, where circumstances warrant, recommend redress for the bidder. If the problem proves to be systemic and related to a flaw in government procurement practices, the procurement auditor may make recommendations to address these systemic issues.
Our goal is to ensure that we continually improve the government's procurement practices. The procurement auditor will be appointed by the Governor-in-Council and will submit an annual report to the Minister of Public Works and Government Services Canada. The report will also be tabled in Parliament.
As part of its accountability agenda, the government will implement a code of conduct for procurement. This new code will consolidate existing conflict of interest and anti-corruption measures into a comprehensive and transparent statement of expectations for both government employees and suppliers. Integrity provisions will also be included in all contracts to provide a clear statement of the existing obligations of contractors under the Criminal Code, the Competition Act and the Lobbyists Registration Act. Included in these provisions are commitments: not to pay, offer, demand or accept bribes; not to collude to obtain a contract; to ban contingency fees; and to disclose all commissions and expenses paid in connection with the contract.
A central element of the federal accountability action plan is the government's commitment to ensuring that the procurement reforms do not undermine the ability of smaller businesses in all regions of Canada to compete equally for federal business. Public Works and Government Services Canada's Office of Small and Medium Enterprises is taking the lead in ensuring that firms have fair opportunities to compete, regardless of their size and location.
The importance of this work should not be undervalued. Smaller suppliers — those with fewer than 500 employees — are a key contributor to the economy and provide a source of innovation and efficiency in meeting government requirements for a broad array of goods and services.
Small-and medium-sized enterprises account for 43 per cent of Canadian GDP, much of Canada's economic growth, 66 per cent of all jobs in the economy and 75 per cent of net employment growth. It is in the best interests of taxpayers and regional economies across the country that these businesses remain competitive, reliable suppliers to the Government of Canada. PWGSC is committed to streamlining our processes to allow this sector greater access to federal business opportunities.
The Regional Master Standing Offers for office supplies recently awarded by Public Works and Government Services Canada are an example of our commitment to making it easier for small and medium enterprises, SMEs, to access government business opportunities. In this particular instance, we saw the number of SMEs rise approximately 150 per cent, from 22 suppliers previously to 55, and indeed the number of Aboriginal firms doing business with the federal government increased as well.
To further strengthen our work in this area, the minister recently announced the establishment of six new regional Offices of Small and Medium Enterprises. These offices will provide support to SMEs and improve their access to government business by the following: maintaining an ongoing dialogue with smaller suppliers across the country to identify their concerns and possible solutions; providing information, training and outreach to SMEs in every region of the country; and working within the procurement system to modify procurement approaches and policies so that SMEs can contribute more effectively to meeting the government's requirements for goods and services.
The elements of Bill C-2 that I have touched on today are intended to ensure that the federal procurement process is open, fair and transparent. For the first time, vendors will be able to bring any concerns they have to a federal procurement auditor with the legal mandate to address them. These are positive steps, and they complement the initiatives already underway within Public Works and Government Services Canada.
The Chairman: Thank you for that broad, comprehensive, informative overview. You covered many issues in just a few moments.
You stated that, for the first time, people have a procurement auditor to go to. What was there before Bill C-2 brought in the concept of a procurement auditor? Where would people go?
Mr. Bennett: There were a variety of avenues for individuals having concerns about a federal procurement transaction. Specifically, the Canadian International Trade Tribunal, CITT, had a mandate to hear any concerns within a certain dollar value — basically subject to trade agreements. Additionally, Public Works and Government Services Canada had an alternative dispute resolution, and we would take to heart any issues being raised by any suppliers. Lastly, where there were issues of wrongdoing, through our audit programs or seeking input from suppliers, we would follow up on any allegations of such. Those mechanisms were open in the past to suppliers with concerns about the federal procurement system, but the role of the federal procurement auditor will fill a certain vacuum. They will be empowered to look at transactions that are below the thresholds of the CITT, for example, and will provide a consolidated and visible mechanism for suppliers to bring forward their concerns and complaints.
Senator Mitchell: Thank you, Mr. Bennett, for your very informative presentation.
One of the few areas that is very strong about this initiative is its emphasis on small and medium-sized enterprise in particular. I am from Alberta, and in the West, and probably the East, there is a great emphasis in the economy from small and medium-sized enterprises. It is often possible for them to be excluded from contracts that could assist them in growing and diversifying and building a regional economy because of size restrictions. That is a good thing.
Having said that, I see one profound irony throughout much of Bill C-2 and certainly in this case. I know you cannot be political, but I can. I cannot help myself. This comes from a Conservative government that seems to be premised upon this idea that all government is too much government and that there should be less government. As is so often the case in politics, there are these inherent contradictions. There certainly is in this case, because the profound duplication of this effort is obvious. You have actually laid out very well, in answer to the chairman's question, that all the functions that this is supposed to do are already being done. Perhaps there is a vacuum being filled because of thresholds, but you might just change the thresholds on the groups that are already doing it to solve that.
To check on matters we have an Auditor General, internal auditors, new controllers, this committee of the Senate, public accounts committees, committees of the House, management structures, et cetera. There is plenty of procurement review in this government today. The obvious question is: Why is this duplication necessary? Could it not be handled in a more efficient manner to fill the vacuum that you have indicated?
Mr. Bennett: Mr. Chairman, it is a very detailed question and I will try to touch on a few of the central points. In terms of the threshold — and perhaps considering lowering the threshold — there is legislation around in terms of the international trade agreements. As well, the hope would be that the federal procurement auditor could drive through some of the issues. Obviously, putting cases forward to the CITT is an onerous process in terms of the protocols followed, et cetera. This applies as well to the question of access to small and medium enterprises that have a concern that may not merit a full quasi-judicial proceeding but want to come forward with that.
With respect to the Auditor General, who appeared before the committee yesterday, Mr. Chairman, my experience as a public servant is that the Auditor General tends to look at program delivery, financial management and value for money. Clearly, in the scope of discharging those accountabilities, the Auditor General will look at specific contracting aspects associated with program delivery. Generally speaking, the Auditor General does not look at horizontal, systemic kinds of operational procurement-related issues.
The Chairman: She said that yesterday, as well.
Mr. Bennett: A case in point would be, for example, the firearms programs in which she commented on some of the contracting aspects but moved to much broader issues, such as the performance measures. Those roles are complementary.
With respect to the internal audit community, quite rightly, reference is made to strengthening the controllership function in government. The financial management of government is, as senators can appreciate, highly complex and connects to procurement. Consider the magnitude of the transaction with the dollar values that are part of the purview of procurement, the variety of interventions in the process with some 130 federal departments and agencies, and the thousands of suppliers. My point is I am not sure that the controllership function, although clearly aligned with the procurement function in government, would have the time and the energy to focus on procurement issues. Checks and balances are in place but this is a step toward strengthening those checks and balances.
Senator Mitchell: In your response, you mentioned a couple of matters that I would like to follow up on. You said the federal procurement auditor would be in a position to drive forward certain initiatives that would be to the advantage of SMEs that might not be driven now. Why would that not be an obvious mandate of the existing Office of Small and Medium Enterprises? If it is a mandate but it is not being done properly, why is someone not managing to rectify that? If they are doing it properly but not as well as they could, will the procurement auditor receive a transfer of some of their budget so that we are not duplicating the expenditure?
Mr. Bennett: Mr. Chairman, in response to those questions, the OSME is looking at systemic issues with respect to barriers for SMEs getting government business. They are aggressive in looking at simplification and streamlining of our processes, including education of and outreach to SMEs to ensure that they aware of federal opportunities and how to access the systems. The essence of my comment was that this group clearly has that mandate. SMEs can take forward, what I would consider, generalized policy concerns with respect to barriers. They will address the following questions and concerns: Are our processes too complex? Are some terms and conditions in our contracting documents barriers to SMEs?
Specifically, Mr. Chairman, when I spoke about the role of the procurement auditor with respect to SMEs, I was referring to low-dollar-value complaints and resolution of those complaints. The OSME group that reports to me does not have the mandate to hear and discharge a transaction-specific complaint where an SME might not feel they had a fair shake in terms of the transaction.
We want to ensure that the OSME function within Public Works and Government Services Canada, PWGSC, including regional offices doing outreach at a local level, is funded and fully functional. We will ensure that the roles are harmonized, that there is no overlap and duplication, and that we will look at the appropriate balance of the budget. That is on the radar screen at PWGSC.
Senator Mitchell: If I were minister of PWGSC, I would want to have you as my deputy minister, because you are supportive of what they are doing and you argue it well. I am not convinced. Your argument is that the OSME does not have this particular mandate, which I will accept, although with management initiative that mandate could have been undertaken. That would have been preferable to creating another layer of bureaucracy — another distraction from getting things done. It is amazing that government is not completely paralyzed already — if it is not. Why not simply tell the minister that you do not need that extra layer because a group with the expertise is already in place. In that way, you would not split the role and the needed synergy and drive would occur because it would be all in one place. If that office cannot identify the issue, then we have to expand their mandate, and it would not cost that much money. In fact, it would help you to obtain that $1 billion that you are trying to get.
Mr. Bennett: It provides an opportunity to put two key elements on the table. First, the Office of Small and Medium Enterprises of Public Works and Government Services Canada is a new function. Its role with respect to other government procurement transactions reaching across the whole of government needs to be strengthened. I gave you some of the dimensions of the mandate of PWGSC and the value of the purchases that we make. That is our clear line of sight, because we have control over those processes. One difference in the mandate is that the federal procurement auditor will have a mandate to look at all transactions from all departments. Although this position reports to the minister of PWGSC and will table a report in the House, the mandate includes transactions in other departments that reach out to SMEs. That would be an expansion of the mandate.
Second, the skill set for resolution of issues, considering legalistic aspects, is a function that I would not want to have at arm's length from the department. The Office of Small and Medium Enterprises reports to me and I report to a deputy minister. The federal procurement auditor needs to be at arm's length from the Department of Public Works and Government Services. This position, which would be a Governor-in-Council appointment, would report directly to the minister and would table a report in Parliament. While they need to be synergized and complimentary, they need to be at arm's length.
Senator Mitchell: That raises a couple of issues that I would like to pursue, but I want to go back to the question of duplication of budgetary expenditure.
In an earlier answer, you indicated that the Auditor General is probably doing some of this now but not completely, because apparently there is this horizontal systemic, which is an interesting concept. However, I believe that the Auditor General would go into the horizontally systemic if she found a problem. She does not seem to be particularly timid about those matters.
Again, would you see us taking budget money from the Auditor General and putting it into the procurement office, or will we just duplicate the same functions for both?
Mr. Bennett: Mr. Chairman, I would not presume for a second to speak to a budgetary issue of an agent of Parliament. I spoke typically about the types of reviews that I have seen from the Auditor General. The Auditor General certainly has, within her mandate, the authority to look at value for money of procurement across government, but the Auditor General is not empowered to hear issues with respect to particular transactions, complaints arising. That is not a function that she is undertaking.
I go back to the fundamental point: There is a variety of oversight, checks and balances in the federal procurement system. We would want to make sure that they are interconnected and complementary and not duplicative.
Senator Mitchell: You alluded to the question of independence, which of course is very important. If this group were to function effectively in the way that it is being construed, then it would have to be independent. It is interesting — Mr. Wild was presenting some time ago and made the point, which I believe you are making as well — that the reporting function is to the Minister of Public Works and because the procurement auditor is not an agent of Parliament it is independent in a sense in that it reports directly to the minister.
It seems to me that that is absolutely counter-intuitive, given the debate that went on some time ago. The direct appointment to the minister may be exactly what the problem is; it was not a concern in all this issue about political influence. Is that not compounded by the fact that this is a Governor-in-Council appointment that will be almost purely political or certainly subject to political? Also, is it not compounded further by the fact that it is the Prime Minister's Office that will be able to exclude those departments, duties and functions that the procurement auditor should not be able to review?
Mr. Bennett: Perhaps I could touch on some of the points and invite Mr. Wild to comment further. One element of having this position report to the minister fundamentally contributes to the point of maximizing budgets. By that I mean it provides an administrative umbrella of a department and an infrastructure to support this function. The procurement auditor will have very significant input and connection from some of the operational areas of the department. I go back to the comment about the small and medium enterprises.
With respect to the political dimension, I will not touch on that. However, a very important check and balance in reviewing the proposed bill is the tabling of the procurement auditor's report with Parliament. This will give visibility to the complaints that have come forward, the disposition of those complaints and the examination of systemic issues that I have touched on. In terms of a full accounting of the activities of this important function, that is the appropriate check and balance.
Perhaps Mr. Wild would like to add something to that answer.
The Chairman: We have 20 minutes left. I want all senators to have an opportunity because this is an important panel. I will make room on the second round — if there is a second round.
Joe Wild, Senior Counsel, Legal Services, Treasury Board Portfolio, Public Works and Government Services Canada: Concerning the point on independence, there is also a host of machinery choices, if you will, in terms of how one wishes to structure a function that will operate with a level of independence. There are choices. The choices range from an agent of Parliament model, which, while part of the executive for administrative purposes, is reporting completely independent of the executive with respect to the discharge of a mandate. There are officers of Parliament that are completely outside of the executive and are part of the legislative branch of government in that they form part of the institutions of Parliament.
There are also ways to create independence but housed within the executive. In this particular case, we are looking at a function that is carried out primarily within the Department of Public Works and Government Services Canada, as well as other departments in terms of procurement, but it is a function that is primarily carried out by officials. The independence is found by placing the procurement auditor in a direct reporting role with the minister, who then has the responsibility to table reports to Parliament and, of course, is fully accountable to Parliament for what is going on within the department.
That is the form of independence that was being sought here, which was to have a reporting function that would not be going through the Deputy Minister of Public Works and Services, who would have accounting officer type responsibility for ensuring that the procurement controls in the PWGSC are functioning properly. It is removed from being part of that system, so that it can act as an overseer that is reporting directly to the minister, who is, of course, then accountable to Parliament for whatever is going on within those functions.
Senator Cowan: On the point you have raised, it seems to me there is a direct conflict between having this person purporting to be independent and reporting to the minister, who is a political person. It is a political appointment and the direct reporting is to the political person in the department. This bill also adopts this concept of accounting officers, presumably the deputy minister. It seems to me that there is an inherent conflict there — and confusion — and the very kind of overlaying of auditors auditing auditors that Senator Mitchell is speaking about.
Mr. Wild: This is not a typical model for what is perhaps more of an ombudsman function in terms of receiving complaints from the public within the parameters prescribed in the legislation, and addressing those complaints in the form of making recommendations to the minister, which then culminates in the report that, ultimately, the auditor is filing through the minister to Parliament each year. The point to make is that nowhere in that reporting function does it imply that the minister gets to change or affect the conclusions or recommendations that the procurement auditor is making. This is not a new model in the sense that there are ombudspersons that exist in the system now that reflect this similar type of reporting structure. An example of that is with the Canadian Forces.
It is not foreign, it is a way of doing it and it is meant to be independent in terms of the bureaucracy, given that that is where the administration and implementation of the procurement initiatives are occurring. As I mentioned, in that sense, although it is reporting to the minister, there is nothing in the act that is giving the minister control or direction over the procurement auditor. Rather, the mandate is set out in legislation and then there is the possibility of regulation, which will further refine that mandate.
Senator Zimmer: In addition to what Senators Cowan and Mitchell have said, the procurement auditor has the authority to review specific complaints but not to make a recommendation of cancellation of contract. Why not? It is only a recommendation.
Mr. Bennett: There is a fundamental issue here. There are a number of transactions with respect to the entire procurement system, for example, when suppliers are submitting bids they are required to put in place certain provisions, such as insurance, or if it is a service they put holding teams in place.
There are clearly operational requirements in terms of delivery of that good or service. Our feeling is that to have someone raise their hand in terms of a complaint while the process is ongoing will really grind the machinery and the transactions to a halt. I feel it is a question of fundamental fairness to the other people submitting bids.
The role of the procurement auditor will be to look at these and assess them, and the auditor can make appropriate redress. However, while the consequence of stopping the process in the middle was considered very carefully, in looking at the volumes of the transactions and the fundamental fairness to all the people who have submitted bids, we felt that this was the appropriate balance.
Senator Mitchell: The point was made some time ago in an Edmonton Journal editorial that Tuesday was a very bad day for anyone who believes Stephen Harper's promise of a new era in Canadian politics, one of fair, honest, accountable government. This was in reference to Harper's decision to use his discretion to usurp the process of allocating billions of dollars of defence aerospace procurement contracts from the normal procurement process so that he could make those decisions. It article went on to say that it is evidence that he has either succumbed to a fascinating collective amnesia or is just cynical and cunning.
Could the Prime Minister decide to do that, which he has, and then turn, with his powers, and say the procurement officer will not be able to review that procurement process of upwards of $8 billion worth of contracts? Is it possible that could occur?
Mr. Bennett: I will ask Mr. Wild if he would like to comment further, but to start the answer, first, the dollar value of those transactions would be heard by major quasi-judicial tribunals. They would not be eligible for the procurement auditor to examine. There are appropriate checks and balances in place.
If there were systemic and underlying issues about those types of transactions, the federal auditor could look at them. However, in terms of a major supplier having concern about that particular transaction, there are existing, well- founded tribunals that would hear any of those major transactions over $100,000. Those would fall within that purview.
Second, in terms of a fair and open process and the posting of requirements, that is quite standardized and routine. Even for major procurements, we consider a number of critical inputs and the department looks very closely — working in these cases with the Department of National Defence — at what their operational requirements are, who the suppliers are, and the best avenue in terms of fair and open procurement. Moving forward with these kinds of transactions is something that the department does well.
Senator Mitchell: Without the help of a procurement officer now?
Mr. Bennett: Again, these major transactions would be available to be heard by other tribunals.
Mr. Wild: The only addition I have is with respect to the last comment in terms of whether the Prime Minister could decide that the procurement auditor would not look at a particular department or a specific transaction. Pretending for a second that this was a transaction that would actually be within the mandate of the procurement auditors — below the thresholds of it being dealt with, if there is a supplier complaint with the CITT, or in the more generic sense and not a specific supplier complaint — if we are in that world, the only provision in terms of addressing the duties and functions of the procurement auditor and in terms of constraining those duties and functions with respect to specific departments, is through regulation. It is the function of the Governor-in-Council. It goes through the regulatory process — the normal Canada Gazette process with prepublication, consultation and, of course, the overview by the joint Senate-House committee on regulatory affairs.
Senator Andreychuk: We have heard that there are various ways accountabilities are built into the system and that this is one more. Senator Mitchell called them layers; I call them differences of management needs. Do you feel they are duplications or does each one of them serve a different function?
Mr. Bennett: I believe that each one of them has a specific mandate with a very targeted area of responsibility and accountability. Clearly, coordination of these various functions is an important consideration. However, when you consider the number of the transactions in the procurement world, bringing into place a function such as this, and starting to understand how they can complement other initiatives is a very positive step.
Senator Andreychuk: Taking into account that we are talking about a public system as opposed to private corporations that may be very complex, are there similar systems within major corporations? In other words, are these methods peculiar to the public domain or are they within large multi-corporations and corporations?
Mr. Bennett: That is an excellent question, but I have not researched whether or not there would be comparable functions in the private sector. I would say, exactly as has been mentioned, that the expectations with respect to transparency, fairness, openness and diligence are much more stringent in the federal public sector. Other than a very general answer, I could not respond in a definitive way.
Mr. Wild: To give the one concrete example that comes to mind in response to that question: In the banking industry there are banking institutions that have set up an ombudsman function for people to be able to bring complaints if they feel they have an issue with the bank. Of course, that would be on top of all of the normal processes that any large corporation would have in terms of a properly functioning internal audit, an audit committee within their board of directors that oversees that internal audit function and a controller function. There are examples where the private sector has, in some instances, set up what is meant to be a public relations vehicle to some extent, but very much an ombudsman-type function for allowing people to feel as though they have another track to go if they are getting nowhere in dealing with the bank manager regarding a particular issue.
Senator Andreychuk: I want to follow up on something else that Senator Mitchell said, since he set the stage. The term "independence" is misleading because it gives the impression that it is independent of everyone and in the traditional ombudsman arm's length, et cetera. You are making the point that it is independent of the department. Is that where the problems were perceived to be?
Mr. Bennett: I would go back to the comment that within the management practices of the department, there are checks and balances — for example, a senior financial officer with a clear mandate, audit committees, et cetera. However, in terms of having a vehicle where the Canadian public and suppliers clearly know they can come forward with complaints is an area that was not visible within the department, and would build on some of the existing.
I would also touch on the fact that this function is not really unique, not only with respect to the Department of National Defence but also with respect to other areas, such as the role that was prescribed under Transport Canada to hear complaints pertaining to Air Canada.
It is a model that I believe can work in terms of independence. However, to respond to the question, the problems were not perceived necessarily to be solely and exclusively within PWGSC. As I said, there are hundreds of thousands of transactions on an annual basis that occur without reference to PWGSC. The federal procurement auditor would be empowered to look at any of those transactions. It is not solely within the purview of the Minister of Public Works and Government Services Canada to oversee a large department, but more as a minister with accountability for federal procurement.
Senator Andreychuk: When I first looked at it and the materials we received, I thought that was the point; it was really to get back to ministerial accountability. If there is someone at arm's length, the department is then free to do its business. It is necessary to have someone looking at the broader picture and making sure that it is (a), brought to the minister; and (b), brought to Parliament, so something is done about it at the appropriate level. It seemed to me to be strengthening the department rather than not. I wanted to be sure that kind of take on the procurement officer was the correct one.
Mr. Bennett: I believe it is entirely correct. The department welcomes this. We see it as complementing. As I mentioned earlier, the reporting and the diligence to Parliament and making transparent the disposition of some of the cases that have been raised, the issues that have been examined, I feel is very important in terms of the independence and oversight.
Senator Andreychuk: There are obvious challenges and barriers that we understand for small-and medium-sized businesses. Can you enumerate some, particularly for the new Aboriginal businesses, that you see as barriers that we should be addressing?
Mr. Bennett: Maybe I could just start with a very quick overview of how we are trying to help Aboriginal businesses.
Currently, we have, under the trade agreements and our practices, provision to have Aboriginal set-asides, and we consider this in all instances. Aboriginal set-asides are basically parallel processes where we will put in place competitive supply arrangements with Aboriginal firms. They are not in direct competition with mainstream suppliers. Departments that are wishing, for example, to buy office supplies or furniture from their Aboriginal firm, will clearly have access to those supply arrangements and those opportunities.
We are coming forward with new strategies for each of the commodities that we are addressing. We are in consultation with suppliers, including Aboriginals and SMEs; the vast majority of Aboriginal firms would fall within the domain of small and medium enterprises. We are looking at the barriers of entry for them. We are looking for broader partnership opportunities with suppliers in the supply chain. By this I mean, specifically, to have a contract with a manufacturer. We are, however, structuring to make sure that there is local and regional sales service and support. As a part of that, we are asking that they consider nesting Aboriginal firms in the distribution chain — that is a niche in which they are strong — and a portion of that work, the set-up, the distribution, et cetera, should be vetted through Aboriginal firms.
My answer is twofold. We have an existing array of tools and processes, in terms of enhancing access for Aboriginal firms; we are looking to strengthen them even further. We work closely on this with colleagues in the Department of Indian and Northern Affairs Canada as well. We also consider this with respect not just to the horizontal supply arrangements the government is putting in place, but also to some of our major contracts that are affecting First Nations and Aboriginals in the area of health care, et cetera. We specifically look at what those opportunities would be.
Senator Ringuette: You mentioned the procurement transformation agenda and all the built-in efficiencies of time and cost of procurement. This is not a new thing. This is not within Bill C-2. This has been an ongoing process within your department for at least two years. You have identified all kinds of issues that you want to deal with, in regards to efficiency, and I congratulate you on that.
With the proposed procurement auditor that would be within the department — we will discuss the arm's length situation later — proposed in Bill C-2, you must have looked at how many person-years will be required to be efficient in this mandate for the procurement auditor office and staff. If you want this person to do an adequate job of overseeing 417,000 contracts on a yearly basis, we are looking at a considerable number of staff. Have you evaluated the required person-years to accomplish this?
Mr. Bennett: I would answer only in a very preliminary fashion. Obviously, the mandate and the scope would be shaped by the regulations. The initial assessment is that the annual operating costs — and this would include the person-years for this function — may be in the order of $4.5 million per year. There would be some start-up costs but very minor. The estimate — and I emphasize that it is preliminary — that I have received is ongoing costs, once established, in the order of $4 million to $4.5 million. In the government, that would equate, depending on how the mandate is being discharged, to an office of between 10 and 20 individuals. Obviously, these are early days. That is the figure I have seen.
Senator Ringuette: That is not a lot of money allocated. I see the number of person-years, office operations and new office set-up, office expenses and auditor expenses, and I think that your guesstimate is low. However, I guess that the finance committee will look into that later.
The Chairman: Did you want to respond to your low estimate?
Mr. Bennett: It is an estimate. It is neither low nor high. It is the best estimate that we have at this point in time.
Senator Ringuette: It is depending on the result of Bill C-2.
Mr. Bennett: Yes, but clearly, once this function is in place, and depending on the volume of complaints coming forward in a timely disposition, it would need to be looked at. My answer is that, at this point in time, when we have looked at the impact, especially to get the office up and running, those are the numbers we are looking at.
Senator Ringuette: Do you believe that it is reasonable to give this office a double mandate, one of ombudsman and one of auditor, because the two are not compatible in regards to being efficient? An ombudsman will deal with complaints from the industry. However, the auditor has a completely different mandate in regards to responsibility.
I have to be very honest. I can see that within PWGSC you would have an ombudsman office to facilitate the complaint mechanism and process for suppliers. However, we are looking at a responsibility across government to audit contracts, and that is not only the 40,000 to 60,000 contracts within your department. That is only 10 per cent of the procurement process. You also have the mandate to advise the other departments on how to do their procurement. I cannot agree with this person having an ombudsman responsibility to deal with complaints of all the suppliers across government and, at the same time, do auditing of contracts.
The Chairman: Mr. Bennett, did you want to comment on this dual role?
Mr. Bennett: Yes, and I will try to be very brief in respect of senators' time, and perhaps Mr. Wild would want to add a comment.
We have, what I would call, a quasi-audit function as part of the ombudsperson role. Combining that will give an indication of systemic issues. Obviously, if complaints are recurrent and, in looking at the processes, issues surface, there is a synergy there, and that was part of the consideration.
The Chairman: The senator raises a good point, though. Are there other places in the Government of Canada where we have this dual role she described?
Mr. Bennett: I would like to clarify, if I could, Mr. Chairman, because it goes to the heart of the question. This function would not be hands-on in terms of a random sampling of federal contracts or the actual transactions. There are existing mechanisms in terms of audit practices, and I will ask Mr. Wild to speak to this. The strong sense is that the auditor function will be with respect to specific transactions that have surfaced, and this individual would have the authority to audit that transaction.
Senator Ringuette: It is not really an auditor. The main role is not auditing.
Mr. Wild: The title "procurement auditor" might be somewhat misleading in that it brings to mind the Auditor General or an internal auditor in a department, and that is not exactly the role. We should say the role is dual in the sense that part of it is complaint driven.
The other aspect of it is reviewing practices, but it is reviewing practices to assess fairness, openness and transparency. It is not necessarily an audit to determine whether or not a specific contract transaction followed an appropriate process. It is more looking at the systems. It is meant to complement the fact that the procurement auditor might receive complaints and, as they receive complaints, they may suggest that small suppliers are coming forward and repeatedly saying, "I am frozen out of bidding for supplying pencils to the government from no matter which department." That may relate, then, to the procurement auditor saying, "I will look at the more generic practices across government and make a determination." There is a danger with labels and terminology and how they are viewed by different people looking at it from different perspectives. I would not necessarily look at that function, use the pure sense of the word and say it is an audit function.
Senator Ringuette: It is not.
Mr. Wild: The point being driven here is that this is meant to be complementary and to fill a vacuum where the emphasis will be more on that ombudsman perspective than perhaps a pure audit function.
Senator Ringuette: You agree with me that the position should be called "procurement ombudsman" and that, in order to satisfy the public, government and parliamentary requirements for more accountability, the entire structure of the procurement auditor should be at arm's length within the Auditor General's office. An audit structure is already in place; there is audit experience, somewhat in procurement, already in place. The Canadian population would, therefore, have a real procurement auditor that would be at arm's length, and the department would have an ombudsman. An ombudsman role does include, Mr. Wild, reviewing certain contracts that have led to complaints. That is part of the ombudsman mandate.
The Chairman: Mr. Wild, can you respond to that?
Mr. Wild: It is a bit difficult to respond. All I can say is that the legislation has framed the mandate, and I have tried to explain how we interpret that mandate. The title one feels that should then engender is in the eye of beholder, to some extent.
Senator Ringuette: It needs to be clear.
Mr. Wild: From our perspective, as I have explained it, that is the intention of the mandate. It is what is set out in the legislation. There is not much more I can add.
Senator Zimmer: Thank you for your presentation this morning. As Senator Ringuette said, this is an important element of the act. Senator Andreychuk raised the issue of Aboriginal enterprises. Do you have any idea what percentage of Aboriginal enterprises bid in this area and how successful are they?
Mr. Bennett: I do not have that information with me. We do track the Aboriginal procurement, and I could make that information available to you.
The Chairman: If you could send that information to the clerk that would be appreciated.
Mr. Bennett: Yes.
Senator Zimmer: I know that complaints have a broad range, but briefly, the most common are, not getting the bid, price, claimed unfair, frozen out, et cetera. In addition to that, do you get any other bizarre complaints that are beyond the usual scope?
Mr. Bennett: None beyond the usual scope. We provide full disclosure in terms of responses to bids and the evaluation of the technical criteria. We can be quite prescriptive. We think we are balanced in terms of ensuring value. We look at the quality of the product and the expertise of the firm. They will want to look at how we have evaluated their response to what we refer to as the technical criteria. It is generally a two-stage approach. In other words, we look at the technical criteria and ensure that anyone who will hold the contract is qualified and has the product or service to discharge the responsibility, and then we look at price. Obviously, we do not disclose commercially confidential information, but we do give a full debrief on the technical evaluation. We post the awarding and the value of the contract, so it is very open and fair, and all suppliers can see the outcome of the process.
Senator Zimmer: When you respond and give that information after that complaint, I presume the volley back is very low or almost minimal?
Mr. Bennett: Correct. Out of all of those transactions over the last seven years, typically there are only 50 cases per year on average referred to the CITT, and roughly 20 per cent of those 50 cases per year are found valid. The answer to the question is that it is, at the moment, a very minuscule part of the total transactions undertaken by the government.
Senator Cowan: I have two points. First, arising out of your discussion with Senator Ringuette, it appears that what we really have here is somebody who is essentially an ombudsman, and it would be just as well to call it that. If the person is really an auditor and you are trying to have what is, in fact, an arm's length audit function, then the appropriate reporting relationship for such a person would be to the Auditor General's office and not to the minister. If it is to be more than simply an ombudsman function, it would be appropriate to have that.
The second point has to do with the necessity of the function. Mr. Arthur Kroeger appeared before the committee on June 28, 2006, and stated:
...Certainly, there has been great controversy about procurement in the past few years over the sponsorship affair. In the sponsorship affair, again what happened was that procurement regulations were by-passed. It was not that the regulations and the system were ineffective. The Auditor General has said that Public Works and Government Services had a sophisticated and effective regime for the management of procurement. It is also a very transparent regime. Public Works does not very often get access to information requests because practically everything everyone would want to know is already public. This dates from reforms made approximately 20 years ago. Again, I am a little puzzled as to what the procurement auditor would do. You can always find something for a new official to do, but the question is whether it is important enough to have that function carried out to warrant the creation of another position and perhaps another set of requirements.
My question is: As an experienced public servant, exactly what is it that you have been unable to do up to now? What wrongdoing, what malfeasance, or what improper practices have you been unable to discover and unable to prevent that you will be able to discover and to prevent with the addition of this new layer of bureaucracy entitled "procurement auditor."
Mr. Bennett: My first point on that is that as the Auditor General commented, we have a highly sophisticated system of checks and balances with the transparency that I alluded to earlier.
Senator Cowan: Yes, you have that in place.
Mr. Bennett: Given this proposed investment of $4.5 million to $5 million, do we have accessibility for suppliers to come forward with low-dollar-value transactions, and to give voice to their concerns? In awarding contracts, analyzing bids and overseeing contracts once they are in place, our system of checks and balances is rigorous and will withstand scrutiny. With some of the operational policy issues across the federal procurement system, I believe that the investment of approximately $5 million is well worthwhile.
Senator Joyal: Mr. Bennett, my question is on the interpretation of proposed section 22.1(3)(a), on page 203 of the bill, which follows the line of questioning put forward by Senator Ringuette. I quote:
22.1 (3) The Procurement Auditor shall, in accordance with the regulations,
(a) review the practices of departments for acquiring materiel and services to assess their fairness, openness and transparency and make any appropriate recommendations...
Yesterday, the Auditor General appeared before the committee. Perhaps you read her testimony. In response to a question from Senator Day, she made it clear that the auditing initiative undertaken by the Auditor General is performance, which is not the practice of PWGSC for acquiring materiel. The Auditor General also prepares value-for- money audits and financial audits. I am trying to understand the position of the proposed procurement auditor. Will the position leave the vast areas of performance, value-for-money and financial audits to the Auditor General? Will the position be responsible only for audits on the procurement of materiel and services? Such references would then be removed from the performance audit of the Auditor General. Essentially, the review of the practices is within your guidelines, because a department is not allowed to buy what it wants when it wants. Departments of government have to follow strictly the guidelines of PWGSC, and it is your department that coordinates the overall purchasing activities of the government. Therefore, the new procurement auditor will review PWGSC's practices and guidelines and the way in which they are implemented but only in respect to fairness, openness and transparency. Those terms of reference are pretty narrow.
Mr. Bennett: The role of the Auditor General includes not only the three areas identified but also examination of the contracting aspect, which falls under the value-for-money audit and the program delivery. I made reference to the review of the firearms registry, but there are many others where the Auditor General will look at program delivery and will link within that all of the inputs for successful program delivery, including the contracting function.
With respect to the roles and responsibilities, this goes back to ensuring that they are complementary without being duplicative and redundant. The scope and mandate of the proposed federal procurement auditor, thus defined, fits nicely into the ability to hear and review complaints, operational policies — to which you referred — and systemic issues. With respect to the ambit of the mandate, it is appropriate and complements the other roles and responsibilities.
Senator Joyal: Therefore, PWGSC has the internal audit that would be the responsibility of the deputy minister according to the bill, the external audit committee and the Auditor General's audits, and then it would also have the new procurement audit. That adds up to at least four layers of checks with respect to the procurement of materiel and services for a department.
The Chairman: Mr. Bennett responded to that question from Senator Mitchell before you arrived, senator. Mr. Bennett, do you have an additional comment?
Mr. Bennett: The system has been characterized a couple of times as "layers of bureaucracy," although I do not conceptualize it quite that way. Rather, I see the responsibilities as not one on top of the other, but as one reviewing the work of others while having complementary and interlocking responsibilities and accountabilities. I do not believe that the committee has any sense that these people will look at the work of the others because that is clearly not the intent. The intent is to have someone look at specific mandates and responsibilities, to ensure that they have the expertise and that they are complementary.
Senator Mitchell: If we are not talking about layers, then it is a very fine sliver that we are adding, if I can put it that way. Mr. Bennett, you have been very diligent in your defence of this initiative and in your effort to articulate how the role will be different than any existing role, or how the role will fill a vacuum in the current system. I congratulate you on trying to define that.
However, I feel you are being way too hard on your department, and I believe this department is actually noted for its transparency and the indication of that is the fact that it has very few access-to-information requests. You have said yourself that it is noted for its competence, its effectiveness and efficiency because it has a — to use your word — minuscule number of complaints, compared to the 416,000 contracts that are let.
I believe you have been doing a remarkably good job, and I remain committed to the fact, to the observation, to the conclusion that this is a $4.5-million to $5-million estimate — and it will be higher — commitment by this Conservative government to fix a problem that does not exist to make a political point at great expense to the Canadian public.
Having said that, if this is bigger than the sliver I feel it is — if it is a sliver at all — and it is so obvious that it needs to be fixed now, did your department ever identify this as a problem? Did it ever recommend that it should be fixed in this way, and if not, why not? Did you simply have a to wait for an outside political group with literally no experience in government in running a department and an enterprise of this complexity to get their idea, rather than having that generated organically, to fix a problem that you and your professionals — the people who have clearly been doing a good job — did not identify as needing to be fixed?
Mr. Bennett: That is a difficult question for me to answer perhaps not for the reason you may think. I took on accountabilities as Acting Assistant Deputy Minister for Acquisitions last December. Therefore, in terms of some of the history and the evolution, I cannot speak to what the thinking was before that.
I would offer that, I believe, for the department — and I am very touched by the kind words — to capture these kinds of issues that were surfacing, we had an alternative dispute resolution process, et cetera, and we worked very closely with the CITT in hearing and responding to those complaints. However, we feel there are some operational and systemic issues, which are not the big "P" public policy issues. How does the government function in terms of operational policies? I feel those are areas where we believed we could strengthen an already strong regime.
The Chairman: Thank you, Mr. Bennett.
Honourable senators, on behalf of all of you, I would like to say to Mr. Bennett, Mr. Higdon, Mr. Wild and Ms. Meyboom-Hardy, thank you very much for coming today and answering some difficult questions on a very significant series of clauses on an important Bill C-2.
Honourable senators, you should know that Mr. Wild will be back again with other groups, so there will be another opportunity to ask questions. We are, by agreement running late, and I would like to get to the next panel as soon as possible.
In continuing with our theme of procurement, I am pleased to welcome the Canadian Union of Public Employees, which represent more than half a million members across Canada, represented by Toby Sanger. Joining him is the Canadian Union of Postal Workers, represented by Evert Hoogers.
Also appearing is the Canadian Advanced Technology Alliance, which is committed to growing the global competitiveness of its members — 80 per cent of which are currently active exporters — represented by Joanne Stanley and Alex Beraskow. Welcome to you.
Toby Sanger, Senior Economist, Canadian Union of Public Employees: I would like to thank senators and staff of the committee for inviting us to speak with you today on this very important piece of legislation. Our national president apologizes for not being here, but he is presenting at the House of Commons Finance Committee.
As the chairman said, we represent over half a million members, mainly workers in the health care, education, social services, transportation and municipal sectors. We have very few members at the federal level. We do not have the same type of direct interest in this bill as our membership in sister federal public service unions.
Our interest in this legislation is because we want to have good public policy in legislation. This bill may serve as a model for other pieces of accountability legislation in Canada, and it is very important that it gets done right.
I am an economist and certainly not a lawyer or legislative expert. I am humbled by the number of legal experts around the table here. Bill C-2 is a sweeping and complicated piece of legislation and makes many positive advances in many areas, particularly in terms of the short time with which it took to draft. Amendments by the House of Commons have further improved the bill, but it still needs to be improved further. I would like to commend the senators and staff for the hard work you are putting into this legislation.
My impression was that lack of transparency, control and accountability over contracts was at the crux of recent government spending scandals: the so-called Adscam and the $100 million or so contracting scandal at the Department of National Defence.
From my reading of the bill, it appears to have gaping loopholes that could have the following impacts: potential for further abuse of public money because of lack of transparency and oversight in relation to contracts; a potentially corrosive effect on funding to non-profit organizations and agencies, which will be subject to extensive accountability rules, while for-profit contracts will be excluded from many provisions — we just heard earlier this morning about how the procurement auditor is not really an audit function; and reduced overall accountability for government spending if managers then divert funds toward private contracts and away from funding agreements, they can avoid these accountability provisions.
Stronger rules in Bill C-2 will extend and increase accountability over almost all areas of government spending, except private contracts. In particular, I have outlined four areas. The proposed accountability act has the following loopholes: It does not require enough public disclosure about larger government contracts; it does not address the recommendations of the Information Commissioner regarding disclosure of details of government contracts with third parties, or even meet the principles that have been established in courts over this information; it excludes contracts for goods and services from review by the Auditor General; and it does not allow individual citizens to lodge complaints with the proposed procurement auditor.
I can go through each of these in more detail, if you would like.
The Chairman: Please do.
Mr. Sanger: First, in terms of requiring greater public disclosure about government contracts, we are happy to see that the House of Commons acted on one of our recommendations and included an amendment to require proactive disclosure of all basic details on contracts over $10,000. This has been government policy since March 2004, but it was not enshrined in any legislation or regulations and it could have been reversed at any time.
Interestingly enough, this policy was put in place to reduce the government's costs of complying with access to information requests. To further increase that, we think that the legislation should require more details for contracts in excess of $100,000. The fairly common tombstone information on most contracts could be made public as well.
Second, implement the proposals made by the Information Commissioner to ensure that the details of contracts are not excluded from coverage under the Access to Information Act. Section 20 of the Access to Information Act provides a mandatory exemption for third-party information with conditions that can be applied broadly. The Information Commissioner has recommended that this exemption should not be used to exempt details of contracts from coverage under the act. Current practice and case law has established the principle that there should be no reasonable expectation of confidentiality in relation to a successful bid once a contract has been awarded.
Third, give the Auditor General the power to investigate all companies that receive government funds, whether through a funding arrangement or through a contract. Bill C-2 will extend the powers of the Auditor General to analyze the records of recipients of funds from the federal government, but it specifically excludes funding provided through contracts for goods and services.
This appears to be a major loophole that would prevent the Auditor General from examining the records and accounts of companies that have a contract for goods and services for the government. She would only be able to examine material from the government's side of the fence. This is an issue, especially if records are falsified.
This morning, we heard from Mr. Wild and from the assistant deputy minister that there are good procedures in place. However, before proceeding to a criminal investigation, I feel it is appropriate that the Auditor General have this power — and controls can be put in place on that — to examine the contracts and financial records from the recipient organizations.
My concern, in particular, is that it could have a corrosive effect on public funding to non-profit organizations and agencies. Managers could easily avoid the higher standard of auditing and accountability by being risk averse and contracting to a private company instead. Private companies with contracts could avoid some of the increased paperwork costs of reporting. Together with this, I believe the funding for the Auditor General should be increased to handle these additional capabilities.
Fourth, allow all citizens to lodge complaints with the procurement auditor. The current Bill C-2 would allow only Canadian suppliers as defined in the Agreement on Internal Trade to lodge complaints with the new procurement auditor. The restriction is convoluted. It is hard actually to get the definition of it. It appears to have no rationale in terms of the bill. The bill should allow all Canadians, and not just companies, to lodge complaints. That could be easily achieved with the suggestion we have there.
These are not difficult or complicated changes to make, but they would have far-reaching, positive impacts. They could save money in certain areas. More important, they would make Bill C-2 into comprehensive and fair accountability legislation that Canadians can have faith in and of which we can all be proud.
Evert Hoogers, National Union Representative, Canadian Union of Postal Workers: On behalf of our 54,000 members, I want to thank you for the opportunity to provide this committee with our views on Bill C-2. As well, I bring you the regrets of our national president, Deborah Bourque, who is unable to be here today.
I will focus on contracting out, procurement and access to information provisions. What I will be saying is a much edited version of the paper that has been distributed to you.
As you may know, in the wake of the Auditor General's report in 2002, Deloitte & Touche found that Canada Post failed to comply with its procurement and contracting policies in 355 cases of the 599 cases that were reviewed. In April 2005, our national president wrote to Gordon Feeney, the chairman of the board of directors of Canada Post, to ask what the board intended to do about this. He wrote back to say that "In light of the findings, the Canada Post board of directors had mandated management to review current policies," and he said that he was "comfortable with the actions that had been put in place."
We are not quite as comfortable as Mr. Feeney with the actions because we have no idea what those actions are. Mr. Feeney did not provide any details. To this day, we have no way of knowing what exactly Canada Post has done to address its contracting out and procurement problems.
Mr. Feeney did not tell us when we asked, and of course we were unable to get this information through access to information because Canada Post up until now has been exempt. What we do know is that Canada Post has a predisposition to contracting out based on its assumption that contracting out provides better, cheaper service. We know from our extensive knowledge of the post office and various pilot projects that have been independently evaluated that that is not always the case.
We would, therefore, like the committee to draft language that ensures that Crown corporations that want to contract out work are required to do a standard assessment that compares not only the financials benefits but also the social, economic and environmental benefits of contracting out versus keeping the work in-house.
In addition, we would like the committee to draft language that ensures that Crown corporations are required to do a similar assessment when work is contracted out.
In this case, the assessment would compare the financial, social, economic and environmental benefits of one contractor versus another. We believe this process would guard against the use of contracts for political purposes.
We also believe that Crown corporations should be required to consider all those factors because they are public corporations, not private corporations with strictly commercial objectives.
I would also like to raise concerns about some of the access to information provisions of Bill C-2 that affect Canada post. The Canadian Union of Postal Workers, CUPW, is keenly interested in ensuring that new access to information provisions improve transparency at Canada Post for contracting out and procurement in particular and public postal service in general.
To begin, I would like to mention that we are happy that Canada Post will be covered under the Access to Information Act. However, the union does have serious concerns about clause 147 under Part 3. This clause adds new subsections 18.1(1) and 18.1(2).
We think that the exemptions in proposed subsection 18.1(1) are too extensive. In addition to normal economic interest exemptions such as trade secrets or financial, commercial, scientific or technical information, the government has added a new exemption for information that has "consistently been treated as confidential." This could cover a great deal of information at Crown corporations such as Canada Post. Canada Post has not been required to give public access to its information, and it would therefore be very easy for Canada Post to say that a great deal of information has "consistently been treated as confidential."
Basic information that Canada Post is currently treating as confidential includes the review of its national network. It has announced plans to close a mail processing plant in Quebec City and it has closed about 50 rural post offices since 2001, in spite of a moratorium on post office closures in rural areas and small towns.
Canada Post is a public corporation and the public has a right to know what the corporation is doing in this area. Unfortunately, Canada Post has refused to release its overall plan for the network. To date, there has been no way of obtaining this information through access to information. If information has been consistently treated as confidential, and this is included in proposed section 18.1(1), it will be difficult for us to obtain that kind of basic information even if Canada Post does fall under the Access to Information Act.
We also have concerns with proposed section 18.1(2), which outlines the exceptions to the new exemptions. To us, this is a strange provision. Why do we need an exception for a record that deals with general administration? Why do we need a special exception for a record that deals with any activity of Canada Post that is fully funded out of monies appropriated by Parliament? I am sure we get most of this information already. It sounds as if everything except these two types of records could be treated as information that has "consistently been treated as confidential."
We would like this committee to amend Bill C-2 to make it clear that Canada Post must provide all information except for specific exemptions for information that is commercially sensitive. We agree there is a need to improve transparency at Canada Post, but we also think that our public post office must be protected from the predatory requests of competitors who have no legitimate claim to information, such as Canada Post's plans to compete with courier companies. These companies want more of Canada Post's business but none of its universal service obligations. The union is, therefore, recommending that proposed subsection 18.1(2) be eliminated and that proposed subsection 18.1(1) be amended to read as follows:
The head of a government institution must provide all information that is requested under this Act, but may refuse to disclose a record requested under this Act that contains trade secrets or financial, commercial, scientific or technical information that belongs to...
Then paragraphs (a) through (d) follow.
To ensure that the corporation does not abuse this provision, we would suggest that the terms "trade secrets, financial, commercial, scientific or technical information" be defined in the most restrictive way possible. I note that there was a typo in the document that was handed out there.
We would like this information to be subject to an independent review by the Information Commissioner.
If for some reason this committee does not agree with our recommendation, we would urge the committee at the very least to remove the exception for information that has "consistently been treated as confidential."
We would also urge the committee to reject any proposals that Canada Post might make that would further restrict access to information, such as the proposal the corporation made to the legislative committee on Bill C-2 regarding its security and investigative services. Canada Post asked this committee to allow its security and investigation services to be an "investigative body specified in the regulations" under section 16(1) of the Access to Information Act. We do not think that exempting Canada Post's investigative body is in anyone's best interest.
We are also concerned by the Information Commissioner's comment that the proposed act makes access to information worse. We are concerned that the government has created a slower, separate process for dealing with many access reforms by sending the discussion paper Strengthening the Access to Information Act to another committee. Anyone who has had any experience with the Access to Information Act recognizes that it is in urgent need of improvement.
I will be more than happy to answer questions.
Joanne Stanley, Vice-President, Canadian Advanced Technology Alliance: Ours will be a combined presentation. Thank you very much for having us here today. It is an honour and a pleasure to be representing the Canadian Advanced Technology Alliance.
As vice-president, I want to take a minute to describe our association, our members and our mission. Then I will turn it over to Mr. Alex Beraskow. He is president and CEO of IT/NET and a board member of the Canadian Advanced Technology Alliance, and he been an active advisor on CATA's campaign around the procurement issue.
CATA is Canada's leading and largest trade association representing the technology alliance. We have close to 500 corporate members — that is, technology companies — and several thousand individuals; 80 per cent of our corporate members are active exporters.
The common purpose that unites the membership in CATA is commitment to our members' business growth. We are all about helping tech companies grow and become global competitors. We are focused on the provision of business services and government relations for our members. We also provide research and a conduit for our members into the federal government.
Our mission is to stimulate global business growth, and that happens through Canadian innovation and strategic partnerships. We have a significant governing council of individuals with very diverse backgrounds and rich expertise in the technology sector. It is one of the strongest and most powerful peer networks in Canada. Members include Terry Matthews, Frank Stronach and Alex Beraskow as part of our governing council.
Directors on our council act as champions for campaigns that CATA undertakes, such as supply chain management, procurement, outsourcing, talent and education, scientific research and experimental development tax credits, and international market development.
We represent the broadest cross-section of technology companies, manufacturers, software and application developers, service providers and large, medium and small companies who rely on technology to succeed. As an umbrella organization, we have a number of divisions within CATA that represent niche technology groups. I will name a few of those: the Canadian Association of Internet Providers, the CATA WIT (Women in Technology) Forum, the Innovation Management Association of Canada, and Commonwealth Advantage. We also have a Chinese association, a group that reaches into China. We have a strong presence in Quebec representing the French technology association.
With that as an overview, I will turn the presentation over to Mr. Beraskow, who will talk more specifically about our views on the issues of accountability and procurement.
Alex Beraskow, Member of the Board of Directors, Canadian Advanced Technology Alliance: Thank you very much. We certainly applaud the Government of Canada's interest in procurement because that is, in our view, an essential part of accountability.
From the perspective of our association, our members and our industry, accountability has both a narrow definition and a broad definition. We are certainly very interested that you have taken a broad definition in drafting the bill and reviewing it. We think that is most appropriate.
It is important to note at the outset that CATA represents a sunrise industry, but in the past we have seen some clouds. That is particularly troubling to me, both as a member and as the leader of a very successful consulting firm.
We strongly believe that Government of Canada procurement should be rooted in a government-wide industrial strategy that can harness the notion of a value chain to derive the maximum benefits of taxpayers' money. More specifically, Government of Canada procurement should not have a Wal-Mart approach. The Government of Canada should not be the Wal-Mart of the public sector.
To speak to the issue of global value chain, CATA has been soliciting input from its members for over two years, mobilizing around key issues. We recognize that in order for Canada to be successful and to prosper as a nation, it must be based around a knowledge-based sector. That is a large part of what we represent.
A large part of our position is that the federal government should in fact use public sector procurement in a strategic way to create favourable conditions for the growth of the Canadian economy. We believe strongly that the $18.5 billion that federal procurement spends on services and goods should be used strategically to advance Canadian-based firms. Taxpayers do have a vested interest in ensuring that the government acts as a good citizen and uses its enormous buying power for more than just getting the lowest costs all the way through.
We have several comments. First, we would appreciate getting clarification on the notion of influence. Specifically, if a president of a company calls an assistant deputy minister or a deputy minister to discuss an innovative idea or approach that may be proprietary in nature, how will that be handled? While I am not a lawyer, I cannot get a clear understanding of how that would be treated.
We would also recommend that prior to implementing the proposed act, there should be a standard approach to change management, including communications and training. Some of us in industry are used to developing and playing with technology and are not trained lawyers like some fine members of the Senate here, so we do not have that expertise of going through the law.
We do applaud the role of a procurement auditor. CATA had called for that role about six months ago, and we think it is a step very much in the right direction. We have some strong opinions on the procurement process. Right now, it is way too complex, and the transparency and accountability should be improved.
There should be the notion of creating a supply chain to get the maximum effect for every dollar that is spent. The $18.5 billion could generate a lot more economic effect. For example, when the Government of Canada buys a particular service or good, it insists on trying to keep the intellectual property rights. There are some 30,000 people developing information technology solutions, but I am not aware of a single copyright or product that the Government of Canada has developed of the $2 billion expenditure.
In one case, for example, the Department of Justice would not give us the intellectual property rights for the software we had half developed. My contention at that time was that you should be in the business of lawyering, and I should be in the business of software development. When I do lawyering, I do it poorly. The converse should hold true.
The Chairman: Why would they not give you the intellectual property rights?
Mr. Beraskow: Just because. That is an example.
There is a whole notion within the IT professional services industry right now. There is, I believe, a tremendous lack of accountability. There are approximately 30,000 civil servants developing and looking after systems. With respect to the level of accountability, we do not hear where projects are, how they are doing and whether they are on track or not. In effect, the Government of Canada is buying inputs rather than outputs, and that is a very grave concern to us in the industry.
I would love to be able to do this as a demonstration: A 25-pound bag of flour costs $7.50 when it is on sale at Loblaws. A pie probably costs $15, depending on whether you get it at a patisserie, a boulangerie or what have you. The Government of Canada insists on buying the bag of flour because it is cheaper. Our contention is that they would derive better value in their procurement process if they were focused on buying outputs rather than inputs, buying results rather than time and attendance, which it is doing. In the procurement process, the government should be a buyer and not a builder.
Comments on the procurement process from other people involve simplifying the process. Right now you need to be a Philadelphia lawyer to respond to some of the procurement processes. In relation to the costs of procurement, I could probably regale you with stories for hours on how processes have gone astray.
A third thing we do is to encourage true competition in the procurement process. By that, we mean a few specific things. One is to have full information disclosure. Right now any level of information disclosure about any procurement process is variable at best. Disclosure depends on the procurement officer, what they want to say, who the incumbents are and so on. Again, for an expenditure of $1 billion to $2 billion, a process that depends on how somebody has done it in the past is not good for the industry.
There is also some confusion — and this confusion relates to both sides of the definition of influence, narrow as well as broad — about whether anything forces senior officials to take a meeting. If I, as president of ITNet, call an ADM, does that person have to take a meeting or can that person say, "I'm sorry, I'm busy," or "I'm sorry, we do not talk to industry"? We certainly see that. There is an inconsistent view of that entire marketing approach. Some senior officials say they will not talk to us.
Again, people more cynical or critical than I suspect that maybe others are providing information; is that approach consistently applied? From a government procurement process, there should be a consistent guideline. I appreciate that an ADM might not want to talk to every single company in the entire world, but there are other ways of communicating information.
On the issue of accountability, we applaud the notion of publishing contracts on the Web in one place. This technology is such a simple one to put in place. We already have the government electronic tendering service, known as MERX, which publishes all contracts for tender. I do not think we need further committees to examine that. The industry is tough enough and efficient enough that if anything is going on we would then be able to enforce an act on that. The idea of publishing every single contract, regardless of value, on the Web, is not a difficult thing.
The public accounts right now give me grief, and I appreciate that they are being tabled today. The reason they give me grief is that in a professional services sphere there is approximately, in my information technology professional services, $800 million that is accounted for, where we know which firms received those contracts. For another $800 million to $1 billion approximately, we do not know which firms received those contracts because they fly under the radar of $100,000. Those are the numbers. In effect, because of the transaction level, we may not know in the majority of contracts where the public money goes. Again, publishing every single contract on the Web is not a difficult thing to implement.
I also note that one large agency, the RCMP, does not account for what companies receives its contracts at all. Again, that information should be clearly visible. My belief is that the expenditure is $30 million to $50 million, but I do not know. Again, information about the firms receiving the contracts should be published.
We applaud the notion of a procurement auditor. We also talked about the notion of implementing a fairness procurement panel made up of one representative from industry, one from Government of Canada, and one from a client to basically write a management letter.
These are some of the process issues that we can talk through. We welcome the opportunity to talk about the industrial benefits of a value chain and the multiplier effect, so that for every dollar the Government of Canada spends it receives $2 to $3 back in terms of value.
When I go back to this notion of 30,000 civil servants looking after information systems, can you imagine if we had, say, 100 firms of 1,000 people each, or 100 firms of even 100 people each, how much intellectual property we could develop. Can you imagine how we could prosper, how many companies like Cognos, Systemhouse, FreeBalance and other Common Gateway Interface, (CGI), companies we could have to create economic wealth?
The Chairman: Thank you very much. Those three excellent presentations dealt with issues of procurement, access to information, lobbying, and administrative transparency, so there is lots of food for thought for honourable senators.
Senator Cowan: My first question is to Mr. Sanger. On this issue of extension of the Auditor General's powers to contracts, we asked the Auditor General whether her mandate ought to be extended and her answer, quite properly, was that her mandate is set by Parliament and she does what Parliament tells her to do. Can you tell us why you think her purview ought to extend to following the dollar to contracts?
Mr. Sanger: Bill C-2, as it is written now, proposes to extend her mandate broadly to funding agreements.
Senator Cowan: Not to contracts though.
Mr. Sanger: Right, not to contracts. I believe, on the basis of equity, and also in terms of accountability, the Auditor General's powers should be extended to contracts. Presumably, if a public service manager is faced with providing a funding agreement to a recipient or a contract to a private firm, which is not subject to the same level of auditing or accountability, a risk-adverse manager might divert those funds to a contract.
Senator Cowan: Can you see any public policy reason why there should be a distinction?
Mr. Sanger: Absolutely none. In fact there is a strong public policy reason for treating those two areas the same way, especially since this morning we heard from Mr. Wild and Mr. Bennett that the procurement auditor is not really an auditor. The procurement auditor is an ombudsperson. Perhaps the procurement auditor has a role, but with the increased accountability proposed in this bill the door closes when you have a contract and I believe that is unfair.
I completely agree with the points that our friends made here as well. I thought I was being cautious on the other issue in terms of saying that more detail should be published on contracts of over $100,000. All contracts should be published. I would agree with that.
Senator Cowan: Do you agree with me that there seems to be no good public policy reason to restrict the ability to complain for people who are defined as Canadian suppliers, and that any citizen who feels they have been aggrieved in some way with respect to the procurement process ought to have the ability to lodge a complaint with the ombudsperson/auditor?
Mr. Sanger: Completely: I do not see why complaints are restricted to the definition in the agreement on internal trade. I do not think that you will have a lot of spurious complaints, and those complaints can be dealt with.
Senator Cowan: Mr. Hoogers, you talked about the Canada Post failure to comply with these procurement and contracting policies. Do we really need more policies and more rules or do we need better compliance with existing rules. As I take to be what Justice Gomery said, it is not the absence of rules but the failure to comply with the rules that got us into difficulty. Is that your point with respect to Canada Post as well?
Mr. Hoogers: Certainly it is. Also, the matter arises as to what other way there is to ensure compliance unless there is a standard assessment process in place.
Senator Cowan: The second question had to do with the exclusion of matters that have traditionally or consistently been treated as confidential, and I accept your point that it would vary from organization to organization and might extend further. Do you have anything further to add?
Mr. Hoogers: I think what I said is fairly self-explanatory. It is far too broad. It means that Canada Post can say traditional non-coverage, by the Access to Information Act, has allowed it to maintain secrecy or lack of transparency around a whole variety of issues that will apply as a result of this phrase being included in the proposed legislation.
Senator Cowan: The third point, and the last point for you, sir, has to do with this issue of the Canada Post security and investigative service. I had not heard of that before and you have given us some information. Do you have anything to add to your written submission?
Mr. Hoogers: Our experience with Canada Post security and investigation has been very troubled over many years. It has included recognition, after considerable investigation that the security and investigation services has on many occasions, been extremely intrusive, especially into labour relations and into the surveillance of union activists. As I mentioned in the written presentation, this is backed up in a book by Andrew Mitrovica entitled Covert Entry in which he describes in detail what the investigation service at Canada Post has done in the past, and has done so with impunity.
Senator Cowan: You said that your organization had called for the appointment or the creation of the office of a procurement auditor. We have heard today, and it is pretty clear, that this is an ombudsperson rather than an auditor. What kind of a person, what kind of an entity did you envisage, or did you recommend?
If I could just ask when you are addressing it, just to save time, what reporting mechanism do you see? This person reports to the minister. I put to one of the earlier witnesses that perhaps if the person is really an auditor, and if that person is to be truly independent, then maybe the reporting mechanism ought to be the Auditor General rather than to the political minister. Could you comment on those two points?
Mr. Beraskow: We think it is very important, first of all, to recognize that we are living in a Web age. If the CBC feels that it is the fifth estate, you could make a compelling argument that the web is the sixth estate in being able to disseminate information. The role of the procurement auditor could be anything from one bookend to the other. It could be a mail drop, in the sense of being able to aggregate any issues. Our contention is that, essentially with the web, if every single contract is published, there will be total accountability and transparency and then there will be a point to reference. My concern is always that the audit process is a very extensive process with reporting; we do not want to slow down the process.
Senator Cowan: You are talking about the procurement process.
Mr. Beraskow: Yes, and right now every single aspect of program delivery to Canadians has elements of information technology embedded in it. You cannot do anything these days — build a road, build a building, — without having some aspect of information technology. You cannot transmit TV or security; there is always some aspect of information technology. It is very important not to slow down the process. It is very important not to put in speed bumps, barriers or extra controls, because realistically, there will be always people, I am told, who will skirt, who will go faster than the speed, whether it be four o'clock in the morning or otherwise. It is very important to leave the audit trail, the fingerprint so to speak, so in time they can be caught and prosecuted. That is the whole notion.
In audit circles we talk of the difference between detective and preventive controls. Preventive control is stopping someone from doing it; detective control is leaving fingerprints so later you can catch the person and do what is necessary. The procurement auditor has a role, whether it is ombudsman, to gather the information at minimum, or perhaps make recommendations, as well to Parliament or to the deputy minister.
Senator Ringuette: I remember quite a few years ago that the Auditor General reported — an issue of interest to your industry — that the different departments were scattered all over the place, in regards to procuring IT expertise, programming of programs, client services and so forth. The Auditor General audited the IT procurement aspect across the government at that time, and made specific recommendations. The AG recommended one IT supervisory role across government so there would be added value for money for the services that were purchased and some kind of standardized IT function across government.
Mr. Beraskow: It is a very tricky problem, senator, because we want to be innovative, we want to be creative. That also implies that we do not want to wait for two years, because our collective ADD kicks in and we just cannot wait. We are dealing with a technology life cycle of probably three years. To wait for anything like that to get on to the audit plan could take one to three years and the audit process, up to three years. By that time, we have gone through a technological cycle and the world changes significantly in that time.
Senator Andreychuk: Mr. Sanger, I understand that you are in support of the accountability bill, but you think it should go further, most notably the contract provisions should have been included. Is that a fair assessment of your position?
Mr. Sanger: I have to admit that I have not read the whole bill. I cannot say that I am in support of the bill as it is; there are some gaping holes in it. I believe that it makes advances in some areas, but it is a very sweeping piece of legislation. I commend the legislative drafters who did it in a short time, but they had a very short time to prepare a large and very sweeping piece of legislation. I believe that it has some very serious gaps.
Senator Andreychuk: You mentioned the serious gap with contracts. What else are you pointing to in the bill? Excluding contracts was a difficulty. What other one would you pick out as a single difficulty for you?
Mr. Sanger: I have to admit, I am certainly no expert in terms of the bill. My opinions on other parts of the bill would be amateur-ish, at most. I have covered four different parts where I think there should be amendments made. I agree that the government should go further, as our friends here have suggested, and publish all contracts. It is easy to do.
Senator Andreychuk: Do I understand that you like the direction of accountability and so on, but you may have some problems with specific sections and feel that those sections warrant looking into or more monitoring as we continue to develop new systems?
Mr. Sanger: What happens here is interesting. A panel of people here represent unions and business, and we are all in support of greater accountability and transparency in this bill, but we see serious flaws in it. We may disagree on whether the private sector or the public sector performs certain functions more efficiently, but we want greater transparency and greater accountability. From my point of view, this bill does not achieve that in these areas.
Senator Andreychuk: You are looking at it as it stands alone, and we will have to address how it works in the context of other issues.
Mr. Hoogers, you paint a dismal picture of Canada Post. Do you believe that this accountability bill is where we address those issues, or is this just one piece of ongoing difficulties that need to be addressed in Canada Post? Can I summarize it that way? Am I fair in my assessment?
Mr. Hoogers: I would not characterize my view of Canada Post as dismal. I do not think that Canada Post is fundamentally broken or fundamentally flawed. It provides an important service to the public of Canada, and it has done so with increasing efficiency in many ways. This is not to say that there are not difficulties, which I have outlined. I definitely do not want what I am saying to be characterized as some kind of attack on the public service mandate of Canada Post. It is not. I believe that mandate is extremely important.
My view is that the leadership of Canada Post tends far too often to look at only its commercial mandate. I want to see the leadership look at things much more broadly. Canada Post is a Crown corporation that has a public policy mandate, and often it is called upon to serve the public interest and not just to maximize profits.
As far as the problems that we mentioned with respect to procurement and contracts, part of the problem is that, over the last number of years, we have seen a culture that in my view is a private sector culture with respect to massive salaries for the CEO and huge things given over the course of time, as we all saw in the Auditor General's report of 2003. That is something we could deal with. I am not saying in any way that Canada Post is a broken institution.
Senator Andreychuk: I am curious about one of your proposed amendments regarding competition. You say competition should be more narrowly defined, and you have put in things such as trade secrets, et cetera. Do you think competition goes beyond the issues you have identified? You can gain a lot from a business by looking at its management style and some of its operations. You can gain a competitive edge by looking beyond the actual trade secrets and the other items identified.
Mr. Hoogers: I think the proposed language that I put forward earlier is adequate and protects Canada Post from predatory corporations that seek a business edge without adopting any of the universal service obligations that Canada Post has. My biggest concern is the clause that has been added with respect to the phrase I referred to earlier, "consistently been treated as confidential," is truly problematic, because virtually everything has been viewed as confidential in Canada Post Corporation. Will this be something that is trotted out each time there is a request for access to information?
Senator Andreychuk: I was trying to get at that. It may be a flaw of the leadership now to take everything under that umbrella. Whether that is correct or not, I do not know, and I am not in a position to say. However, you are taking the counter-argument of narrowing the definitions of competition too narrowly. In other words, you would not be able to protect anything if it is so narrowly defined that it must be a trade secret. I am saying it is a fluid operation, and you can gain a lot from your competitors by watching them rather than getting their actual trade secrets.
Mr. Hoogers: We may need to agree to disagree on this point, because I think it is equally important to protect the public interest of Canada Post. The public interest of Canada Post cannot be protected without transparency and without Canada Post becoming a more transparent organization with respect to its public service mandate.
Senator Andreychuk: We agree on that point.
Mr. Beraskow, you raised many interesting points that seem to go to information technology and looking at government differently. Many issues that you touched on are beyond the scope and intent of Bill C-2. Are there other initiatives to discuss information technology with the government in which you could get your points across?
Mr. Beraskow: I am not aware of any. My contention, stepping back a second, is that information technology touches every single business process. It is difficult to say where accountability really stops. For example, on all that administrative oversight and accountability, I would like to encourage the committee to look further and be more innovative rather than using processes and structures that were there perhaps 10 and 20 years ago. To me, that is essentially pouring new concrete into old moulds. It is just the same old, same old.
The direct answer is, I am not aware of any. We live in a fast-paced industry, and that pace is increasing. We have to react. We do not want to be slowed down. We cannot be slowed down. It is important from the procurement standpoint, senator, to maximize the benefit of that procurement and ensure that people are accountable to the government in the use of it and in supporting good Canadian companies. We should build new Canadian firms rather than rely on Wal-Mart for the lowest and cheapest price.
Senator Mitchell: I think it is safe to say that you both make the strong point that accountability needs to be enhanced. I think that where you disagree with Senator Andreychuk, who is from the government side, is that you do not think, and we do not think, that this bill has anything to do with enhancing accountability, particularly with respect to opening up contracts.
I was interested when you said that contracts should be open to private sector contracts, and my heart fell because I knew that the answer always is that it will ruin competitiveness. My hopes got up again when the Canadian Advanced Technology Alliance said, "We are not afraid of it." It is a remarkable, historical moment where two competing views come together like this. I am wondering whether CATA could comment on the fact that they do not have a problem with private sector contracts being opened. Perhaps you could address Senator Andreychuk's concern more directly.
Mr. Beraskow: We are happy to have as much competition as possible. It drives innovation. It drives the whole notion of the value chain. That is how we do it, without referring to Darwin or anybody else. It is part of our industry. We live in it, and we thrive on it. Not only do we want as much competition as possible, we insist on having as much competition as possible.
What we truly want is a level playing field and I am not certain that the procurement process, with all its intricacies, is accountable and striving for results. How do you measure flour? Do you buy it by weight? Many of the outcomes are missing in the entire discussion.
Senator Mitchell: It might be that the $4 million to $5 million to be used for the procurement auditor could be used to create industrial teams, as you suggest, to approach global value chain opportunities with a Canadian solution. That money would be more productively used because the auditor will not enhance accountability, not to put words in your mouth.
Mr. Beraskow: I want to emphasize the important issue. Is it better to drive innovation with 30,000 civil servants or with an economic powerhouse of 1,000 firms of 100 people per firm? That question speaks to the competitive nature, on which we all thrive, whether on a golf course, cooking dinner or whatever it might be.
Senator Mitchell: I spent many years in opposition in the Alberta legislature. I was always concerned that government did not structure its tendering process in a way that could truly help to develop small business, which could be a more important engine of the Alberta economy. Yet, we were told earlier that about 95 per cent of the contracts let by government nationally are under $25,000. Is the size of these contracts a problem or is it simply that there is not any emphasis or enough emphasis on this idea of Canadian content?
Mr. Beraskow: There are three issues. First, I will not use the line "size matters," but the cost of the transaction is sinking the industry due to the complexity rather than the quickness of doing the small transactions.
Second, it is exceedingly important in procurement and for the accountability of deputy ministers that their money focus on the results and not on the purchase of the individual parts of the result. If we were to focus only on low-cost compliancy in the procurement process, we would eat hotdogs and beans three times a day. In effect, there must be something to drive that value part.
Third, and equally important, we have an Office of Small and Medium Enterprises and yet we do not have an office that promotes Canadian industry.
Senator Mitchell: The obvious reaction of a Conservative government to what you propose is that it would involve too much "intervention" and might require government to pick winners and losers, and that kind of rhetoric. However, you are not arguing that they would come in and actually do that. Rather, you are arguing that you could put in processes, such as these industrial teams, to approach global value change or require bidders on government contracts simply to show how their bids help Canadian companies. You are not arguing for direct intervention.
Mr. Beraskow: There are various ways of doing it. At minimum, I want to have a possible proposal to take to a senior government official to develop a solution. The idea is to focus on the results and drive the innovation. We should be able to turn it around and let a senior official decide what the value of that Canadian content is. What can we provide so that someone can make that decision?
Senator Mitchell: It is not simply the cost but cost tempered by value.
Mr. Beraskow: That is correct. Focus on the outcomes, not on the inputs.
Senator Zimmer: I always think about the lowest bidder, as Senator Mitchell mentioned, when I fly on an airplane. Who built the airplane?
Do you find that if a person with the lowest bid is awarded the contract, there is too much focus on price and bids, which require compliance with the regulations. Then, after the lowest bidders receive the contracts they do not comply with the regulations, and they get away with it because nobody follows up on compliance?
Mr. Beraskow: My experience from being in the industry a few years is that there are probably parts before, during and after in the entire procurement process. We have an industry that might have 400 or 1,000 firms. Does everyone in the industry play by the rules? Of course they do not. Gamesmanship goes on. Effectively, a toxic cycle is created whereby PWGSC tries to create more and more rules to control the process, to wind it down and notch it up, and industry response.
Some of it is misdirected. For example, would someone with 15 years of experience be more valuable than someone with five years of experience? That is difficult because there are other factors to consider, such as where and how. PWGSC takes on the role of driving everything by specifications, thereby driving up our cost of business. That increase has ramifications throughout the entire cycle of before, during and after. You can focus on the outputs and let industry earn a decent margin without trying to drive it down further. We have a market economy. Why does the government insist on driving costs down further and risking quality, which will be affected? Something must be cut out, and we cannot reinvest in our industry. There are many other serious effects that occur throughout the procurement process, and no one is held accountable.
Senator Joyal: My first question is for Mr. Hoogers. We heard from the CEO of Canada Post earlier this week. Were you able to read her testimony on the point that you raise in respect to the interpretation of proposed section 18.1 of the Privacy Act, which gives Canada Post the capacity to refuse to disclose a record that "has consistently been treated as confidential"? Are you familiar with that testimony?
Mr. Hoogers: I have been informed of it but I have not read it.
Senator Joyal: I am concerned by the impact of the phrase, "consistently been treated as confidential." It is a kind of tautology. Until now, Canada Post has never disclosed anything except its annual report. The words "consistently been treated as confidential" allow the status to continue.
Mr. Hoogers: That is precisely my point, senator.
Senator Joyal: I listened to your comments and to the comments of the CEO of Canada Post. Essentially, we want to protect the competitive position of Canada Post, which is equally in the interests of the union, the administrators and the managers of Canada Post.
In respect of the information they could refuse to disclose, I go to your brief at the top of page 3 where you speak to proposed section 18.1. I would remove the last part "and has been consistently treated as confidential by" and replace it with "and the disclosure of which can reasonably have adverse effect on its competitive position."
What would we achieve by this? First, instead of referring to the administrative practice, we would put as the criteria the maintenance of the competitive position of Canada Post, Export Development Canada, VIA Rail and so forth, because we know they face competition from other companies in the private sector.
With such a criterion, we leave the administrators the task of administering and evaluating the effect on the competitive position of Canada Post. That is what we want to achieve, as you said in answer to Senator Andreychuk's question. On the other hand, we create more openness because certainly information that has been treated as confidential can be released without affecting the competitive position of Canada Post, which is really the criterion.
Would you settle for a criterion that would more or less express that point?
Mr. Hoogers: I do not think I can speak on behalf of the union on such short notice. Certainly, the wording is better than that ambiguous clause that is currently in bill, but I leave it up to the senators to decide how they want to deal with that problem.
Senator Joyal: We do not want to hurt Canada Post. There is a consensus around the table on that. I do not want to speak for the government but, definitely in this initiative, we do not want to hurt Canada Post because we know it faces fierce competition in many areas of its activities, sometimes by companies south of the border. I do not need to name them. On the other hand, we want to achieve openness, which is fair, and which you subscribe to in principle. We need to establish some kind of a criterion whereby we protect Canada Post.
My second question relates to the interpretation, on the bottom of page 4 of your brief, where you refer to 18.1(2). On the top of page 4, you quote that section of the bill where it says that Canada Post should not refuse to disclose information that relates to:
(b) any activity of the Canada Post Corporation that is fully funded out of moneys appropriated by Parliament.
Can you give me initiatives that have been taken by Canada Post that are totally funded by the Canadian Parliament?
Mr. Hoogers: The only thing I can think of is franking privileges for mail to the blind and for parliamentary mail that goes out to the populace at large from MPs and senators. I am not aware of what other initiative may be there.
My concern with the way it is phrased. Because it follows on from subsection 18.1(1), it seems to be the exception to the phrase that we take exception to, "consistently been treated as confidential." We know that the information included in this subsection is probably available to us anyhow. That is our concern.
Senator Joyal: Your position is that it is redundant?
Mr. Hoogers: It is redundant and seems to provide some kind of guidance as to how to interpret the previous subsection, and that is a big concern.
Senator Joyal: Can you review my proposal and come back to us in writing if this proposal is acceptable generally to your union? I know you cannot react definitely to us, but I think it would be fair to give you an opportunity to go on.
My final question is to Mr. Beraskow. I listened to you carefully and, at the same time, I was reading the proposed section 22.1 of the amendments to the Department of Public Works and Government Services Act, at page 203. Section 22.1 defines the mandates and terms of reference of the procurement auditor.
You stated in your presentation that you want an expanded role for the procurement auditor. If you read what is in the bill versus what you request from us, I want your reaction and comment to a proposed amendment to subparagraph (3) of section 22.1, which currently reads:
The Procurement Auditor shall, in accordance with the regulations,
(a) review the practices of departments for acquiring materiel and services to assess their fairness, openness and transparency and make any appropriate recommendations to the relevant departments for the improvement of those practices;
There, I would add the following:
and their benefits for the Canadian economy.
Mr. Hoogers: Wonderful.
Senator Joyal: I tried to phrase in three words what you are trying to express in many words. The addition to the amendment relates not only to the practice of acquiring, but also to the impact of those acquisitions on the Canadian economy.
Mr. Beraskow: It is not just the process, but some of the outcomes as well.
Senator Joyal: Absolutely: You are concerned about the outcome. When you were speaking, I asked myself, is the Auditor General of Canada responsible for outcomes? Value for money is not exactly the same thing. Value for money is receiving enough value for what we pay. You were more concerned about the general capacity of government procurement to stimulate creativity and to add to the overall benefit of our society or country as a whole.
Mr. Beraskow: That is correct, absolutely. We would certainly champion that.
Senator Joyal: That addition seems to take into account what you request from us this morning.
Mr. Beraskow: Wonderful, thank you.
Senator Stratton: I am sympathetic to your concerns with respect to procurement, having been in a consulting business for years with the Canadian government. It was a frustrating process, but it evolved. It improved under the Mulroney government, where patronage was completely removed and we went to a competitive process that is in place today.
I have a concern for what you are trying to achieve but what do Senator Joyal's comments mean, "benefits to the Canadian economy"? It is a kind of generic statement.
When you say "benefits to the Canadian economy," would you want to make sure that all of a sudden we do not have flags raised under the NAFTA agreements with respect to that wording, because that would open that door to be more specific and narrow the bidding process? Would you not rather go through a process with the procurement officer? Here, to me, is the key in this instance: working with that individual to ensure that what you want to achieve can be done.
In the act, I do not see how you can properly define what you need to achieve. Rather, it is a process and not a black-and-white issue.
Mr. Beraskow: The tough part is that on some of the procurement to be held accountable, the transactions happen so fast and furious that we do not have time. My firm on a given day has anywhere from 30 to 50 proposals that we are trying to get out the door. That is only us. Therefore we do not have time, nor would the procurement person on the other end.
I support what Senator Joyal said, because it is important from a public policy perspective to lay down the criteria of what is important to us all as Canadians and to what we should be held accountable for. Specifically, it is difficult sometimes to be specific on how to measure things. On the notion of what love is, I would say that everyone for the last 10,000 years has been trying to describe it. We do not know: we cannot specify it, but we have a good sense of what it is.
My point is that we have a good sense of what economic benefits are, but they be difficult to describe because we would end up with another 200-page document and lawyers would be involved in arguing about the words. A good general policy statement that says "economic benefits to the Canadian economy" would be good direction to give.
Senator Stratton: My concern, while it sounds delightful, is whether that approach will have any real impact.
Mr. Beraskow: We will be back in a year if it does not.
Senator Stratton: We will see.
My next question is addressed to all of you because it concerns the access to information, which is what we have talked about throughout this process. I quote the Toronto Sun today, which states:
Canada's auditor general came to the defence of the Stephen Harper government's centrepiece accountability bill yesterday as it undergoes the slow scrutiny of a Liberal-dominated Senate.
As an aside, I will end with the statement that the total number of meetings we have had to date is 22. This number is as of Tuesday. The total number of witnesses to date is 108. The total length of meetings to date amounted to 71 hours and 39 minutes, excluding suspensions.
That is for the record. I am sure that our chair will update us on Monday as to where we will be next week.
Anyway, to continue:
Sheila Fraser countered the criticism of information commissioner John Reid that the proposed Federal Accountability Act is regressive by blocking public access to draft internal audit reports and audit working papers.
This is a quote from Ms. Fraser.
"With respect, his position reflects a fundamental lack of understanding of the audit function," Fraser told the Senate committee on legal and constitutional affairs.
Reid contends that documents obtained by reporters that uncovered initial aspects of the sponsorship scandal under the previous Liberal government would never have become public if the Conservatives' proposed act had already been in place.
But Fraser disputed Reid's claim and said the initial media report that set in motion a series of audits into the sponsorship program would still have been written.
Existing access to information laws have already resulted —
And this is the important part of this whole thing:
— in cases where internal audit reports are given orally, which ultimately means no public access at all...
She is saying, "no public access at all," because they will not put anything on the record because of access to information. That is the issue.
My question to you is, if the Auditor General is saying that, how would you deal with that issue if you suddenly throw everything open to access to information? This is the critical aspect of what she is talking about.
The Chairman: Mr. Sanger, are you the one to respond to the question?
Mr. Sanger: No.
Mr. Beraskow: I am not too sure that I have any wise words because to us the dominant issue is that, without being repetitive and sounding like my mother here, I want to create industrial growth. I am trying to create a future and not worry about the past.
Senator Stratton: We are trying to do exactly that, to make the government process of procurement, in your case, open, accountable, and transparent, and that is what Fraser is getting at. If we tighten or open up access to information across the board, reports will be oral and not written. That issue is the fundamental one.
Mr. Beraskow: I do not have any further words, wise or non-wise.
Mr. Sanger: We have had a productive discussion this morning talking about ways in which the act can be improved, without getting into a lot of discussion about whether the proposed act make advances or not. We agree on ways in which it can be improved and I think the Senate has done excellent work in looking into this issue.
In terms of actual audit reports and whether those reports are restricted, I presume that the legislation can be amended — I am not sure exactly how — so that it does not lead to a step back in that area.
Senator Andreychuk: I wanted a clarification. Senator Joyal, I think, proposed an amendment and it would be good to have that amendment.
Senator Joyal: I am not proposing an amendment per se.
Senator Andreychuk: I would appreciate having it, because I think it would be helpful in our work.
Also, I wanted Mr. Beraskow to clarify something. In answer to Senator Joyal's questions I think he talked about agreeing with Senator Joyal's amendment, but went on to say that — I cannot remember the exact words now because I lost the train of thought — Senator Joyal is not proposing that economic benefit to Canada is the only issue in our public policy so if we start down that road, procurement means more than economic benefit to Canada. Do you agree that public policy is more than economic benefit?
Mr. Beraskow: That is correct. It is one of several, but it is an important one.
Senator Andreychuk: Right. I appreciate that. Thank you.
The Chairman: On behalf of the committee, I would like to say to the four of you thank you very much for coming today. Your presentations have been excellent, informative and, as I said at the beginning, they dealt with a number of issues, such as lobbying, procurement and access to information, all of which we have studied at length over several weeks. Your input has been helpful to us.
Honourable senators, we now return to our theme of whistle-blowing. We will hear from the Public Service Alliance of Canada, which has more than 150,000 members across Canada. We welcome John Gordon and Edith Bramwell. Joining them are Michèle Demers and Jamie Dunn from the Professional Institute of the Public Service of Canada, the largest multi-professional union in Canada, representing some 48,500 public service professionals employed at the federal and some provincial and territorial levels of government.
Before turning the floor over to you, I would like to apologize to Mr. Gordon and Ms. Bramwell because we had some scheduling difficulties. I thank you for coming back. We look forward to hearing your presentation.
Michèle Demers, President, Professional Institute of the Public Service of Canada: Mr. Chairman, thank you for asking us here today. I am the President of the Professional Institute of the Public Service of Canada. With me is one of our negotiators, Mr. Jamie Dunn.
As an omnibus bill, the Federal Accountability Act is comprehensive and complex and will have far-reaching effects. Therefore, it must be deliberated carefully and thoughtfully. Canadians and public service employees deserve no less. It is in this spirit that the Institute offers the following observations and recommendations.
The institute's primary area of focus with respect to Bill C-2 must be the amendments to the legislative regime for the protection of whistle-blowers. We are very pleased to see the House of Commons adopt our amendments to remove the provision for rewards. The deletion of that provision upholds the sentiments of our members by removing a barrier to the integrity of the disclosure process.
However, there are still some areas of concern where we question the impact of this proposed legislation on our members.
While there are many changes we support, we must point out that Bill C-11, the Public Servants Disclosure Protection Act, which received Royal Assent last year, remains unproclaimed and without effect. We have fought for these protections for more than 15 years and have watched many initiatives come and go with the fortunes of politics Had Bill C-11 been proclaimed, at least our members would have been protected.
In our written submissions to the committee, which you have before you, we have outlined the areas where amendments are needed to improve this proposed legislation. I will touch on them briefly so that more time is available to answer your questions. Wording for these amendments is provided in our brief.
The first point is lack of a clearly defined role for bargaining agents.
Bill C-2 has not dealt with a shortcoming we addressed in all preceding whistle-blower legislation, namely the lack of an explicit role for bargaining agents.
While bargaining agents are included on a consultative basis in the development of the Code of Ethics, as prescribed by Bill C-11, section 5(3), they still have no explicit standing under this Act with respect to disclosures, except for the generic allowance of "representation."
The issue is a really simple one. The bargaining agents of public service employees have a special role in the process of protecting whistle-blowers and the integrity of the public service. They have legislated obligations to protect employees under a broad spectrum of circumstances and a duty to act with diligence and fairness. They have a legislated obligation to be consulted on organizational change in the public service.
These obligations have expanded the role of bargaining agents and woven that role throughout the fabric of the work environment of government employees. We are legally recognized partners with management in tending to the work lives of our members. It only makes sense to explicitly recognize that relationship in this legislation. This status must be recognized to take advantage of its full benefit in resolving these issues and, most importantly, protecting whistle-blowers during the disclosure process when they are most vulnerable.
The second point we wish to address is the creation of the public servants disclosure protection tribunal. Under Bill C-11, this role was vested in the Public Service Labour Relations Board. From the institute's perspective, it is not apparent why there was a need to create this new body, composed of superior court and former superior court judges. Clearly, the Public Service Labour Relations Board already has the structure and the expertise to deal with complaints of reprisal. In addition, it is a forum with which the government and the bargaining agents have a great deal of familiarity and it is experienced in the customs and standards of labour law. It also houses a mediation service, which is referred to in Bill C-2.
The government has defended the creation of this new body by insisting that public service employees deserve a choice in deciding whether to have their complaint of reprisal addressed by the grievance process and therefore the PSLRB, or through this new tribunal. The institute submits that this is not a real choice. Only the tribunal is empowered to award damages for pain and suffering to a maximum of $10,000. If the government seriously wished to create a special process for complaints of reprisal, it has the model of the Canadian Human Rights Commission, although the tribunal falls well short of the powers of the commission, which can award up to $20,000 in damages for pain and suffering and an additional $20,000 where the discrimination was wilful or reckless.
It must be recognized that under the Public Service Modernization Act, the Public Service Labour Relations Board and bargaining agents have been tasked with dealing with human rights complaints. The trend to put employment- related matters before the parties to the dispute is based in legislation and jurisprudence across the country and from our highest courts. The provision for the tribunal described under this legislation in that sense is regressive. We have outlined in our brief a number of additional problems the tribunal would pose. You will find them listed at page 7 of our brief.
In assessing the need for this new body, the question must be asked as to how this new process will better help whistle-blowers who have faced reprisals and encourage disclosure of wrongdoing, which is in itself is a public service. In the final analysis, it does not, but adds another layer of complexity to the disclosure and protection process. Whatever the rationale for the tribunal, it cannot be used as a reason to delay protections for whistle-blowers.
The final point I want to discuss with you is access to legal counsel. Should the government stand firm on its decision to set up this tribunal, we would no longer be dealing solely with labour relations issues.
Bill C-2 proposes in section 203 — the new section 25.1 — that the commissioner may provide access to legal counsel for advice only. Advice is not representation. The general cap for legal fees of $1,500 and $3,000 in exceptional circumstances reflects this reality.
Unionized public service employees have the benefit of the support of their bargaining agents. Non-represented employees do not. Given the likelihood that politicians and senior managers implicated in a disclosure would be supported directly or indirectly by government counsel, are whistle-blowers to stand alone before the onslaught of legal maneuvering and accusations? It is absolutely essential that employees be provided with full representation. To do otherwise is simply to put a price tag on accountability.
It is certain that the cost of legal representation for whistleblowers would be far less than the millions lost to scandals and spent on investigating their aftermath. Therefore, the Institute recommends that legal representation, not merely advice, be included in the resources made available to those involved in the disclosure of wrongdoing and that the $1,500 and $3,000 limits be amended accordingly.
In conclusion, the Professional Institute of the Public Service of Canada has fought for protection for our members for 15 years. We have watched many initiatives for whistle-blower protection come and go with the fortunes of politics. Bill C-2 is not perfect. Our concerns regarding the tribunal reflect this. The money dedicated to the tribunal would be much better spent ensuring whistle-blowers have improved access to representation in an arduous and intimidating process. Accountability would be far better served by focusing on these essentials.
The Chairman: Thank you very much for that. Mr. Gordon and Ms. Bramwell will present next.
John Gordon, National President, Public Service Alliance of Canada: The Public Service Alliance of Canada wishes to thank the members of the committee for the opportunity to appear on Bill C-2. This legislation will touch the working lives of tens of thousands of public sector workers who are members of the Public Service Alliance of Canada. For over three decades the PSAC has called for legislation that provides guidance, support and protection of public sector workers who wish to speak out against wrongdoing. We made extensive submissions and have taken every opportunity we can to address protection for public sector workers who wish to serve the public interest by speaking out against wrongdoing in the public service.
While Bill C-2 seeks to amend a number of pieces of legislation in areas of concern, such as conflict of interest rules, election financing and procurement, I will concentrate on the provisions dealing with whistle-blowing.
Bill C-2 falls short in delivering the key areas such as adequate protection against reprisals and procedural fairness for disciplined union members. In particular, the PSAC acknowledges that there has been an attempt to address some of the Bill C-11 shortcomings, but we do not believe that the amendments go far enough in addressing our concerns.
Regarding the public servants disclosure protection tribunal, we have long taken the position that our members ought to have the right to pursue issues related to whistle-blowing through their collective agreements and, indeed, have negotiated clauses around whistle-blowing protection in some of our collective agreements.
Given this, the independent tribunal created by Bill C-2 duplicates some functions that are already performed by our labour relations boards. It is unlikely that the tribunal will be able to match the labour relations expertise on these bodies, which is repeatedly referred to by the courts, yet Bill C-2 requires the tribunal to deal with the sensitive matters of discipline and on-the-job reprisal. We question the need for the new tribunal to deal with the matters already addressed by other boards.
When it comes to pain and suffering, damages awarded by the tribunal are capped at $10,000, whereas the Canadian Human Rights Act has a limit at $20,000.
We are also concerned that the bill does not contemplate systemic remedies of orders relating to terms and conditions of employment other than money. The sole exception to this is the power to order reinstatement. We do not believe that the tribunal can fulfill its mandate without authority to change departmental practices and reporting structures.
The PSAC is also profoundly concerned by the tribunal's power to order damages in lieu of reinstatement if "the relationship of trust between the parties cannot be restored." It is our position that those who come forward, despite reprisals, should never have to pay for doing so by losing their livelihood. While it is appropriate to allow for damages in lieu of reinstatement at the request of the whistle-blower, it should be the whistle-blower alone who has the right to make that request.
It is unclear what the outcome will be if the tribunal finds that an action is not a reprisal but is, nonetheless, clearly grieveable as an alleged violation of the collective agreement. There needs to be greater specificity as to how the jurisdictions of the tribunal and labour relations boards will overlap. Powers are needed to give whistle-blowers access to interim reinstatement when they come forward to make a disclosure.
Finally, we are profoundly concerned by the tribunal's exclusive authority to discipline for wrongdoing. Under clause 201 of the bill, proposed new subsection 21.8 (4), the tribunal is granted exclusive right to award discipline against reprisal and the long-standing right of our members to have this discipline reviewed by a labour board is taken away. While these provisions may be appropriate for those public service workers who are not represented by a union, they deprive our members of rights that are among the most basic for unionized employees. The factors that the tribunal is required to consider in proposed subsection 21.8(2) are all factors that the courts have repeatedly stated are best handled by a labour board or arbitrators.
The right to grieve discipline is fundamental in a unionized setting. In the past, we have seen workers scapegoated for the wrongdoing of managers. The recourse of these collateral victims of wrongdoing has always been the grievance process. All grievances against discipline must continue to be reviewable by a labour relations board. The failure of this legislation to provide for review of discipline by a labour board deprives our members of rights that are fundamental to basic fairness in an administrative setting. These rights include the right to adequate notice, the right to be heard, the right to be represented in matters of discipline and the right to independent third-party review of the discipline imposed.
With respect to the requirement for reasonable grounds, the right to file a complaint should not include a requirement for "reasonable grounds to believe." In allowing the commissioner to refuse to deal with complaints not filed in good faith, the stage is set for needless preliminary objections. Similar language in Bill C-11 was the subject of vigorous union opposition. This language opens the door on stall tactics and switches the scrutiny from the wrongdoer to the whistle-blower. No evidence from the Public Service Integrity Officer suggests that this approach is warranted.
In Britain this approach was sharply criticized in the Shipman Inquiry report. In our opinion, reviewing the substance of a complaint determines adequately whether the complaint has merit.
Reprisal is no longer defined as wrongdoing. Under both previously enacted whistle-blowing bills, Bill C-25 and Bill C-11, the wrongdoing included a reprisal. Clause 197(2) of Bill C-2 amends section 8 of Bill C-11, the Public Servant's Disclosure Act, by deleting subsection (f), which brought reprisals under the wrongdoing umbrella. This change is entirely inconsistent with Bill C-2's stated objectives.
Finally, the PSAC has criticized previous legislation for not covering all federal public sector workers. We are particularly concerned that, with the full exemptions of the Canadian Forces, the Communications Security Establishment and the Canadian Intelligence Security Service, Bill C-2 continues the exemption, which we believe to be unnecessary.
With respect to access to the public service integrity commissioner, under the bill, the commissioner shall refuse to disclose records containing information obtained or created by or on behalf of the commissioner in the course of an investigation. "Information obtained" would cover all the information that the commissioner received during an investigation. To deny public access to this information defeats the purpose of the legislation. This provision is grossly at odds with the Conservative Party's commitment to require the prompt public disclosure of information revealed by whistle-blowers, except where national security or the security of individuals is affected.
I would ask the committee members to review the recommendations we have made and consider them as your work progresses.
The Chairman: Are there one or two recommendations that you want to highlight for the benefit of honourable senators?
Mr. Gordon: First, with respect to the public servants disclosure protection tribunal for members, regarding compensation in lieu of reinstatement, under proposed section 21.7(1), we would like to see the phrase "in the Tribunal's opinion" deleted and replaced with "at the complainant's request." The complainant should be the primary part of the decision.
Second, with respect to the labour boards versus the tribunal, we believe that in a unionized environment we have collective agreements and the protection should stay with the labour boards for our members. We can understand having something in place for people who are unrepresented. That has to be taken into consideration.
The Chairman: Thank you. As you probably know, a number of witnesses have talked about whistle-blowing and about the problems associated with reprisals because reprisals can take so many forms. In the course of questioning, perhaps we can learn more about that.
Senator Cowan: Ms. Demers, on the issue of the recognition of the role of bargaining agents, do you know whether that role is recognized in other whistle-blower legislation in other jurisdictions?
Ms. Demers: Frankly, I do not know. Maybe Mr. Dunn could comment on that? I know that the role of the bargaining agents in the labour relations context is clearly defined, and that is what we are seeking to have recognized through the process of the whistle-blowing.
Senator Cowan: It would be helpful if you could give us any guidance, any information you have from your research about whether or not this role is somehow specifically recognized in other jurisdictions.
The point has been discussed, I think in both of your presentations, about whether there is a need for a new tribunal or whether the existing labour board is sufficient, and both of you take the view that there is no need for the new tribunal. We have heard the other argument that the labour board is specifically focused on employer-employee relationships. Many issues that would be raised in the whistle-blowing context, if I can put it that way, are outside of the employer-employee relationship, and that is the justification for creating a new tribunal with a different and perhaps broader, less specialized focus. Do you have a view on that?
Ms. Demers: Whatever substance would come forward from whistle-blowing would be in the context of a person's work environment, knowledge of work processes or purchases or something the employee become aware of because of his or her role as a public service employee. I do not think it is accurate to separate that context from the realm of the day-to-day employer-employee relationship.
Senator Cowan: In your opinion, then, there would not be situations covered by the scope of whistle-blowing legislation that would not be appropriately dealt with within the context of an employer-employee relationship. Is that accurate?
Jamie Dunn, Negotiator, Professional Institute of the Public Service of Canada: If I can add something to that, since the Weber decision, unions find themselves having to represent members on everything that could even be inferred as being part of the working employer-employee relationship. That is the Canadian legislative and jurisprudence environment in which we work; we have been given an onerous burden, one we accept and work hard at fulfilling, covering everything. In fact, if an employee were to bring something to court, the judge would turn it away, saying, "I do not have jurisdiction if you are a unionized employee." That has happened repeatedly across Canada. That is the environment in Canada in law, in jurisprudence and in practice. Everything covered by a work environment is dealt with where there is a union representing the employee and the employer.
This comes back to your first question about where else that relationship is explicit in protection. The Canadian model, going back two or three attempts at this, is quite a hybrid. Ms. Demers and I met with an employer at the end of August who asked us, "Can we please talk to you about whistle-blowing regimes?" This proactive public sector employer had put in place a process. The employer told us, "We need your help. Employees are coming to us with everything. They are coming to us with complaints about staffing, complaints about their office furniture, complaints about everything, and they are calling those wrongdoing. You have a network of stewards. Can you please help us steer them to the right process and explain to them what the process of disclosure is and what falls under it?" That is the best example I can give you of why it is absolutely vital that unions be involved at every part, in order to make the process real and workable and part of the whole environment of labour relations, rather than misdirected and cumbersome.
Senator Cowan: That highlights Mr. Gordon's point that this act does not adequately recognize the distinction between unionized and non-unionized employees.
I wanted to get to the next issue, which perhaps you would both comment on, which is access to legal counsel. The access is not just advice but actual representation. Would it be sufficient if the dollar limits were eliminated and the awarding of costs of assistance was at the discretion of the tribunal or the board?
Ms. Demers: That certainly would be better than to put a cap on it, because every case is different. We at the institute have spent hundreds of thousands of dollars representing one or two individuals in whistle-blowing cases. What does $3,000 equate to? What is $1,500 based on? There is no reference.
Senator Cowan: Those of us who are lawyers look at legal fees as being an investment rather than a cost.
Ms. Demers: This is fifteen minutes' worth or something.
The Chairman: Senator Cowan did not respond to that.
Ms. Demers: I noticed.
Senator Cowan: Mr. Gordon, would you tell us more about how the bill could be tightened to deal with the distinction between unionized and non-unionized employees? I think you are saying that, providing there is some recognition for the role of bargaining agents, there is protection and representation for unionized employees, but the non-unionized employees really are left on their own. Would allowing the board or tribunal to award costs in its discretion without a limit deal with that issue?
Mr. Gordon: I agree with Ms. Demers about the limits. There should be no caps. We compare this to what is in the Human Rights Act.
From a union perspective, we like to negotiate and then we are responsible for making sure that our members get the benefits we have negotiated. Whistle-blowing and reprisals should be dealt with in exactly the same fashion. We recognize that not everyone is unionized and there ought to be a process that non-unionized workers could follow to deal with their issues. Possible the tribunal is a solution for that. I can speak only for our people. Our members feel much more comfortable knowing that they can be represented with our counsel within the union rather than entering into a process where they do not have access to make arguments directly or to call witnesses.
There could be a system with two processes, one for unionized workers who have representation and one for people who do not, including managers, because no one is immune from reprisals who takes it upon himself to speak out about wrongdoing of government. I think that is what you are trying to address here.
Edith Bramwell, General Counsel, Public Service Alliance of Canada: I think there is a subtle distinction between the submission we are putting forward and the submission that is being put forward on behalf of The Professional Institute of the Public Service of Canada. PIPSC has a strong objection to the tribunal per se. I am not sure that we share that objection entirely. The tribunal will serve a very useful role, and it will serve that role more efficiently and in a way that is more consistent with the traditional format of labour relations in Canada if it does not usurp the role of the labour board in reviewing discipline. That is our main objection. Certain complex situations will involve public servants that may, under the full extent of this proposed legislation, which has very broad jurisdiction, involve non-public servants making allegations of wrongdoing. Some of those situations I think are most appropriately looked at with a whistle- blowing focus by this tribunal.
Our very specific concern is on behalf of the members we represent — a member who may be perhaps wrongly scapegoated, who may be disciplined inappropriately, whose discipline may exceed the amount of appropriate discipline in the circumstances. Perhaps a suspension would be appropriate, but not a termination, for example. We would like to ensure that whatever discipline the tribunal deems appropriate can be reviewed by the labour board in the same manner that discipline meted out by a deputy head would be reviewable by the labour board. That is a specific and narrow concern, and I think it speaks to the issue you were addressing about the ability of this tribunal to look at whistle-blowing situations in their entirety. We agree that that is positive.
In terms of the union's role, as Mr. Gordon stated, we far prefer to negotiate, especially in light of the Weber decision, anything that involves our representation rights with regard to our members rather than having it imposed on us legislatively by statute. That is just not what we as unions do. As unions, we negotiate on behalf of the people we represent.
If I may make one last point about the legal representation and the cost, I do not think it will be any surprise that we would like the caps removed. Another concern has to do with the subtlety of the language of the section, and it is this: The section provides compensation for advice. It is not clear that what is being compensated is actual representation. To be effective, the words should be changed to "legal counsel or legal representation."
The Chairman: That is a good point.
Senator Cowan: Either way, whether it is counsel or representation, you will not get much for the limits.
Ms. Bramwell: For the $3,000, no. Someone will introduce themselves on your behalf and sit down.
Senator Cowan: On the issue of who ought to be able to blow the whistle and the protection that ought to be offered to those who do, some limits are imposed by this. Anyone can provide information, but protection is only offered to certain groups. Is it your view that this protection ought to be extended to any provider of information, any whistle- blower?
Ms. Demers: Is your question really whether any Canadian citizen can blow the whistle? That is where you are heading with that. My comments are limited to whistle-blowing protection for people who are in the federal public service or the extended, larger public service.
Senator Cowan: What is your view? I understand why you are here — representation — but why should it be limited in any way?
Ms. Demers: I believe that the people who should have access to such a process should be directly made aware or knowledgeable of processes in order to avoid a witch hunt across the country with anyone who is not happy with what the government is doing coming forward with whistle-blowing. I have some reservations about opening the door. If the door is that wide, there is a risk of diluting the process and its effectiveness.
Senator Cowan: Mr. Gordon, do you share that view?
Mr. Gordon: The context of our discussions is to look at what at happens when, through the course of their employment, our members come across information about wrongdoing. They take that information through the channels, but nothing gets done, so they want to take it elsewhere. That is where they risk reprisals, and we want to protect them from reprisals. I do not know how you manage to police such a thing. In a broader context, there are people who are not necessarily employed by the public service but who are external contractors to the government. Reprisals would be of a different nature with contractors.
Senator Cowan: My final point has to do with reasonable grounds. Protection ought to be afforded to people who have reasonable grounds to believe that the complaint they made is justified. To remove that requirement for reasonable grounds would seem to wrong. Could you comment on that? I read in the brief that one should be able to make a complaint without having reasonable grounds to believe that it is accurate.
Mr. Gordon: We believe that when people go to this level and make public a wrongdoing, they truly believe that there are solid grounds on which to make the accusation and they want it investigated. That is the whole purpose of going public. Most likely they have taken their complaints through a few other steps in the process but no action was taken. Generally speaking, they then feel compelled to speak out. Public sector workers are also taxpayers and when they see tax dollars being squandered, they want to speak out. There are many reasons why people come forward, but I believe that everyone who brings forward a complaint believes that there is an issue that should be dealt with.
Senator Cowan: Why is it wrong to include in the bill a requirement of good faith and reasonable belief?
Ms. Bramwell: There is a technical, legal aspect to this. The assumption of good faith is present in almost every piece of legislation that allows a person to have a basis for an action. However, the words are not always there. If the words "in good faith" are removed, that does not mean that we allow someone to come forward in bad faith. Rather, it means that we have taken away a basis of objection to the complaint because the presence of the words in the legislation would be seen to create an additional onus, perhaps. Certainly, it would create a sense that the legislative intent in drafting the bill in this way was to provide an opening for objections based on allegations of bad faith. That is particularly true given the fact that later in the bill, there is a good faith requirement at proposed section 19.2. The good faith requirement is iterated twice, and if I were counsel on the other side defending wrongdoers, I would be tempted to look at that. This is an open door for me to attack people and say that they have to have proof of their good faith, which is difficult to provide.
I would add a comment about experiences in other jurisdictions and putting such a requirement in front of a whistle- blowing element. I think of the hospital regulations reviewed in the Shipman Inquiry, when so many people were killed by their attending physician. The requirement there was to come forward with good reason and good faith. People who testified before that inquiry said that they read the requirement and felt unsure about meeting the standard because what they knew could have been rumour or innuendo. They said, "It looked bad but I was not sure that it was good enough for what they wanted."
There is the legal technical problem, or invitation, if that is the right word, and, beyond that, there is the effect that this might have on someone who has strong suspicions but is unsure about meeting the standard.
Senator Cowan: I take the point. Requiring someone to act in good faith does not seem to be an onerous burden.
Ms. Bramwell: That is a presumption of Canadian jurisprudence.
Senator Ringuette: Mr. Gordon, you have stated that for many years you have been negotiating the collective agreement provision for whistle-blowers. Could you provide the clerk of the committee with examples of the wording to be included in the PSAC's collective agreement?
Mr. Gordon: Yes, we can do that.
Senator Ringuette: On page 3 of your brief, you say that under proposed subsection 21.8 (4) the tribunal is granted the exclusive right to award discipline against reprisal, and consequently the long-standing right of your members to have the discipline reviewed by a labour board is taken away. I reviewed that proposed section on page 155 of the bill and I see that it removes the grievance process as an appeal mechanism. However, there is always an appeal mechanism after the tribunal, provided for in Bill C-2.
I would have to read your collective agreement to know more about it. Further on, you state that the factors that the tribunal is required to consider at clause 201 are all factors that the courts have repeatedly stated are best handled by a labour board or an arbitrator. The courts, without previous legislation on this issue, would say that a person should report the matter to his or her labour board or arbitrator. However, if the means to appeal is in legislation, then I have some difficulty with your statement that it would remove some ability from the collective agreement. Could you clarify this for the committee?
Mr. Gordon: We negotiate collective agreements and we put whistle-blowing language into the collective agreements. Once that language is in the collective agreement, we have the ability to assist our members who have to grieve and take the grievance through the natural process, which includes possibly the labour boards. We believe this provision will remove our ability and put the process into another stream. We disagree with that. We have the responsibility to negotiate the rights for members and we then have the responsibility to protect them when they need that protection. We do that through these boards.
Senator Ringuette: Yesterday, another union representative said that without having it explicitly in the collective agreement, they would support the employee going through the tribunal process. Essentially, you do not need to make a grievance per se to go to the tribunal. Hopefully, it would not be necessary to enter into a grievance process in order to assist the employees you represent at the tribunal process.
Ms. Bramwell: No, I do not think we are looking at something that technical.
The specific concern is around what happens to a person who is disciplined by the tribunal for reprisals. I am listening very carefully to your comments that that person still has a right of appeal to the Federal Court. I do not believe that is a right of appeal. That is a right to make an application for judicial review.
On an application for judicial review, a judge cannot consider evidence, other than the evidence that is part of the record that was before of the tribunal. There is no possibility for new evidence.
Under the Federal Court Act, an application for judicial review is severely limited. An application can only result in an order for a new hearing where there are patently unreasonable findings of fact in the decision of the tribunal.
That is considerably different from what happens in front of a labour board or an arbitrator when they are considering facts around discipline. They can make orders compelling production. They can subpoena witnesses. They can consider facts that, perhaps, are coming to light for the first time.
The right to have your discipline, or the possible termination of your employment, which we refer to as the capital punishment of labour law, reviewed in that manner is fundamental to a unionized employee. We feel that to have certain employees be deprived of that right actually disrupts the delicate balance of labour relations in the federal public sector. It is a serious, fundamental issue.
I certainly would not say, though, that we feel it is necessary for someone who is a member of our union to pose a complaint and file a grievance at the same time. I do not think that is what is being discussed here, if that is a concern of the committee.
Senator Ringuette: The proposed legislation specifically identifies the grievance process under the collective agreement.
Ms. Bramwell: Which section are you looking at?
Senator Ringuette: Proposed section 21.8(4) does not prohibit the union from assisting its members through the process. It is just saying that it cannot be through the grievance process.
Ms. Bramwell: It says they cannot grieve their discipline. That is a large concern to us. The factors the tribunal must consider in meting out discipline are elaborated at proposed section 21.8(2). Regarding those factors, judges of the provincial courts and of the Federal Court have consistently said, "We believe that labour boards and labour arbitrators have the expertise in these matters. We will defer to their findings, unless there is something so erroneous in their decision that it has to be overturned." That is a concern for us.
Senator Joyal: Referring to the proposed section that deals with the establishment of the tribunal, I note that all the members must be judges of the Federal Court or a superior court of a province. The following section establishes the proceedings. Then there is the application by the commissioner. It is a very judicialized procedure, so much so that it becomes a common-law court.
I am concerned that through this bill we are taking a labour relations situation, be it disciplinary action, termination of employment or what I call a systemic attitude to push someone to the side, and putting it into the formal court procedure, which is contrary to the way the system has wanted to establish that the labour relation boards have a greater sensitivity to the culture of work. I do not see that we will get the same results at the end.
Unless I am poorly informed, the labour relations boards are composed not only of judges or former judges, but most of them are also practitioners of labour relations. The process takes into account the flexibility that exists, as we heard, on a negotiation basis. Of course, there is an adversarial situation in which two parties compete for two different interpretations of a situation, but it is more in the context of the reality of the work. As you stated, the courts have recognized that this is a matter of labour relations.
We are now taking this out of the realm of labour relations and putting it before a court of law. Unless the judges appointed there have labour relations practice or experience, it creates an oddity in the system, and perhaps not to the benefit of the employee. It is the employee who seeks redress here. It is not the other way around. It is not the administration trying to sue employees to get damages because the person has done something wrong. It is the reverse situation.
Have you analyzed the system we are putting into place here and its impact in the context of labour relations?
Ms. Bramwell: That is an extremely insightful point about the regime being created here. The labour boards, as you have correctly mentioned, are made up of practitioners. They are often nominated from the union side and from the management side. They are people who have a very good sense of the structure. The structure of the federal civil service is complicated, not approachable intuitively or without experience. That knowledge can be learned, of course, but it would be ideal if at least some of the members of the tribunal had labour relations expertise from the union side and the management side, with, beyond that, organizational expertise in how a government can be organized badly and how it can be organized well.
I think there is a complementary deficit in the proposed legislation in the failure to allow the tribunal to introduce systemic remedies, to which Mr. Gordon's brief referred. To bring about real change, the tribunal would need to have the knowledge base to understand where the systemic shortcomings were and then the power conferred by legislation to correct those shortcomings. At the moment there is no provision for either.
I wish to be very respectful to judges. I am sure there are judges who would be able to analyze the workings of the federal government, but that is not typically the area of expertise that they bring. There are people who do have that expertise.
Senator Joyal: That is why I am concerned about the provision that all members of the tribunal must be judges of the Federal Court or of the superior court of a province. I believe it would be wiser to have the presence of specific types of practitioners, although not as the president of the tribunal; that will always be a judge. There will be layers of authority. The president of the tribunal might direct that a specific issue be dealt with by a practitioner with knowledge in a particular milieu. There may be a scientific milieu, for example, which requires more knowledge than what someone delivering service at a counter would have. There are complex situations, and I do not believe that this provision would bring to the system the flexibility required to deal with the situations in the least disruptive way for labour relations.
Ms. Demers: To put it very simply, whistle-blowing is not done fool-heartedly or off the cuff. It is a very serious thing that is done after much personal reflection and that generates much apprehension on the part of the person who does it. The system to protect whistle-blowers has to be user-friendly, simple and known.
I also do not want to underestimate the knowledge and capabilities of judges and retired judges. However, the lack of knowledge of the milieu and of the processes and the lack of access to redress for someone who could face termination in the context of reprisal do not make this a user-friendly process. Rather, it makes it a complex and intimidating process not conducive to people coming forward as whistle-blowers or with valid denunciation of any kind.
Mr. Dunn: When we appeared before the Commons committee, it was reiterated that the tribunal existed as an issue of choice. I am obliged to say that employees have made a choice about how they want to be represented in the workplace. They voted for certification. We negotiate on their behalf through collective bargaining. There is an enormous legislative process around that. They can periodically make the choice of whether to keep us as their representatives.
The idea that they are nailed by the feet into this process and need an escape, provided by the government, to be heard by judges does not reflect the fact that we are there by their choice and that we have to serve them or they will exercise their right to change that choice.
Having said that, it is important to say that at the Professional Institute of the Public Service of Canada many of our members, by virtue of being professionals, are supervisors, and therefore stand to be accused of reprisal, whether or not those accusations are true. We are very worried about the idea of discipline being handed out by the tribunal and of having to meet the burden of judicial review just to have that discipline evaluated. Discipline evaluation is a very important part of labour relations because there are many ways you can make your case, have it modified and keep your job. The government has made is clear that it is taking this seriously, as it should. However, where are the checks and balances on that process of discipline?
Labour relations has been around for 100 years. It is a sophisticated system that has grown separate from the common law and the courts specifically to address the subtleties and the specificities of its context.
Senator Mitchell: I am quite interested in the relationship between the tribunal and related provisions and your collective bargaining process, and what this bill might do explicitly or implicitly to weaken that. It seems to me that there are two things that inherently do weaken it. To summarize, one is that you could be excluded from your grievance process, and the second is that the tribunal members will be appointed exclusively by the government through the Governor-in-Council.
Did the government consult with either of your organizations on this? No. They did not do this, in any way, shape or form, in cooperation with you? No.
In the case of a collective agreement where someone utilizes the grievance process, is there funding under the collective agreement for legal assistance for the griever, or is that funding provided by the union?
Mr. Gordon: The union collects dues from the membership and from that we provide members with representation in any forum.
Senator Mitchell: I guess you could argue that you could also do that under the tribunal process. If you are not union, it does not help. I am not arguing against you.
Ms. Demers: We have a whole gamut, as I am sure the Public Service Alliance of Canada has, of services we provide to our members in terms of representation. Many of our labour and employment relations officers are not lawyers. I do not think they could make representations in front of a judicial tribunal. We do have lawyers also, but the labour laws do not require that only lawyers can make representations.
Senator Mitchell: This process could become much more expensive as a result of that.
Ms. Demers: Absolutely.
Senator Mitchell: Finally, can you confirm for me that in many, if not all, cases the union or the griever does have some say in who is selected for the labour board. It is not imposed on them as it would under this tribunal process, is it? Generally each side gets to pick someone. Or are these standard boards that you are referring to?
Mr. Gordon: When the Public Service Labour Relations Board, for example, is looking for replacements, we can suggest names. Normally from we on the labour side will suggest people who understand the labour side of the equation. Whether they are selected is up to the government. The same is true with the Canada Industrial Relations Board.
Ms. Bramwell: Typically in the private sector both the union and the employer agree on arbitrators, and they are nominated and paid privately. It is not that way before the Public Service Labour Relations Board. You walk in that morning and find whoever is there, and you have no ability or grounds to object.
Fortunately, as Mr. Gordon described, an effort is made to ensure that the Public Service Labour Relations Board members have been selected from bargaining unit nominations and employer suggestions.
Senator Mitchell: So there is a difference.
The Chairman: Senator Day is not here today, but if he were, I am sure he would have asked a series of questions about the general damage component of the bill. In your brief, you said that under the Canadian Human Rights Act the limit for general damages is $20,000 and in Bill C-2 it is $10,000. I would like both groups to comment on that, because in Senator Day's questioning he talked about the fact that in certain recent cases of the Supreme Court of Canada the awards have been substantially higher than either $10,000 or $20,000.
Ms. Demers: Just as there should not be a cap on representation or legal advice because each case is dramatically different, making someone whole financially should be looked at on a case-by-case basis. If a person's reputation is ruined and that person loses everything over a whistle-blowing situation, that should not have the same magnitude of repair as someone who has been suspended for a week because of blowing the whistle.
There is no magic number, not $10,000 or $20,000 or $50,000 or $100,000. The amount should be assessed based on the cost of the damage that has been endured.
Mr. Gordon: We simply did the comparison and wondered where they got the figure for this bill. Why does this bill offer $10,000 and the Canadian Human Rights Act $20,000?
However, I would make the same point as Ms. Demers. When a person points out a wrongdoing that should be investigated and then is the subject of reprisals and loses their whole livelihood and reputation and suffers all the emotionally draining aspects, someone should be able to say, "Wait a minute, this person has been totally destroyed." Then, you should make fair compensation, if compensation is warranted, without setting a cap.
The Chairman: Thank you very much. Your information today has been very helpful to this committee.
The committee adjourned.