[Recorded by Electronic Apparatus]
Wednesday, December 13, 1995
.1539 
[English]
The Chairman: Good afternoon, ladies and gentlemen. Welcome to the Standing Committee on Government Operations.
On your behalf, colleagues, I'd like to welcome the witnesses from the Canadian International Development Agency.
Madame Labelle, Madame Roberts and Mr. Redmond, welcome. I understand you have a short opening statement, after which my colleagues and I will ask you some questions. Please begin.
.1540
Ms Huguette Labelle (President, Canadian International Development Agency): Thank you, Mr. Chairman. Merci.
It seems like it has been a long time since I last appeared before this committee. As a matter of fact, there are a number of new members, including a new chair. I hope we can be of assistance this afternoon on some of the rather important questions that you are discussing at this time on contracting.
In terms of CIDA, a lot of our work certainly is done through contracting. As members around the table know, our business is to be in international development assistance around the world in many different situations and many different countries, often in isolated areas. We provide goods, food at times, and emergency assistance, as well as ongoing project work to assist people to hopefully come out of the poverty situations that they're in.
There are two issues, among others, that were indicated as we were invited to appear before you. One was the nature of our contracting process, in particular the extent to which contracts are awarded with or without competition. The second was the whole issue of small and medium-sized enterprises in Canada and whether or not they are getting their fair share of contracts.
In terms of the first question, CIDA revamped its contracting process completely in the fall of 1994. Before that, we had a registry and people needed to be registered. Long lists would be prepared from the registry and firms would be invited to make some proposals.
At that time, in working jointly with our outside partners, consultants and engineers, we decided to establish a new process. We are now using the open bidding system for all contracts over $100,000, although there are some exceptions in terms of non-competitive contracts. Those, of course, do not go on the open bidding system.
What we do, at the request of our outside partners, is have competitions through two phases - pre-qualification and a final request for proposal. We put a request on the OBS and seek people to identify themselves and to first make very simple, very short proposals that would allow us to draw up a list of those who meet the requirements. We then invite up to five firms to make detailed proposals. The companies were quite adamant that it be done in this way because they feel it is too costly for them if we just have one step. You might then end up with 50 or 75 enterprises, and they felt the chance for each one to win was too low for the cost involved in preparing the proposals.
We have had this in place for one year. At this time, we are again talking to the consultant engineers with the exporters' association. Up to now, their sense is that this works as well as they had hoped for, but we're still open for improvements on that front.
The overall types of contracts that we have are for services directly from CIDA, for goods used in Public Works and Government Services, or through the Treasury Board if the contract is over our delegated authority or is on a sole-source basis. This is how they roughly divide for contracts in excess of $100,000, and that takes in about 92% of the service contracts. On the other hand, for contracts below $15,000, over two-thirds are in that category.
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On the other hand, for contracts below $15,000, over two-thirds are in that category, but for a very small amount of money, in total something like 3% to 5%. You probably have similar situations in a number of other departments. I'm not quite sure how that has worked.
One of the concerns you have raised is the question of repetitive contracts to the same firm on a sole-source basis, even if they are small. That is an important issue. I would like to share a few comments with you on what we are attempting to do to deal with that situation.
[Translation]
First, regarding contracts under $100,000, we try to use various mechanisms, for example standing offers, which enables us to have some competition and to establish a list on that basis. Following that, we turn to that list when the need arises.
We also try to make sure that inventories are used when they are available. However, for the contracts under $15,000, which make up the majority of our contracts, we have to look for best value and they are awarded without open bidding.
There is also the issue of amendments to contracts. We don't have the same problems as other departments with small contracts. On average, amendments are made to 12% of contracts with a $25,000 value. We are looking into the possibility of splitting the contracts, but we have not yet reached any final decision on that.
Under the delegated authority regime, contracts in excess of $100,000 are not delegated to us; they remain under the responsibility of the minister. Contracts between $50,000 and $100,000 are delegated to the vice-president, contracts between $15,000 and $50,000 are delegated to the director general and contracts under $15,000 are delegated to the project manager. Therefore, as far as delegated authority is concerned, we feel quite comfortable with what we have now.
[English]
I have a final word on small and medium-sized enterprises. In CIDA we do a lot of work with small and medium-sized enterprises. We have had in place a policy of reserving contracts below $700,000 to enterprises that have fewer than fifty employees. That has given those agencies a lot of scope for that.
Something else we are seeing now, which is new, at least in our case, in such a number, is the creation of consortiums. More and more, when people bid for contracts, you will see a private company along with maybe a university or a community college. Sometimes it is a large company with a number of other small niche entrepreneurs.
That's interesting, because it allows small companies that have not had an opportunity to work outside of Canada to acquire experience, while at the same time of course the larger company is very often able to get a good service at a fairly low cost and to bid in a different way for a contract.
.1550
That's a second approach, which we encourage, though it's not a condition of bidding. Some of our projects are more complex and require various dimensions, so that also serves as an added incentive for this to take place.
I will stop my comments right now and would of course be very pleased to deal with questions of the members.
The Chairman: Thank you, Madame Labelle. We appreciate your presentation.
I will begin with you, Mr. Marchand.
[Translation]
Mr. Marchand (Québec-Est): Thank you, Ms Labelle, for your presentation. I want to ask you a few questions to find out whether I have understood you correctly.
You said at one point that contracts in excess of $100,000 are awarded under the open bidding system; in other words, they are competitive and they represent 92% of all contracts awarded by CIDA.
Ms Labelle: They represent between 90 and 92% of the total dollar value, but far less in terms of numbers. There are few of them but they represent a large amount of money.
Mr. Marchand: How much?
Ms Labelle: In 1993-1994, the year you are looking at, contracts in excess of $100,000 amounted to approximately $115 million.
Mr. Marchand: Therefore, the contracts which are awarded without competition, 10% of the total, amount to $10 million to $15 million.
Ms Labelle: You mean competitive contracts as opposed to non-competitive contracts?
Mr. Marchand: Yes.
Ms Labelle: The total amount for 1993-1994 was $142 million for goods contracts and $126 million for service contracts.
Mr. Marchand: Are all these contracts awarded under the competitive bid system?
Ms Labelle: No.
Mr. Marchand: Without competitive bidding, then.
Ms Labelle: Fifty-three percent of service contracts have been awarded under the competitive bidding system and 47% without competition.
Mr. Marchand: You told me earlier that approximately 10% of contracts were non-competitive. This means then that 90% of contracts in excess of $100,000 were awarded using competitive bids.
Ms Labelle: No. I said earlier that contracts in excess of $100,000 represented 90% of our expenditures.
Mr. Marchand: These contracts represent expenditures amounting to $115 million?
Ms Labelle: That's right, $115 million. Of these $115 million, contracts amounting to $66 million have been awarded using competitive bids and $49 million worth of contracts have been awarded without competition.
Mr. Marchand: Okay.
Ms Labelle: I am referring only to service contracts.
.1555
Mr. Marchand: Are you talking about contracts in excess of $100,000 that have been awarded without competition?
Ms Labelle: Contracts in excess of $100,000 are basically awarded using competitive bids. There are several reasons why a contract would be awarded on a non-competitive basis. It happens in particular when we are dealing with the second phase of a project in any country. Rather than bringing the team back to Canada and starting over with a new one, it is more cost-effective to stay with the same team. A second example might be in an emergency: you might have refugees and there would be an immediate need for services, for example in Rwanda, and so on. These are the two situations we see most frequently.
Mr. Marchand: We have many suppliers and they can be found probably just about anywhere. How many do you have in Canada?
Ms Labelle: When we are working with a country, we come to an understanding regarding their needs, their priorities and what Canada can do. Following that, we turn to Canadians to do the planning with us. Therefore, even if our work takes place in a developing country, it is done with Canadian organizations.
Mr. Marchand: Can we get a list of those suppliers?
Ms Labelle: Yes, absolutely. We can provide you with a list or private companies, NGOs, universities, colleges and municipalities we work with. There are many of them.
Mr. Marchand: Thank you very much, Ms Labelle.
[English]
The Chairman: Thank you, Mr. Marchand.
Mr. Gilmour, please.
Mr. Gilmour (Comox - Alberni): Thank you, Mr. Chairman.
A list provided to us through Treasury Board shows that of your total spending of $317 million, $107 million, or a little more than one-third, was given out through non-competitive bidding. Why is that such a high figure?
Ms Labelle: There is a number of reasons for that level. It's been about the same, although in 1993-94 it was a bit better than the previous year, as you saw, in terms of the ratio between competitive and non-competitive.
One, because this includes goods as well as services, we might have a situation where, for example, a country requires spare parts for a particular infrastructure we installed a number of years ago, such as a GM locomotive. Of course then we would go back to GM to supply these additional parts, if we decided we wanted to do it. That is one example.
A second example would be in the same vein. If we have worked in a country to help them install rural essential telephones and they decide they would like to expand this particular service, again, we're dealing with a particular technology that is Canadian. If we decide this is something we can and should do, then we will go back to the original supplier so they can continue, because you're dealing with a particular patent and so on.
The third one is the one I just mentioned before. If we decide to do a second phase of a project where there is a company already in a country, for example helping a particular province to establish some clean water services in a rural area, and they would like to expand it a bit more, then it is much more cost-effective for us to use the company that is already on site and where we have the relationship established with the country. That's another time when we will deal with this.
Finally, in situations of emergency, we will go again to sole-sourcing, or we will go without competition.
.1600
Mr. Gilmour: Thank you.
I would have thought that most of the materials and goods you would be supplying would be relatively basic; you're looking at generally basic items, which are in fairly good supply throughout the world, particularly in Canada. Do you make an active effort to go out to do competitive bids? Again, a third of your budget is non-competitive on what are primarily basic goods. I have some difficulty understanding why such a high percentage of your budget, over $100 million, would be non-competitive when you're talking about fairly basic items. It doesn't quite fit.
Ms Labelle: If we look at that particular part, for example, for $87 million of that we would have gone to Treasury Board to have the proposal reviewed because it was on a sole-source basis. Now, I think what I mentioned before are the ones that keep coming back. You might have four or five contracts that are of significant importance. They're not necessarily all very small ones, although we have a lot of small contracts as well, but we go without competition because of the ones that keep coming back to us.
Mr. Gilmour: Okay. I'm having a little bit of difficulty understanding this. Canadians are looking for value for money. Again, I'll go back to the basic items. I'm having some difficulty understanding why you wouldn't go out to a more broader bid process.
You say that over the last number of years this percentage has stayed about the same. Do you anticipate it going down at all or do you anticipate it basically staying the same, with a third of your budget being non-competitive?
Ms Labelle: In the last year, since we have introduced the open bidding system, we're also putting into place a modified approach to standing offers so that we compete in order to then have standing offers on the service side. We hope the combination of these two will help us to reduce the non-competitive aspect.
On the goods side, what you have there is the part that can be tendered easily, of course, by Public Works. When a standard piece is required, it is tendered, unless it is a great emergency - and not everything is an emergency. There are certain things that are, but not everything is.
So we are striving to increase competitiveness because we believe in transparency. That's why we introduced the new system last fall, with the objectivity and the access by all Canadians, because we were all so concerned about how people at different ends of the country would have equal access to our system. We hope the open bidding system will be helpful.
Mr. Gilmour: Okay.
Finally, what percentage of your contracts would be handled by Public Works? I guess percentage is the wrong way to say it. What sort of value do they handle? Does Public Works do the high-value ones? Perhaps you could fill us in.
Ms Labelle: Public Works does primarily goods and equipment. They do that in a standard way. They're equipped to do that, and that's where it goes. We do mostly the service side, such as consultant engineers to design particular plans.
You have a country like Russia or Ukraine wanting to privatize its land, to go back, hopefully, to being more of a bread basket to part of the world than they were. They need to establish a completely new land regime because it's all centralized, so they've come to us to assist them with that. That's the kind of service we do. We look to Canadian surveyors and those who have that expertise and we use them.
So the service side is CIDA, and goods and equipment is primarily Public Works.
Mr. Gilmour: Thank you, Mr. Chairman.
The Chairman: Thank you.
Mr. Bélair, please.
.1605
[Translation]
Mr. Bélair (Cochrane - Superior): Good afternoon to you, Ms Labelle and to your colleagues.
I must tell you that I am quite shocked by what you are saying. You are stating this very firmly and very self-assuredly but, basically, you are telling this committee that you pay absolutely no heed to Treasury Board directives. And it doesn't seem to trouble you in the least.
I have read your brief very carefully and I notice that 40% of contracts in excess of $100,000, representing an amount of $49 million, are awarded without going trough the open bidding system.
I understand that you may take some special circumstances into account. It is certainly understandable. However, it is a bit more difficult to understand how they can amount to $49 million. That is my first point.
Secondly, the way I see it, what makes the problem worse and makes it even more of a puzzle to us, since we are doing our utmost to see to it that the system remains fair and transparent, is that you state clearly in your brief, on page 3, that contracts between $50,000 and $100,000 are awarded by a CIDA vice-president, again paying no heed to Treasury Board. You are thinking of using - that's how it reads, "think", Mr. Chairman - competitive bids. Those were my negative criticisms. Let's try nevertheless to patch up.
Ms Labelle, during the last two years, how many times did you use the open bidding system? If you used it, what are its advantages? If you didn't use it, how could it be improved so that CIDA will not be able to disregard it, contrary to what all other departments are doing?
Ms Labelle: First, as far as services are concerned, competitive bid solicitations have been much more frequent since we have been using the OBS, that is to say since November of last year.
Mr. Bélair: It has been in place since January 1994.
Ms Labelle: Yes, but we only received approval from Treasury Board in September. Following that, we have started using it during the past year for contracts in excess of $100,000.
Mr. Bélair: During the last 15 months, how many times did you use the system?
Ms Labelle: Approximately 80 times.
Mr. Bélair: Out of 1,700 contracts.
Ms Labelle: You must not forget that two-thirds of these contracts are under $15,000. That's the difference. As I was saying earlier, some 83 or 84% of contracts are under $15,000.
Mr. Bélair: You are right on that. There are therefore approximately 1,200 contracts with a dollar value of $15,000 or less. There are approximately 5,000 remaining and you used the system only 80 times.
Ms Labelle: No. The total was 1,100 -
Mr. Bélair: You are telling me that they represent two thirds of the total, so there would be approximately 1,250. Let's say 1,200.
Ms Labelle: You are referring to a 15-month period.
Mr. Bélair: A 15-month period, but I am only looking at the figures. According to my recollections, approximately 1,700 contracts have been awarded during 1993-1994.
Ms Labelle: The number is 1,100, but nevertheless -
Mr. Bélair: All right, 1,100 or 1,200.
.1610
Ms Labelle, it is very obvious that you don't pay any attention to Treasury Board directives. A system has been established because the government thought it was adequate and you are not using it. This committee is currently looking positively at how this system could be improved.
It is along these lines that your contribution here today could be extremely valuable. Well then, why don't you use the system that has been established and how could it be improved so that a vast majority of your contracts go through the system in order to make it possible for small companies to compete as long as they meet the bidding requirements? That's what we want to know.
Ms Labelle: I said earlier that, when I joined CIDA, the system was totally different. We did not use the OBS. We looked at the situation. We did it with private companies and, starting from there, we agreed to set up this new system that enables us finally, I think, to be in a better position to use a competitive system. The process is more transparent, more open.
Mr. Bélair: That's what the OBS is for, Ms Labelle, and you are not using it. Answer my question, please. You are referring to a period five years back. I am referring to January 1994 and you refer to September 1994. Since September 1994, why haven't you exercised your right and your obligation to use the OBS?
Ms Labelle: We have been using it much more often since we have put it in place.
Mr. Bélair: Then, give me some figures. The figure you mentioned earlier was 80.
Ms Labelle: There has been an increase since the fall of 1994.
Mr. Bélair: Let us get this right: 80 contracts out of 500 or 600. We agreed on the figures earlier. This amounts to 15%. What did you do regarding the remaining 85%?
[English]
The Chairman: Do you wish to respond to that?
Ms Labelle: I have just two comments, because I did not answer all the questions the member had.
First, a number of years ago CIDA was granted an authority of up to $100,000. Therefore we are operating within the Treasury Board directions in that case.
I personally feel, and so do our officers, that it is much better to have the highest possible competition level for all the contracts that you do, especially those over $15,000 or $25,000. Below that - I don't know what the position of the committee would be - there is a problem of cost and quality when you expect many enterprises to submit a proposal.
There was also a question about how one improves the situation. I'd be ready to deal with that question at any time you wish, Mr. Chairman - because that was the second part of the question.
The Chairman: Mr. Bryden, you're next on the questioner list. Do you wish the witnesses to give us their recommendations at this moment? Is that all right?
Mr. Bryden (Hamilton - Wentworth): Well, no, actually. I would just like to plunge on with a different line.
Mr. Bélair: She has not answered my question.
The Chairman: Then go ahead and reply to the member, please.
Ms Labelle: About the ways one could improve the system at this time, on the one hand I think a number of small companies have been concerned about the difficulty of accessing the OBS. It is complex. It takes time. What we have done is to have a special entry for CIDA, which means they can go immediately to CIDA and the second page of the text will give them immediately the list of contracts that are available. They find this is more user-friendly than what they have had before.
.1615
A second thing that I think we could consider is to use the Internet in addition to OBS. We can post on the two. Internet is very often found in certain offices already, and people would not have the cost of having to gain access to the OBS system. To me, this is a second way in which we could be helping companies to do that.
We mentioned the threshold that we can use to ensure that small companies have a greater chance of gaining access to this. I think that is something one could consider. One has to be careful, because you also don't want to discriminate either against the larger companies. But this has been helpful to us in allowing small and medium-sized enterprises to have a much better chance of competing, because they're not always competing with companies that are much bigger than they are.
So these are some of the ideas that one could consider.
The Chairman: Mr. Bélair, may I move to Mr. Bryden?
Mr. Bélair: Yes.
The Chairman: There's one thing you should know we're considering. We're ratcheting down from $30,000 to $25,000. I'd be curious to get your reaction from CIDA as to how you would respond to that.
Ms Labelle: I think anything is feasible. It's a question of the amount of energy that the company or companies have to use and the money they have to spend. Therefore, the lower the price of the contract, the more they have to expend for one opportunity out of ten, twenty, or whatever, to have access. So I think the companies would be the ones best able to do that.
To me, an additional mechanism would be to use the OBS under competition to draw up your short lists for the small contracts. Then you either use a call-up or a rotation. But it's to use it more.
The Chairman: As I understand what you're saying -
She's suggesting this is an improvement, Mr. Bélair? Jump in.
Mr. Bélair: She's talking about a computerized bank in which there is obviously a bank of firms that could supply very specific supplies.
But that is not using the OBS system. The OBS system is to advertise for a tender; it's not a shopping list of firms. That's the point I want to make.
The Chairman: Do you want to add something to that?
Ms Labelle: Yes, Mr. Chairman. I was not talking of a shopping list. What I was talking about was using the OBS and indicating that we would have in agriculture, for example, the need for retaining the services of ten specialists in agriculture, but on a call-up, as we need it.
The Chairman: Like a water engineer?
Ms Labelle: A water engineer.
So you put the request on the OBS. You select the best ten, based on the terms and conditions. Then, for a period of two or three years, let's say two years, rotate them.
The Chairman: Rotate them.
Ms Labelle: So you could even have a very small contract, yet not have to issue a request for proposals each time you use the service.
The Chairman: So, to conclude, that's a sort of recommendation you would ask us to consider -
Ms Labelle: Yes.
The Chairman: - in terms of a change or an enhancement, if I could use that word, of OBS. It's a change to the OBS.
Ms Labelle: Yes.
The Chairman: That might be interesting to consider. Thank you.
Mr. Bryden.
Mr. Bryden: I apologize to Mr. Bélair, as I was on another thread there.
I find myself at a little bit of a disadvantage, because you've not come with the kind of documents and lists of numbers that I adore so much. So I will just have to find my way through my questioning, if I can.
Do non-profit companies bid competitively?
.1620
Ms Labelle: Up to now they have not, other than if we used only their category to do so. The private sector did not feel it would give them a level playing field to have non-governmental or not-for-profit organizations bid on the same kinds of contracts.
We have had discussions in the last six months with all the players at the table, the private sector as well as non-governmental organizations, universities and colleges. They have now come to the conclusion, after having looked at this much more carefully, that they would all be ready to compete on the same request for proposal, which we feel would be much better than having the two classes, as we have now. On the basis of their recommendations of a few weeks ago, we will be now considering this with our minister. We'll probably be going to the Treasury Board to bring about modifications to the current practice.
Mr. Bryden: Then let me help you with this, because it seems like a good direction in which to go. I would like a little bit of historic information on this very subject.
I'd like to confine my remarks to the service area rather than goods. So everything I'll deal with is the $126 million that you do in services. What I'd like to see is a comparison of spending for over two or three of the most recent years between non-profit and for-profit companies, and with non-competitive awards versus competitive awards.
You have indicated to me that what I'm going to see essentially is that there's a lot of money going to non-profit companies - that's if ``companies'' is the right word, indeed - that did not have to compete. Nevertheless, I'd still like to see that.
Ms Labelle: Sure.
Mr. Bryden: That would give us an idea of where you have been and where we hope to see you go.
Am I clear on that?
Ms Labelle: Yes.
Mr. Bryden: Another thing that interests me very much is just a listing - I've asked this of other ministries that have come before us - of the top fifty non-competitive service contracts that you have let in the last three years, say. Again, I'm looking at the dollar value. I'd like the actual name of the company or the organizations you've done.
So you can see where we're going there. I'll be able to compare for-profit and non-profit organizations, and I'll be able to identify whatever patterns and trends there are and look at the whole shopping list.
Ms Labelle: That's fine.
Mr. Bryden: The other thing I'd like to look at is how many contracts to CARE Canada have been let over the past ten years. I guess every contract to CARE has been on a non-competitive basis.
Ms Labelle: CARE Canada, yes, would be not-for-profit. They usually go to provide services to refugees in camps. A lot of their work is done through the UN refugee group.
Mr. Bryden: CARE Canada is on our territory.
Ms Labelle: Yes.
Mr. Bryden: This is precisely what I'm curious about. Am I to understand that the various contracts CARE has received for doing whatever it's doing have been untendered, sole-source contracts? This is like the the management it does in Bangladesh.
Ms Labelle: These are distributed on the basis that they provide a part. Let's say this is work that requires the value of $300,000. They will, in many instances, provide from 25% to 50% of the cost either through volunteers or through funds they have raised. Then we provide the remainder of the support to them, to the extent that we need the work to be done.
Mr. Bryden: But if you don't tender, how do you know you're getting dollar value?
I can think of one case specifically, which is CARE Canada's involvement in the Bangladesh project. It's receiving $5.4 million to do the management of that project.
.1625
Now, as I presume this is an untendered contract, one question I would ask you is, surely there are other organizations, even for-profit organizations, that could provide the same management service as CARE Canada. Is that not true?
Ms Labelle: When we have a situation where the private sector is capable of providing the service, our tendency has been to go to the private sector, unless you have a situation where CARE Canada has been able to raise quite a lot of money on its own and where our cost is quite a bit lower.
The point I was making earlier in terms of our discussions was that I personally felt that it left two parallel systems that in a way were discriminatory both ways. They prevented not-for-profit organizations from being able to apply when we had a request for a proposal, and on the other hand, it also meant that they were getting, through contribution agreement, access to work from CIDA. So this is why we would like to put everybody on a similar footing.
Mr. Bryden: No, I appreciate that we are heading in that direction, but I'm trying to see where we've been, because when you get where you're going I'll know that I'm there with you.
Ms Labelle: Okay.
Mr. Bryden: If I can get it straight in my mind, then, the problem is that by sole-sourcing to a non-profit organization, let's say for the sake of argument CARE Canada, one is denying the opportunity of competition to another non-profit organization that might have been able to supply the same service - in this case we are actually talking about management services - and we're also denying the opportunity to a for-profit person.
Where you're hoping to go is that you're hoping to put this very thing -
Ms Labelle: Yes.
Mr. Bryden: Okay, I think that is dynamite. But I would like to see the figures -
Ms Labelle: The breakdown.
Mr. Bryden: - that will give us a grasp of that. I thank you very much.
The Chairman: Thank you, Mr. Bryden.
Mr. Bellemare, please.
[Translation]
Mr. Bellemare (Carleton-Gloucester): Ms Labelle, you state that it might be worthwile to use the Internet. Do you think that it would be better than the OBS?
Ms Labelle: Personally, I think that we should be using both or at least consider using both since many companies have already invested in the OBS and have now become used to it. Therefore, since we have a system that works well, I would be inclined to say that we should also use the Internet so as to expand our scope.
Mr. Bellemare: Have you already received any complaints regarding the OBS?
Ms Labelle: I will ask John Redmond, who is responsible for contracts, to answer you. The answer I gave you earlier was probably the most obvious one.
[English]
Mr. John Redmond (Director General, Contracting Management Division, Canadian International Development Agency): No, really, we have received a lot of compliments about going on the OBS. Regarding some of the testimony that's been given to you before about the difficulties of the searches and so on that people have to go through, one of the things we were able to do - of course, we're not dealing -
Mr. Bellemare: On the question of search, did you ever have complaints?
Mr. Redmond: No. The reason for that is that the way we have set up on the OBS, when you go in, by the time you get to the second or third menu, you can click into the CIDA requirements and go directly to them, and they all appear directly there. We don't have that many at any one point in time, so it's very simple for our supplier community to go in and identify those requirements.
Mr. Bellemare: Mr. Chair, it would be very important that the researcher follow up on that particular point, following points that I brought in Monday and I will bring in later on.
[Translation]
How many of the 80 contracts were awarded using the OBS?
Ms Labelle: None.
Mr. Bellemare: I must tell you very openly, Madam, that I spent the better part of a day with a company and I used their computer to find out the details of the contracts. On two-thirds or three-quarters of the pages, it was stated that the contracts had already been awarded -
Ms Labelle: I am sorry. Now I understand your question.
.1630
Mr. Bellemare: You are an exception, then.
Ms Labelle: I understand your question. On one hand, we are using the OBS to receive the proposals. We then assess them and, once a selection has been made, the name of the successful company is made public on the OBS.
Mr. Bellemare: You communicated with the OBS on 80 occasions. In how many instances did you do it only to announce that the contracts had already been awarded?
Ms Labelle: No.
Mr. Bellemare: Don't just say ``no''. You have to explain what this ``no'' means.
[English]
Mr. Redmond: I believe, Mr. Bellemare, you're speaking about the advance contract award notices.
Mr. Bellemare: Yes.
Mr. Redmond: Since we've been on the system - the first notices went out probably about a year ago - we have in fact made 15 announcements that we had sole-sourced contracts, which is one of the mechanisms that is provided for that we -
Mr. Bellemare: Excuse me, I want to make it very clear.
Mr. Redmond: Yes?
Mr. Bellemare: There were 80 contracts that went through the OBS system out of 550.
Mr. Redmond: Yes.
Mr. Bellemare: Okay. Out of those 80, how many of them were announced on the OBS system with a little star, which indicates it's already given out but you're announcing it anyway?
Mr. Redmond: I'll go back with a little bit of an explanation of the how the system works.
Mr. Bellemare: No, I want an answer to my question. I don't want to be led down some garden path.
Mr. Redmond: We've made 15 announcements on the system since we put the system up.
Mr. Bellemare: I am not listening, because you're not answering my question.
Out of the 80 that went through the system, the OBS system, how many had an asterisk next to the contract?
Mr. Redmond: Fifteen.
Mr. Bellemare: Oh, so we're now down to 80 minus 15, to make 65 contracts that went on.
Mr. Redmond: May I quote the values to you?
Mr. Bellemare: It's not important. We're looking at the system.
For how many of the 65 that were left did people have only 48 hours or less in which to respond?
Mr. Redmond: None. The minimum we've -
Mr. Bellemare: You can assure me of that?
Mr. Redmond: Yes, sir, 21 days.
Mr. Bellemare: I'm sorry, did you raise your hand with both fingers indicating two, or what?
Mr. Redmond: No, we put them out, and most of them are 21 days. We've had some 15 or 16, but never in the 2-day or 3-day category.
The Chairman: Are those working days -
Mr. Redmond: Yes.
The Chairman: - or do they include Saturday and Sunday?
Mr. Redmond: No, calendar days.
The Chairman: Calendar days.
Mr. Redmond: That is for a request for pre-qualification. It is not a full proposal because of our process. So it does not demand the same kind of input in those 21 days that is required for a full RFP.
Mr. Bellemare: Regarding the contractors that would submit the bid, can any contractor that is a qualified - Let's say you're looking for water systems and engineers. All the firms in Canada that want to bid, can they bid?
Mr. Redmond: Yes, sir.
Mr. Bellemare: Oh. I've been told that you tell these contractors that if they've never been in Europe or overseas, or in Africa, or in India, they may not bid, that you would not accept their contract, that in order to be able to bid they have to have that experience overseas, and for those who don't, there's no show.
Mr. Redmond: That's not correct either. When we speak to firms and so on, we indicate to them what kind of - They always ask, what are my opportunities of winning and so on, and what criteria do you use to assess the proposals that are presented?
One of the criteria we use, amongst a number, is the experience of the firm. So they can compete, but one of the things when you end up allocating the marks for the various proposals is, if they have not had experience working in that particular region perhaps, or in development and so on, they would not get as many marks as a firm who has worked in those areas.
Mr. Bellemare: Why not?
Mr. Redmond: Because the firms that have had the experience are better technically qualified to carry out the project.
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Mr. Bellemare: I would hold you right there. As you're aware, for five years I sat on the public accounts committee. I used to dream at night, reading those horror stories with CIDA. If you keep sending back the same engineers as the Auditor General likes to write about in his novels, we're in trouble. What is wrong with having good engineering firms that are qualified - they may never have been in whatever land you may point out, but they can do the work and they can be challenged if they're not good - as opposed to maybe repeating the same jokers who go over there and create funny problems?
You know what they are. Should I enumerate some of them here so I could shock the rest of the committee that's sitting down? Building railways; having engineering firms that don't know, for example, that in Pakistan the gauge is different from the ones they were working on, and then for millions and millions of dollars - For years the trains haven't been running because it's the wrong gauge. You mean to say you would rehire that same company to do another railway line somewhere else, again using the wrong gauge, because they had experience? Probably the experience is with the Auditor General.
Your per diem for firms is how much?
Mr. Redmond: There's no set per diem for anyone. When we do the request for proposals and so on, these are costed proposals. It's part of the appraisal of the process. So they bid the fees to us. For the smaller contracts and so on, we do have a process in place in which we negotiate the fees for each of the particular assignments.
Mr. Bellemare: I will bite my tongue and I'll pass.
The Chairman: Mr. Duhamel, please.
[Translation]
Mr. Duhamel (St. Boniface): I would like to ask a rather broad question. You have been listening to a number of questions and you probably followed the debate when we met with other witnesses. My question is in two parts.
Do you think that your policies regarding the purchase of goods and services differ very much from those of the other government agencies and, if so, is it necessary that they be different?
Secondly, are there any things that need correcting and, if so, which ones? When can we expect you to make those corrections?
Ms Labelle: Regarding the differences, there are a few departments which, like CIDA, were authorized by Treasury Board to award goods or services contracts up to $100,000 without competition. That's one of the ways CIDA was different. Another difference is that CIDA was using a register. Companies had to register and it was from that register that they were selected and invited to bid on the contracts.
We did away with that system because we felt that the access to it was too limited. There is now far less of a difference. That's what I was telling Mr. Bryden earlier. We used to have two processes, one for the private sector and one for the public sector.
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We now want to have only one process so that everybody will be able to compete using the OBS, provided this is acceptable to Treasury Board, of course.
Mr. Duhamel: Do you think, Madam, that if you make these two changes, my colleagues will no longer have any questions to ask on how your policies compare with the policies the government recommends on your next appearance here three or six months from now?
Ms Labelle: If we can be successful with regard to your second point - Regarding your first point, the process is now in place and we already found that there was an increase in the number of open bids.
Thirdly, we ought to be able to make better use of the open bidding system to have standing offers. If we did it more often, the number of contracts awarded without competition would greatly decrease.
Mr. Duhamel: I have one last comment. I would just like to say that it is very likely that this committee or some other committee may want to follow up on this and see, further down the road, whether real changes have been made, what has been changed, for what reasons and what the results have been. I feel that you are sensing this.
I would just tell you that, although I know that you have occupied a large number of high level positions in various departments, there seems to be an attitude that I would not describe as being dishonest, but that sometimes comes close to being dishonest. How do you feel as a person who has occupied high level positions in several departments? Is this a fair comment?
Ms Labelle: Mr. Chairman, one of the reasons why we chose the OBS to substitute for the process that we had been using, is that, when I joined CIDA, it seemed clear to me that the old system was not transparent and that Canadian companies could not easily access it. That is why we made this change which will hopefully prove to be successful.
However, further changes are needed and I was referring to it earlier. Once they are added to the changes already put in place, they will enable us to come up with percentages that will be different from what they are now.
Mr. Duhamel: Thank you.
[English]
The Chairman: Thank you very much, colleagues.
I guess that basically concludes -
Mr. Bryden: I have a few easy wrap-up questions, if I may, Mr. Chairman.
The Chairman: Sure.
Mr. Bryden: I just wanted to emphasize that I was asking for a list of contracts to CARE Canada over the past ten years, just a little description so we know what we're dealing with. I want to be sure that's clear.
Ms Labelle: Yes.
Mr. Bryden: I mentioned the rural road project in Bangladesh and the $5.4 million contract to CARE Canada for management services. Can you tell me why such a specific contract wouldn't be left to CARE Bangladesh? Why use the Canadian head office when one can use a field service? I'm following Mr. Bellemare's line of questioning. What you have out there is the opposite. You have the expertise out in the field and yet you choose, in this particular instance, to use the Canadian. Is that something you can comment on?
Ms Labelle: Yes. The point you're making is a very valid one. However, as a practice, what CIDA has found over the years is that in terms of being able to account and be accountable for the funds that are used, if we work through a Canadian enterprise we are more certain that the funds are disbursed for the purposes for which they have been identified. Although it happens on the ground - in Bangladesh in this case - we're dealing with an institution we are able to follow more closely.
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So at times we do provide funds to organizations, especially organizations that might be providing a particular new essential service between different countries. At times we will use them.
In Bangladesh we have used three very reputable Bangladeshi organizations, such as the Grameen Bank, to help provide occupations, micro-enterprises, to the poor. If you know Bangladesh, Proshika Kendra is also another institution.
So it's not a hard and fast rule. But we're being rather cautious about going directly and using institutions in other countries without using Canadians and Canadian enterprise.
Mr. Bryden: But wouldn't it be more economical to police it through your own departmental auditors rather than by using a third-party Canadian non-profit organization, which is not, shall we say, open to easy public scrutiny itself? It's just a suggestion.
Ms Labelle: Yes, I think it's a good suggestion. We are doing it at times, but it's the one thing perhaps we need to use more frequently.
Mr. Bryden: I have one last line of questioning.
We were talking about procurement. You were saying in the second-last or third-last paragraph of your presentation that non-competitive procurement has to be approved by a director, a vice-president, and so on. I take it that within CIDA there's an infrastructure of employees who make the recommendations. I take it they're procurement officers or whatever else.
Ms Labelle: Yes.
Mr. Bryden: Have you ever made a comparison or examined the number of these employees who have previously worked for a non-profit organization and which organizations these are? Is that data you have collected or could provide?
Ms Labelle: It is data we would readily have. We do have some movement between the private sector and CIDA, and between non-government organizations and CIDA. It is not huge, but there is movement.
On each project team we have a contract officer who is functionally responsible to our central contract service, under John Redmond, in our central management branch. So the technical expertise is available on the team.
Mr. Bryden: I can tell you exactly what I'm fishing for. I'm not sure whether it is there. It's any suggestion that there may be so much crossover from the private sector, both profit and non-profit, that this might be influencing the awarding of non-competitive contracts. It's the type of thing that's a danger in every department.
Ms Labelle: Absolutely. You have to be cautious.
Mr. Bryden: I don't know whether you can do it or not, but I would like some sort of very brief explanation of how the project officers work - what philosophy is behind them. These project officers come up in just about all the ministries. I don't think we would be able to do this in the short term, but down the road maybe this is a whole area where there needs to be a comparison to see which ministry handles this delicate problem in the best way.
Mr. Duhamel: Mr. Chairman, I would like to make the observation that my colleague Mr. Bryden is somewhat like my priest. At the end of the sermon he says ``finally - finally'' - I think he's reached the same record, three.
The Chairman: As your chairman, I'm going to try to use that to get more air time here.
Colleagues, on your behalf, I want to thank our witnesses.
The researchers asked me to complete the record with a few questions. We don't need this information now, but we'd like to have it as soon as possible, in the next couple of weeks.
One of the problems we have with CIDA statistics specifically is that we have no break-out between competitive and non-competitive. I think you should know there's an increasing frustration - and if some of our members are a little more short-tempered today, it's because you're bearing the brunt of a number of departments that aren't keeping appropriate statistics and aren't using the system that's there as well as they should be using it. We're not here to look at what's happened; we're trying to look forward.
We want to have a breakdown of the awards of non-competitive contracts under $30,000. One thing none of my colleagues has talked about yet is the amendments issue specifically. We need to have your numbers on amendments.
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Ms Labelle: Yes, we have them.
The Chairman: I'd like to know what number of your contracts are administered by DPWGS and what number were done by CIDA alone. We need to know the number that are also done by Treasury Board. We'd appreciate it if those were segregated so we can assess the kinds of activities your department is undergoing.
I think we covered the level in the department at which contracts were approved, but if you want to mention that, it's fine. The top 50 have been dealt with.
I'd like to get a response from you on the complaints we've gotten about 30-day suppliers, if you have one quickly. Ms Roberts, did you want to deal with that one?
Ms Claudia Roberts (Acting Vice-President, Corporate Management Branch, Canadian International Development Agency): Yes. I'll give you a quick one, but we may have to get you some actual numbers and statistics.
We looked into what we had been paying out in interest on late payments, and it's actually a very low percentage. I'd have to get you the exact numbers. Our interest payments are really what would help us determine in an invoicing that was taking place after 30 days -
I do know also that one of the problems you had identified earlier had to do with the small business community and the fact that it puts a lot of pressure on the small business community, obviously when they're in a situation where they're receiving late payments.
The Chairman: Right; there's pressure on the cashflow.
Ms Roberts: One of the areas where none of us are very good at having statistics is in a breakdown of any late payments we do have between small, medium and large businesses. I couldn't promise you that we would have the numbers, but we would do the best we could to get them for you; I'm not sure just exactly what statistics we have.
We are very careful at CIDA with our small businesses. In fact, we have a fairly good record of dealing with them and we also have a very low late payment record.
The Chairman: Terrific.
Finally - the first finally - is the OBS that my colleagues Mr. Bellemare and Mr. Bélair mentioned. I think it deserves some review by CIDA and some recommendations. If you'd like to give them to us in written form, we'd be happy to receive them, because we're looking for ways to enhance it.
As you know, tomorrow we're going to be giving a preliminary view. We're not giving a report until some time later, but we're going to give some of our recommendations to Treasury Board for their consideration and we'd be happy to receive your views on how to improve your numbers and direct them towards small business.
The other issue we had was the tailored requirements. We had received some complaints from the small business sector that the demand for services that went out was so specific that only one person or one organization could possibly get the contract. I don't need it today, but again I'd like to get some of your response to that kind of criticism, because again we're looking for ways to try to improve the system.
Colleagues, I think that completes the record.
Dr. Duhamel, did you have something else?
Mr. Duhamel: I have one clarification. Mr. Chairman, when you asked for the percentage of contracts, I take it you were asking for the actual dollar amounts as well.
The Chairman: Yes. I'm sorry if I didn't make that clear.
Can you think of anything else?
Mr. Duhamel: Before we end, I need to get one clarification, Mr. Chairman.
The Chairman: Is it on the witnesses?
Mr. Duhamel: No.
The Chairman: Thank you very much, colleagues. On your behalf, I'd like to thank the witnesses.
We appreciate your being here. Thank you.
Ms Labelle: Thank you.
Mr. Duhamel: I wanted to clarify the events for tomorrow, a day when some of us may be going elsewhere. Could you just tell me what's happening from your vision of the world?
The Chairman: Tomorrow we'll be hearing from the Department of Public Works and Government Services, and immediately following that we will give some preliminary findings, which will be made available. For any members who wish to respond to any of the issues we raise at that time, it will be in this kind of format, with any media that are there.
It's obviously important that we don't violate the rule of privilege, which all members have, that reports are in the House of Commons. This will clearly not be a report from the committee, but it will be a series of findings or recommendations that we will be sharing with our Treasury Board and Government Service colleagues. Our report won't be coming out until some time next year.
Mr. Duhamel: I appreciate that.
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I have one final question, Mr. Chairman. When will I and my colleagues be able to see those findings so that we can react to -
The Chairman: You'll have them before you leave tonight. I have them here. I am just about to distribute them.
Mr. Bellemare: The other day you very receptively accepted my proposal that we have companies come in here for a second round when we come back later in February. If that is still open, when do we give the names of these -
The Chairman: I'd be happy to receive those. You can send them to the clerk or to the researcher. We're keeping track.
As you might expect, over the course of the last week I've been inundated with mail from small businesses throughout the country. I've received a series of pieces of paper from some members of your party and some members of the Bloc. People such as the Canadian Construction Association and some public service unions are interested in the issues that we're dealing with.
I suggest - and I'm in your hands - that it would make sense to have a full in camera meeting of this committee the week Parliament convenes to sort of retool a bit and focus on where we are going. I think some different issues have come out. Tomorrow, as you know, we'll come out with some preliminary findings, but there'll be some other things.
Mr. Duhamel.
Mr. Duhamel: I like your suggestion of the meeting so we could sort of refocus. I would suggest, however - and my colleagues may see it differently - that unless we can get witnesses to come in and actually say ``this is what happened'', with no more suppositions like ``I think'' and ``there might have been'' and ``I sense'' and ``someone told me'' -
I'm past that stage. I want someone to come in and say, ``I did this, and this is what happened, and here's the proof, and here's what has to be done in order to correct it'', because otherwise it's a waste of time.
The Chairman: The other reason is that the Canadian Federation of Independent Business survey will be available to our committee by mid-January, so we will have concrete evidence and a whole series of anecdotes available. I think that corroborates that.
Mr. Bellemare, and then Mr. Bryden.
Mr. Bellemare: To follow along with Mr. Duhamel's suggestion, perhaps that day we could have the organization, either Treasury Board or Public Works, set up a computer on-line whereby witnesses who want to could use it to explain to us and to show us how we could improve and where it's faulty. That would be good. It would be something we could all see.
The Chairman: Good suggestion.
Mr. Bryden: I wanted to follow Mr. Duhamel's line of reasoning as well, just to say, though, let's not put too much emphasis on the quality of the data we'll get from -
The Chairman: No, I don't.
Mr. Bryden: - the Canadian Federation. A survey is a survey. The point Mr. Duhamel was making is that when we are screening witnesses to appear before this committee, let's make sure that if they are going to appear they have the dope and the evidence.
The Chairman: The researcher and the clerk -
Mr. Bryden: They'll never get a better forum for presenting their cases.
The Chairman: Yes, Mr. Gilmour.
Mr. Gilmour: Perhaps during January it might be worth while for the clerk or the researcher to get your shopping list and go through it -
The Chairman: Yes, and circulate it.
Mr. Gilmour: - to see if you've got some real meat in there, because I really agree with Dr. Duhamel that we're just wasting our time if we're getting innuendo.
The Chairman: I am agreed.
We're adjourned until 10 o'clock tomorrow.