PACP Committee Meeting

    I call the meeting to order.

    Good morning, everyone.

    Welcome to meeting number 85 of the House of Commons Standing Committee on Public Accounts.

    Pursuant to Standing Order 108(2), the committee is meeting today as part of our study on the National Capital Commission and the Rideau Hall storage building.

     I'd like to welcome our witnesses.

    Good morning.

    From the National Capital Commission, we have Tobi Nussbaum, chief executive officer; Simon Comtois, vice-president, design and construction; and Alexis Michaud, director, official residences.

    Mr. Nussbaum, you have the floor for five minutes. Thank you for appearing today.

     Thank you very much, Mr. Chair.

    Good morning, everyone.

    Building on nearly 125 years of experience, the NCC is the principal planner and steward of federal lands and assets within the national capital region, which consist of over 11% of the land mass and include over 1,000 buildings, 300 kilometres of pathways, 145 bridges and many more assets, the total value of which exceeds $2.2 billion.

    The building and grounds of Rideau Hall, comprising 26 historic buildings and 79 acres of property, have been managed by the NCC since 1988. As stewards of this national historic site, the NCC is responsible for the upkeep and maintenance of all aspects of the site's infrastructure from sewer lines to energy, from land maintenance to building systems.

    This work is conducted from the operation zone, the working area of Rideau Hall that houses the RCMP, the Office of the Secretary to the Governor General and the NCC, which uses the operation zone as the base for the NCC management of Rideau Hall as well as the other official residences.

    The redevelopment of the operation zone started in 2003 with the conversion of the stables buildings to OSGG offices, the renovation of the Dome Building and then work to modernize and expand the RCMP garage and offices. The names of the buildings in the operation zone, used in shorthand, reference their historic vocation as an agricultural area and working farm.

    In 2013, it became clear that four buildings used to service, maintain and store equipment used to manage the 79‑acre Rideau Hall site and other official residences had reached the end of their useful life. The buildings didn't meet operational needs, causing significant health and safety issues. We therefore began planning to replace them.

    The project would include selective demolition of the buildings, remediation of the contaminated soil, and the construction of one energy-efficient and modernized building that could serve as a service, maintenance and storage facility while also accommodating the 20 to 40 year-round and seasonal employees who would operate out of the site.

    Constructing a new facility also presents a unique opportunity to build to zero-carbon specifications, thereby reducing Rideau Hall's overall carbon footprint, something especially important given that the NCC, as one of only two federal Crown corporations to voluntarily adopt the Government of Canada's sustainable development strategy, is committed to achieving zero carbon across its portfolio by 2050.

    Before the NCC could break ground on a new facility, detailed and extensive studies and levels of federal approvals were required, including by the Federal Heritage Buildings Review Office, given Rideau Hall's status as a national historic site.

    In 2019 the NCC board of directors approved the project budget, which included the costs of demolition, decontamination, studies, risks, contingencies, designs as well as construction. The work began in 2020 and the facility was completed towards the end of 2021.

    There is value in briefly explaining how the project was carried out. In 2018 prior to the start of the project, to enable the NCC to deliver on its deferred-asset maintenance, the NCC held a competitive public tender to retain construction management services to deliver on the dozens of construction projects the NCC initiates each year throughout its portfolio.

    The public tender was awarded to the lowest compliant bidder, Pomerleau, a Quebec-based construction company with extensive national and international experience.

    Pomerleau built the maintenance and storage building for the NCC. To ensure competitive pricing, Pomerleau posted 20 public tenders on MERX for pre-qualified suppliers to line up all the disciplines required to build the building.

     Despite cost increases due to the COVID-19 pandemic and significant construction, inflation and supply chain challenges, the project was delivered within the project envelope.

    Lastly, Mr. Chair, I have a quick note on the building's energy performance. Not only is the building net-zero carbon, but it also generates 40% of the energy it requires to operate, far exceeding the zero-carbon building standard minimum requirement of 5%, creating a negative carbon footprint and reducing the cost of energy on the Rideau Hall site.

    In conclusion, Mr. Chair, I would like to reiterate that the NCC takes its role as a steward of public funds extremely seriously as it fulfills its mandate of building an inspiring capital, while conserving, maintaining and restoring its extensive natural and built assets for future generations.

    Thank you.

    Thank you very much.

    Now we'll turn to our first round.

     Mr. Stewart, you have the floor for six minutes, please.

    Thank you, Mr. Chair.

    Thank you to the National Capital Commission for the witnesses appearing here today.

    I understand that the $8-million barn is part of the operations zone site map sent to the committee by the NCC yesterday and labelled “Barn Building”. From photos we've seen, it looks more like a detached garage with four doors, or a cement building with some solar panels on it.

    Can you tell us who approved this ridiculous $8-million barn project and how it's possible to spend $8 million on a barn?

    Thank you for the question.

    The service, maintenance and storage building has been part of plans initiated by the NCC as far back as 2013-14, where we indicated in our corporate plan the need to replace the four buildings that were later demolished and replaced by the single-service maintenance and storage building.

    Thank you for that.

     My question is, who approved it?

    As a federal Crown corporation, the NCC has an independent board of directors that is responsible, Mr. Chair, for approving all expenditures over a certain threshold, which included the monies for this project.

    Okay.

     How was it possible to spend $8 million on the facility?

    Mr. Chair, I would start by saying that $8 million is a lot of money. The NCC takes the stewardship of all its public funds very, very seriously.

    It is important in this context to recall, as I said in my opening statement, that the cost of this project included the demolition of the previous existing buildings, the decontamination of contaminated soil on sites, studies, design and all of the soft costs, as well as the construction costs for this building.

    I think, to give you a slightly longer answer, there are three important contextual factors that often lead to the prices of infrastructure being even higher than they might normally be.

     One is that we're operating on a national historic site. That means you have to go through layers of federal approvals. You have to ensure the design and the character of the building reflect the historic concepts—

    I appreciate that answer so far, but clearly the cost of climate change effectively has made this clearly, vastly and egregiously more expensive for the taxpayers of Canada. Canadians are properly outraged that while regular citizens are tightening their belts and making financial sacrifices, the Trudeau government approved spending $8 million on what you now call a service, maintenance and storage facility.

    Has anyone been held accountable for this outrageous spending? Has anyone been fired?

    I have a point of order, Mr. Chair.

    Just one second, Mr. Stewart. There is a point of order.

    The witness just clearly identified that the NCC is independent of the government.

    Mr. Blois, you know that's not a point of order. You're welcome to have your turn to get your remarks on the record. The witness, of course, will have a turn to respond as well.

    Mr. Stewart, I did stop the clock. You have three minutes left. It's over to you.

     Thank you, Mr. Chair.

    Through the chair to the NCC CEO, has anyone been held accountable for this outrageous spending? Has anyone been fired? Will any managers or executives at the NCC, including but not limited to you, lose a bonus or pay raise over this scandal?

    Mr. Chair, what's important to note, I think, in understanding the context of checks and balances on spending conducted by the NCC there are three important, salient points.

     One of them is that we are subject to an annual audit by the Office of the Auditor General. The Office of the Auditor General has every opportunity to do an examination of the NCC spending and provide any recommendations or advice—

     I'd like to get a yes or a no in these answers.

    Number one, has anyone been held accountable? That's a yes or a no.

    Has anyone been fired? That's a yes or a no.

    Also, has any manager or executive lost a bonus over this?

    Those are three questions. I'd like yeses or noes to all three of them.

     Thank you.

    Mr. Chair, I do think it's important in answering this question to provide a sense of what the financial oversight is.

    That's not the question, though.

    Mr. Tobi Nussbaum: So—

    Mr. Jake Stewart: Hold on. I have the floor. The beauty of committee is that I get to ask the questions on behalf of the taxpayers. All I'm seeking are yeses or noes. They're very simple answers. Everybody can understand what they mean. That's all I'm looking for.

     Thank you.

    So on terms of accountability, which is what I was getting at, ultimately the board of the NCC is accountable for these projects. I, as the chief executive officer, am obviously the senior manager, and the accountability lies both with the board and with me as the chief executive officer.

    I hope I've answered the question.

    In terms of employment, no, there have been no employees who have lost their employment at the NCC, for reasons that I've explained at the outset, in terms of the fact that we take the stewardship of public funds very, very seriously—

    Thank you for that.

    The third question was, has any manager or executive, not limited to you, lost a bonus or a pay raise over the $8-million expenditure for a barn?

    No.

    Thank you for that.

    All right: How can spending $8 million on a barn that houses zero people and provides no economic benefit be a good use of taxpayers' money?

    Mr. Chair, I think there are two important things to note about the function of the actual building. One of them is that the building houses between 20 and 40 full-time and part-time staff. Think of groundskeepers—

    Excuse me. The barn employs 20 full-time staff...?

    It's the touchdown workstation—

    I didn't ask you that, though. I'm asking you about the barn.

    Mr. Stewart, I'm afraid that is your time. I know we're coming back to you.

     I appreciate that.

    Mr. Blois, sooner than expected, you have the floor for six minutes, please.

    Thank you very much, Mr. Chair.

    Look, I think it's important to set some context. I said this at the last meeting: It's no wonder that we don't have an ability to replace the residence of the prime minister regardless of who's in there. We have Stornoway, which is the residence of the official opposition that Mr. Poilievre currently sits in, but the way that we denigrate the process of managing our national heritage buildings in this country.... With what I just listened to over the last six minutes, it's no wonder why we can't actually overcome some of these realities.

    I do think there has to be scrutiny, and I'm going to get into that in a moment, but with this bombastic way in which we go about it, Mr. Chair, I think most Canadians watching should be a bit disappointed in how we go about it, because it is concerning, in my way....

    That being said, Mr. Nussbaum, at the same time, we are accountable to Canadians. You highlighted correctly that the NCC is independent of government in the way that these decisions around maintenance and upkeep on national historic buildings don't become completely politicized.

    I want to highlight, maybe for Canadians who are watching, that on the budget you are allocated, your board of directors is accountable for identifying the projects that you see fit to move forward. As I understand it, you thought this project was important because, as you mentioned, there are somewhere between 20 to 40 groundskeepers at Rideau Hall who use this particular building to store equipment, to store different dynamics with maintaining the properties.

    I just want to highlight that the NCC, in 2013, under the Harper government, first identified this as a priority, correct? During the Harper government's tenure...not the Harper government, but during 2013, the NCC identified that this was going to have to be a project because the existing facility on site was coming to the end of its useful life. Am I correct in saying that?

    Mr. Chair, through you, the answer is yes.

     In terms of the appearance of this project in the corporate plan, the need to replace these four buildings and build a new service, maintenance and storage facility first appeared in our corporate plan in 2013-14.

     The way the governance of our corporate plan works is that it's approved first by a board of directors, submitted to the responsible minister and ultimately approved by the Treasury Board. That's the governance route in terms of how the NCC's corporate plan is approved.

    You provide recommendations up to the government on what you see is objectively the best pathway forward. I want to understand, then. Had this building not been replaced, there would have been a concern about how you actually would continue to maintain.... I assume this building might actually have been deemed unsafe at some point for the workers who were in facility, correct?

     Mr. Chair, yes.

    There were actually four separate buildings deemed to be at the end of their useful life because of safety and health concerns. These were the four buildings that were demolished to make way, ultimately, for the new modernized facility.

    Otherwise, either we would have been having employees working in perhaps unsafe working conditions in buildings that were at the end of their useful life or, I guess, we would have been expected to keep equipment—tractors and different elements—required to maintain Rideau Cottage out in the elements. Is that a fair assessment of what would have happened had this not been built?

    Yes.

    You mentioned the $3-million decontamination cost. In terms of those four separate buildings, the $3 million was associated with tearing them down, essentially, and then remediating the ground, because they had existed maybe even since Confederation—or certainly for a long time, for over 100 years. Is that what I am to understand?

    The total project budget did include the cost of demolition of the four buildings and decontamination of the soils underneath them. I don't have the exact figures—those two numbers—in front of me, but we could figure that out—

    But essentially around $3 million was associated with tearing down buildings, re-establishing the land and decontaminating it, and then approximately $5 million was associated with this new build of the infrastructure that was being replaced. Is that correct?

    There were costs associated. I don't think they were as high as $3 million, but it is important to note that there are also, of course, soft costs. There are contingencies. There are risk figures in there as well.

    You may have a more accurate description of the costs in front of you. I can certainly pull that out.

    I just heard the Conservative member talk about the costs associated with transition to net zero, with the idea that it's not important for the Government of Canada to also be greening and reducing its decarbonization, its own footprint in Canada, but I do think there are legitimate questions to ask about the costs associated with that.

     Do you have an estimate for this committee? Was the cost an additional 10% to be able to make those buildings net zero? Was it 20%? It's important work, and we need to do it across the board, not just within the Government of Canada but across the country. Do you have a sense of that for this committee?

    Mr. Chairman, I don't know that I can give a specific percentage. What I can say is that not only do we have a legislative responsibility to move towards net-zero carbon but also often what you find is that over the lifetime of the facility being built, you're going to recoup more than the additional costs of construction in terms of energy savings.

    Finally—I have about 15 seconds—Pomerleau was ultimately selected. How many different contractors put bids forward?

    Mr. Chair, as I mentioned, Pomerleau was the construction manager. I know they oversaw at least 20 public tenders—open tenders for subcontractors to bid—in order to have the various disciplines of the project undertaken.

    Thank you, Mr. Chair.

    I understand.

    Mr. Nussbaum, I did hear an offer to submit some documents that would break out the costs. If we could take you up on that, it would be greatly appreciated.

    Thank you very much.

    Mrs. Vignola, you have the floor for six minutes.

    Thank you, Mr. Chair.

    Thank you for being here with us today, gentlemen.

    I understand that the building known as the barn, which is actually a garage, is located on a heritage site. When I look at the costs and see the final product, I wonder what happened to the heritage part. It looks more like an older building from the 1970s than a heritage building. Had heritage factors been integrated, that might explain the $8‑million price tag given the knowledge and expertise that would have been involved.

    As I understand it, Pomerleau won the contract and subcontracted all the elements to another 20 or so companies. Doesn't the National Capital Commission have project managers and engineers who would have been able to oversee the work of those 20‑odd companies? They could have been awarded contracts directly, which would have saved the fees ranging from 10% to 30% that Pomerleau ended up collecting.

    Doesn't the NCC have project managers and engineers?

    Thank you for the question.

     The answer is twofold. Yes, the NCC has in its employ a design and construction branch with professionals who are the interface between the NCC and the construction manager.

    The second part of the answer is that when the NCC made the decision in 2018 to hire a construction manager to help with the implementation of dozens and dozens of projects, it was made through a decision about efficiency. If you go through a more traditional model, a general contractor, that requires hiring additional procurement and financial and project management services. It was deemed at that time that it was more efficient and a better use of public funds to hire a construction management to oversee those projects.

    But yes, absolutely, there are staff within the NCC who play a role of coordinating projects with construction management staff.

    So, did the employees whose job it is to coordinate projects have to coordinate with Pomerleau, which in turn had to coordinate the work of the 20 subcontractors?

    Mr. Chair, I would situate it a little bit differently. The construction manager is ultimately responsible for the delivery of the project, but as the client, the NCC has to work closely in the development of designs and plans, in assuring project integrity and in playing a challenge function on costs.

    Thank you.

    Often, too, the NCC will ensure that there is an independent examination of the cost estimates to get accurate portrayals of what the budgets will be.

    Thank you very much.

    In your remarks, you mentioned that costs exploded, in part because of the COVID‑19 pandemic, but also because of inflation in general. Even so, you said the project was delivered on budget.

    What was the initial budget? What was the final budget?

    I realize that, when contracts are awarded, there can be changes, which can increase the budget. I would like to know what the budget was going in. Let's keep in mind that the total cost ended up being a little over $8 million.

    Importantly, within the project budget there are budget lines for risks and contingencies. In this case, the project budget authority was $8.6 million. The project was delivered at $8.04 million, but included in that $8 million of the projected budget was about $1 million in contingencies and risks.

    What you hope is that you don't have to spend all of those contingencies and risks, but because you don't know the outcome of the consequence of many of these tenders—it's ultimately the market that determines what the cost of these construction disciplines will be—you need contingencies. Often a project budget is an estimate. It's your best guess as to what those numbers will be.

    Thank you.

    I understand that several smaller buildings were also replaced.

    Was the scope of those renovations comparable to what was done with the garage?

    What was the cost of renovating those smaller buildings on the Rideau Hall site?

    The other buildings in question were demolished, but they weren't replaced. Basically, the new building replaced those four buildings.

    So, costs related to those buildings are included in the roughly $3 million for demolition and decontamination.

    Is that right?

    That's right.

    You said earlier that you'll provide the committee with details about construction, demolition and decontamination costs in a few weeks.

    Is that right?

    Yes, that's right.

    Thank you.

    Thank you very much.

    Mr. Desjarlais, you have the floor.

    You have the floor for six minutes, please.

     Thank you, Mr. Chair.

    Thank you, witnesses, for being present here, although I would be remiss if I did not mention your absence at our last committee on this subject. We had various members from Treasury Board and Procurement Canada, Mr. Chair, if I'm correct, who were present here with us. We had a few questions at that time that they deferred to you folks ultimately, so I'm very pleased that you made yourself available to us today.

    Let me be frank: You're in a unique position here such that through happenstance the name of your project happens to be very polarizing. That name has brought you in front of our committee today.

    The second issue is the expenditure. Yes, we've answered the question. I feel satisfied that it's not a barn. As a matter fact it's a large maintenance building that houses an immense amount of equipment on behalf of the government and that replaces the functions of other buildings. That's fair.

    The questions I'm concerned with and the questions that I think Canadians are most concerned with in a really legitimate and rational way have to do with the expenditure, the amount of the project. Yes, from my perspective it's likely that a project like this would cost as much as $8 million. Your envelope, for example, made clear the parameters around these kinds of costs, which were estimated to be approximately $8 million. I understand that the estimation process and the construction process towards its final amount were accurate. I don't have any questions about that.

    My biggest question is related to subcontracting and the work and process of how the NCC decides how a corporation like Pomerleau, for example, could absorb a contract like this and how many periods of fiscal review—their quotes—came in under for the NCC.

    It's important, I think, that Canadians understand the unique difference between a Crown corporation and a private corporation. That's an important differentiation that I would like you to speak to. They should also understand the confusion that your first answer can create in relation to my second question, which would be in relation to why the NCC's own team couldn't have done this work and why you felt subcontracting.... That is a large issue here federally. It falls into a large narrative about how subcontracting since 2006 has ballooned out of control. We see that across the public sector.

    I'm very curious as to why a Crown corporation on behalf of the government, that's supposed to control costs on our behalf, which is why in particular you exist, would be subcontracting.

    Mr. Chair, I think it's useful to note that when the decision was made in 2018 to go with a construction manager, that followed two really salient points.

    One is that a special examination by the Office of the Auditor General in 2017 concluded that we had a serious deferred-maintenance problem. That meant we didn't have sufficient funds to look after the assets for which we had responsibility. As a result, we were given an additional $55 million in 2018 as part of our 2018 budget. Having determined how best to execute those additional funds and what model of construction should be considered, we decided to go with a construction management contract. It was deemed to be ultimately more cost-effective and lower-risk because ultimately we wouldn't have to hire many of the people we would otherwise have to hire under a general contracting model. That was important.

    Second, it is important to note that the construction management contract itself was the subject of a public tender. The NCC went out in 2018 in an open, transparent and public way and asked companies that acted as construction managers to bid to be the construction manager for the NCC. It was competitively tendered. Pomerleau won. The model for construction management is very commonly used. It's being used for the parliamentary precinct project that's currently under way, which I'm sure committee members are aware of.

    Then what happens is that the construction manager takes responsibility for tendering its own public bids to get subcontractors. Competition is ensured both in the selection of the construction manager and in the selection of subcontractors.

     I hope that answers the question.

    It helps to answer it. I appreciate that. Thank you for that explanation.

    It does raise questions about the history of the NCC.

    When did subcontracting, particularly on these public contracts, become the norm for the NCC?

    When the NCC was founded, did it anticipate subcontracting of this nature? A better way to ask that is had it originally contemplated doing the construction itself?

    Mr. Chair, the NCC was founded, or its precursor was founded, in 1899. I can't go back through the full history but I'm pretty certain that 2018 was the first time the NCC engaged a construction management model since this infusion of deferred-maintenance money presented an opportunity to quickly, efficiently and effectively get going with projects without the need, as I said, to hire additional staff.

     That's a really, really important thing you just said. I want to take note of it for Canadians. Because of deferred maintenance costs, because of cuts to the NCC, you were forced to take, in 2018, an approach that allowed a private corporation to take a profit from rehabilitating our buildings—correct?

    Mr. Chair, the characterization that I would make about the decision of going with a construction manager is ultimately based on value for money. It's not philosophical.

    No, no, I appreciate that. I'm not arguing about that. The value for money is there. I'm saying that the value for money, however, could have been different should you have been capitalized the correct amount of money to begin with. This decision, which was first made in 2018, to bring on board a public contractor that would garnish profits off of a public project was only enabled because of deferred maintenance. You said that—correct?

    The comment I made about deferred maintenance was the conclusion of the Office of the Auditor General, who in 2017 had done a special examination—

    Do you agree with that assessment of the Auditor General?

    I'm afraid that is your time, Mr. Desjarlais. I apologize. We will come back to you.

    Mr. Nussbaum, if you want to respond, I'll allow that. Please keep it very brief.

    In general, we were in agreement with the fact that we had a deferred maintenance challenge, yes.

    Mr. Blake Desjarlais: Thank you.

    Thank you. I appreciate that.

    Mr. Nater, good day. You have the floor for five minutes, please.

    Thank you, Chair.

    Through you, thank you to our witnesses for joining us.

    First off, where does the elevator go?

    The elevator goes down into the basement. The basement is a place where we store a lot of the materials and equipment. Many of these are of a size and weight that you can't transport via stairs. A freight elevator moves between the two storeys of the facility.

    So there is a basement. That clarifies that point.

    Your first year as NCC CEO was 2019. That was the year the budget was approved. You were fresh off from being a municipal councillor, where you were accountable to your ratepayers for value for money and for dollars.

    In your first year, you saw a budget approved by your board for $8.6 million for this storage facility. As a former accountable politician, were no red flags raised at that point in your mind about an $8 million-plus facility?

    Mr. Chair, one thing I said at the outset that bears repeating is that $8 million is a lot of money. I have a responsibility to my board and to the taxpayers of this country to deliver all of the NCC budget as effectively and efficiently as possible.

    If the question is about whether I asked questions, the answer is yes. I think the staff can confirm that a big part of my job is challenging numbers, asking questions and ensuring that we are delivering projects as effectively as possible.

    As an addendum to that, were any considerations given to alternatives to actually constructing such a facility, including off-site facilities?

    Yes, there was some consideration given to whether or not this was a facility that could be built off-site. That was actually a line of inquiry I initiated shortly after arriving. The answer to that was no, in large part due to the fact that Rideau Hall, being 79 acres, is really the locus or centre of where a lot of the maintenance work happens. It wouldn't have been cost-effective to build something like this off-site. That was the conclusion, given the fact that the employees who work in Alexis's shop are based on site and need to have easy access to the equipment.

    How many bidders were there for the contract that Pomerleau ultimately won?

    I wasn't at the NCC at the time.

    Is that information that's publicly available...?

    I think there were three, but I'm going to—

    Can we confirm that in writing to the committee within three weeks at the most?

    Yes.

    Thank you for that.

    Pomerleau had the ultimate contract. How many subcontracts were there in total?

    In my recollection of the project, 20 subcontracts were bid in a competitive fashion.

    How many of those were sole-sourced or had only a single bidder?

    I can answer part of the question in the sense that with regard to amounts below a certain amount, there would have been some sole-sourcing done for smaller amounts. As to how many single bidders there were within the 20, I don't have that information—

    What is that amount in terms of where there would be sole-sourcing? What would be the dollar figure?

    I don't think we have it on hand. My guess is that it would be a small proportion of the overall contract amount.

     Could you confirm all of that in writing for this committee, including the number of contracts, the amounts and whether they were sole-sourced or a single bidder?

    Yes.

     Thank you.

    You have one minute.

    Thank you, Mr. Chair.

    Was GC Strategies involved in any of these contracts?

    No.

    Has the NCC done any work with GC Strategies?

    No.

    Thank you for that. I know it's a little off topic, but it was something that we thought ought to get out in public.

    In your corporate plan for 2022-23 to 2026-27, you write:

    This is in your corporate plan and is basically saying that your reserves are going to be more or less depleted, but at the same time, you're coming to us and justifying an $8-million-plus storage facility, or whatever we want to plan it—

    Ask your question, please.

    Is this really a good use of taxpayer dollars?

    Mr. Chair, I think it's really important to note the difference between our operating budget and our capital budget. I believe the line the member was referring to in the corporate plan was referring to the fact that we've had static budgets in operating. As I say, we have, thankfully, over the course of the last five years received additional capital funds, which have allowed us to start addressing the deferred maintenance challenges.

    Thank you very much.

    Now we're turning to Ms. Shanahan.

     You have the floor for five minutes, please.

    Thank you very much, Mr. Chair.

    I'd like to thank the witnesses for being here today, because this is somewhat of a departure for the public accounts committee to be doing this kind of live investigative work over the use of taxpayer money.

    I was interested to hear that the Auditor General does audit your financials each year. Can you share with the committee any findings, comments or suggestions that the Auditor General's office would have made at that time regarding this project?

    Mr. Chair, there have been no concerns raised by the Office of the Auditor General related to this project and, frankly, in the audit record over the last five years—no general concern that required action or follow-up by the NCC.

    However, because it was extremely helpful, I do think it's important, and I appreciate the special examination that was done in 2017, which took a deep dive into the NCC and concluded that the NCC did not have sufficient capital funds to keep its asset base in good condition.

     That's what led, I believe, Mr. Chair, the government to make a decision to offer additional capital funds to the NCC in order to start addressing its deferred maintenance challenges.

    Thank you very much for that, because that's exactly the kind of information that helps this committee in performing its work: understanding where these decisions come from, and where they get off track, quite frankly.

    Earlier, you mentioned that this project was envisaged in 2013-14. That would have been under a previous government, yet, as you responded to my colleague, we know that money was authorized only in 2019. I've had some experience with the problem of deferred maintenance. I worked at one point with McGill University, and, yes, historic buildings that are still fully functional present quite a challenge to any administration.

    Please share with the committee your thoughts on how the deferred maintenance problem actually became quite significant. I think of an expression that we used often at the time: "penny-wise and pound foolish". We don't want to spend the money today, but we end up spending a whole lot more tomorrow.

     Mr. Chair, I think the “penny-wise and pound foolish” adage is appropriate in a deferred-maintenance context. The evidence is very clear that if you don't invest sufficient funds in keeping your assets in good condition, there are real risks that you'll end up spending more if you postpone that work. That was essentially the conclusion of the Auditor General in the 2017 special examination, and it has been the reason why, at the NCC, we've developed an asset-prioritization index. The purpose of that is to really get at critical assets and prioritize critical assets so that we're doing everything we can to address the deferred maintenance of the assets that are at greatest risk physically but also at greatest risk of causing more financial costs for the taxpayers if we defer further the maintenance of and the work on those assets.

    It's a very important principle. We take it seriously. We've developed processes and methodologies to do the best we can with the funds that we have to address the deferred maintenance, as I said, in the order of priority that makes the most economic sense.

    Thank you.

    Correct me if I'm wrong, but this storage and maintenance facility also serves the official residence of the official opposition as well, Stornoway. Can you tell us how that functions?

    That's right. The staff in Alexis' team who are responsible for the maintenance and upkeep of all of the official residences are based out of the Rideau Hall operation zone, and they are using the service, maintenance and storage building for the equipment, vehicles and everything required for the maintenance of all of Canada's official residences.

    Mr. Nussbaum, can you just give the committee a list, by order of urgency and priority, of the official residences or any official buildings under your purview that need to be repaired and looked after immediately.

    That is a list you're looking for, Ms. Shanahan. Is that right?

    If Mr. Nussbaum can respond verbally, that would be appreciated.

    I suspect.... Do you have that at the top of your head?

    I do.

    Well, I'm afraid you're.... Is it long?

    No.

    Go ahead.

    The building that is most in need of deferred maintenance is 24 Sussex, the official residence of the Prime Minister. I believe, Alexis, that is one of.... Are there other buildings that are still in critical condition?

    The farm is in poor condition.

    We have other buildings in poor condition. We have a list of worst to best, and we categorize them through an asset-condition report that we updated in 2021. That information is actually publicly available, and we're happy to point—

    I'll pre-empt you, Ms. Shanahan.

    Why don't you submit that to the committee, then?

    Where's Stornoway on that list?

    That is your time. We will come back to that side.

    Mrs. Vignola, you have the floor for two and a half minutes.

    Thank you very much, Mr. Chair.

    Gentlemen, are there other buildings on the Rideau Hall grounds that need renovating in the next five years?

    Many buildings on the Rideau Hall grounds need renovating. First and foremost is the 25,000-square-foot Rideau Hall itself.

    At this point, what is the estimated cost of renovating all those buildings in the next five years?

    In the next five years, the deferred maintenance cost for Rideau Hall alone is $31 million.

    Thank you.

    That amount is for Rideau Hall alone and includes none of the other buildings.

    Is that right?

    That's right.

    Thank you.

    In your remarks, Mr. Nussbaum, you talked about restoring the site to optimum functionality. My next question ties into my first comment.

    Did building optimization include heritage considerations?

    Yes.

    That's in the sense that, as a national historic site, even though the operation zone is separate and, as you've seen from the handout, is not next to Rideau Hall, we still have to honour and respect the regulations and policies that govern national historic sites. For instance, the construction of the service, maintenance and storage building was subject to review and approval by the Federal Heritage Buildings Review Office.

    You said that the exterior of the garage in embossed sheet metal and concrete was reviewed by Canadian Heritage, which deemed it to be an acceptable heritage appearance.

    I have to say I find that surprising. That's what pretty much every industrial zone in pretty much every city looks like now. It's not a very heritage look.

     Mr. Chair, I think it's important to make a distinction. The entire site is a national historic site, and by virtue of the service, maintenance and storage building's being constructed on a national historic site, it is subject to approval by the Federal Heritage Buildings Review Office.

    All of us accept that this is not a heritage building. I just want to agree with the member on that, Mr. Chair.

    Thank you.

    Mr. Desjarlais, you have the floor for two and a half minutes. Go ahead, please.

    Thank you, Mr. Chair.

    I do want to get back to what I and, I believe, my party believe to be the crux of the issue, which is subcontracting and this creation of a shadow public service. It's been in the works since 2006, and we're seeing these private profits from public contracts starting to build. We don't have an ability, in public accounts, to monitor precisely the costs of private profit in the work of public contracts, but this is a good example of that.

    I think it's important that Canadians understand that this is a serious problem and that we're going to see continued escalation of project costs should we continue to see private corporations bid on this work. They don't do it for free, and you know that, so how much profit did the contractor Pomerleau make from the public service?

    Mr. Chair, I don't have the number for what Pomerleau made from the public service, but—

    Could you provide that number to us in writing?

    I can speak only about the NCC and the work the NCC has done with Pomerleau.

    Who came into a contract with Pomerleau?

    Just to clarify, Mr. Chair, what I'm saying is that we absolutely have numbers for our relationship with Pomerleau, but the question—

    Who signed the contract between the NCC and the contractor?

    That would have probably been my predecessor in the first case, and after the second request for proposals, that would have been me.

    So that means you have to agree that this company will get profit from our taxes.

    Mr. Chair, it's really important—

    I feel as though these are simple questions.

    I'm trying to answer the question by saying that, yes, there are—

    There is profit being made through public contracts.

    Pomerleau was charging—

    I have a point of order, Mr. Chair.

    —the NCC a fee for acting as construction manager. Absolutely the answer is yes.

    They're making money.

    Yes. They are a private enterprise. They are serving as our construction manager.

    The important point that I really don't want to get lost in this is that the NCC had done an assessment prior to going down the road of engaging a construction manager to ensure that it was cost-effective—

    Yes.

    —and it was the right course of action.

    I hear you, and I'm not saying it's your fault that profits—

    Keep it very brief, Mr. Desjarlais.

    —have been made here. The problem is that you were forced to do this because of a deferred-maintenance cost because of a decision of a government. Is that correct?

    Mr. Chair, that's a hard question for me to answer.

    I'm agreeing with the member that we had a deferred-maintenance challenge, and I'm agreeing that we made our best efforts to ensure value for money in the construction model we pursued. Those are two independent facts with which I agree.

    Thank you very much.

    We're turning to Mr. Stewart.

    You have the floor for five minutes. Go ahead, please, sir.

    Thank you, Mr. Chair.

    Mr. Chair, through you to the witness, I think I have asked 26 questions between now and the first time Treasury Board and Public Works were here, and they basically said that you guys could answer all of those questions. Obviously, given the constraints on our time today, I'm going to email you, through the chair, every question that was unanswered. We have a rule at this committee that we are to receive the answers within three weeks. I'll send them to you today, and then we'll look forward to receiving those.

    Let me just correct you. We have a precedent. We would appreciate a response within three weeks. If you're able to hit that, that would be great and you won't hear from us again. If you don't, you might hear from us.

    Mr. Stewart, it's back to you.

     Thank you, Mr. Chair.

    Through the chair to the witness, the Prime Minister's house at 24 Sussex is a lower priority than an $8-million barn. Clearly you, the board of directors, the government and everybody involved failed miserably to achieve value for money. One example of that is that you actually put an elevator in this building that goes underground. When you choose to build underground, the costs are significantly greater than when you build from the ground level up. Clearly, you failed miserably to get value for money. Two million Canadians per month are going to food banks. Many of them can't afford housing. We have a vast shortage of housing potential. We have people who literally can't afford to eat in this country.

    You had private security on these grounds where there are already two levels or multiple levels of security. There was a private security detail attached to the construction of this building. You already had two levels of security on the grounds to begin with. That I find very strange, considering I had to walk through a mob, on camera, between Confederation and West Block the other day, where protesters were literally breaking our laws and obstructing MPs' ability to get to work. I'm confused as to why there would be so much security there.

    Do you believe for a second that Canadians trust you to manage a $40 million-plus project on the Prime Minister's house when you've in fact prioritized a barn in place of it?

    Mr. Chair, I do need to say that the NCC takes the stewardship of public funds extremely seriously. We ensure not only that there are external opportunities for review of the NCC's financial conduct through annual audits by the Office of the Auditor General—

    Excuse me. Do you believe that, though? Do you believe that prioritizing an $8-million barn over the Prime Minister's own house...? Do you believe that Canadians can trust you when you placed a barn as a greater priority than the house?

    Mr. Chair, it may be useful to note, since the question of 24 Sussex was raised, that the NCC is awaiting a decision by the Government of Canada on the future of the official residence of the Prime Minister. It might be interesting—

    Thank you for that. I appreciate the answer. I'm going to start there.

    Let's look at the budgeted $8 million to renovate the Prime Minister's cottage at Harrington Lake. The last figure in the public domain was that it was more than $11 million to renovate the cottage—$3 million more—a significant financial cost to Canadians. Can you provide the committee with the most up-to-date figure for the renovations at the Prime Minister's Harrington Lake cottage?

    Yes, we can.

    What is that number?

    Oh, I don't have it on me. I wasn't prepared to speak to that property as part of—

    Really; that's one of the properties you manage, but you're not prepared to speak on it.

    A voice: [Inaudible—Editor]

    Mr. Jake Stewart: In a sense, you've come totally unprepared, because you'd have that answer: What is the total cost of the renovations to the Harrington Lake cottage that the Prime Minister likes to run to on occasion, when he likes to hide? What's the cost of the renovation?

    Mr. Kody Blois: [Inaudible—Editor] point of order.

    It's not a point of order.

    Mr. Stewart has made his point. Why don't we hear from the witness.

    [Inaudible—Editor] still hear the point of order.

    All right. Fair point.

    You have a point of order. Badgering is not a point of order.

    Well, it's not allowing the witness to—

    No, it's—

    It's also the manner in which Mr. Stewart is addressing the witness.

    An hon. member: It's your job as chair.

    Neither of those are points of order.

    Mr. Blois, I give members great latitude here to both speak and press for answers. I recognize that Mr. Nussbaum has said he will provide that information. Mr. Stewart feels that an answer should have been forthcoming immediately. He's done his question, and now we will turn the floor back to Mr. Nussbaum.

    I expect members to moderate themselves here, and I appreciate when they do that, but a good committee does involve some push-and-pull on both sides.

    It's over to you, sir.

    Through you, Mr. Chair, I'd be very happy to provide accurate answers in writing to the questions posed as part of the list of questions that the member indicated would be forthcoming.

    Thank you.

    Mr. Stewart, you have about 45 seconds.

     Clearly, you've come totally unprepared.

    Trudeau spoke in his memoir about how it was his childhood haunt and that he was astonished by the shape it was in.

    Can you confirm if it was Prime Minister Trudeau who approved and directed the National Capital Commission to undertake more than $11 million in renovations—that we know of—to his beloved cottage that he detailed glowingly in his memoir?

    Mr. Chair, as I stated in my opening comments, the governance of the NCC is very clear—

    Answer yes or no, please. Just give a yes or no.

    It's the board of directors that makes the decisions—

    No. I'm sorry. No.

    The Prime Minister had no involvement.

     Mr. Chair, I've asked a yes-or-no question. I expect a yes-or-no answer.

    Unfortunately, that is the time.

    I appreciate, Mr. Stewart, that we don't always get what we want. I understand your frustration, but the witness has agreed to provide information and I'm sure he's going to do that.

    Finally, I'm going to turn to Mr. Blois. You have the floor for five minutes again, please.

    I don't think it's me, Mr. Chair.

    Pardon me.

    Mr. Badawey, pardon me. My scorecard is changing here by the minute.

    It's no problem, Mr. Chairman.

    Mr. Badawey, you have the floor for five minutes, please.

    It's nice to see you, sir. Thank you for joining us today.

    Thank you. I appreciate it. It's great to join you folks here today for, I believe, the first time.

    I want to dig a bit deeper into the management of the assets you're responsible for. I guess this would otherwise be known as the business of what you do. I'm sure, having done it for many years, it is something that you know very well.

    With that, my first question is.... I would only assume you have an asset management plan for all of the assets you manage.

    Yes.

    It's one thing to have an asset management plan. That sounds great—it is great. However, do you have the financing plan that's attached to that asset management plan?

    In short, yes.

    The slightly longer answer is I mentioned that we have something called the "asset priority index". What that does is evaluate our assets and help us make investment decisions based on the condition of the asset in question.

    That's correct. Basically, that's just prudent in terms of.... I come from the municipal sector, and one of the things we are disciplined to do is just that. Otherwise, you run into an infrastructure deficit and things, quite frankly, cost probably triple, if not quadruple, if you put them off by deferring a lot of that maintenance.

    With that, you have your asset management plan—I want to spell this out so that everybody gets a visual of this—and you have the funding that goes along with it and you prioritize.

    I'm assuming that this particular project is part of that asset management plan, as well as the funding allocation that would be attached to it. Also, because of its condition, it was prioritized.

    Yes, Mr. Chair.

    That's correct.

    Has that been provided to the committee?

    Probably, the important document in question is the NCC's asset condition report of its official residence portfolio, which is a public document.

    Okay, but it hasn't been provided to the committee.

    I don't believe so.

    I recommend that you provide that to the committee so they can actually see, again, the asset management plan, the provider lists and the funding. This is not just a one-off. This is actually part of a bigger picture as it relates to your fiduciary responsibility, quite frankly, of the assets you manage.

    The next question is, in terms of your unfunded liabilities as per the asset management plan, are there any unfunded liabilities that are identified that are not part of your asset management plan?

    I would answer that by saying that we still have a deferred asset maintenance deficit. Is that an unfunded liability? To a certain extent, yes—

    You've identified it—

    —but that would all be articulated.

    —but you haven't funded it yet.

    That's correct.

    We all understand whether we own our home, we own a car or we own asset individually.... A business under proper business practice or a public entity under proper business practice would identify asset repair maintenance that goes along with the life cycle. Of course, the second part of that is an ultimate reserve that has to be established to replace that asset.

    Do you actually have reserves, not only to repair or maintain, but also to replace the assets once they hit the life cycle?

     That's correct.

    You do. Okay.

    You do pay-as-you-go when you can for the capital side in your capital budgeting, but obviously, sometimes your capital budgeting may impact your operating budget as it relates to financing debt.

    Do you actually finance the debt, as well, through your operating...?

     We do not have the legislative capacity to take on debt.

    So, there's no debt at all. It's all pay-as-you-go.

    Essentially, when you have projects like this—or any project, for that matter—they have to be done through the prioritization of your asset management plan, and a project has to be financed with no debt.

    That's correct.

    Okay.

    My last question, Mr. Chairman, is with respect to what the committee has been provided.

    I do think, with all due respect, that some of the questions might be.... I'm not saying that anyone's being political here, because I'm sure they're not. They're actually looking at the best interests of the taxpayers today and, equally important, of tomorrow by not deferring liabilities and literally landing that on the next generation of those who would otherwise have to take on that responsibility because it's been deferred.

    Essentially, what I would actually do is provide the committee with that information so that they can see it. Therefore, with their fiduciary responsibility and our fiduciary responsibility on behalf of the taxpayers of Canada, we can make the proper decisions based on what's being presented to us both with respect to the asset management plan and the financing plan attached to it. The second part of that is any unfunded liabilities that would otherwise be deferred to the next generation of taxpayers.

    Mr. Chairman, how much time do I have left?

    I'm afraid you're out of time.

    I was going to allow Mr. Nussbaum to respond, but—

    That's very unfortunate.

    Yes, I'm afraid that takes us to the end.

    I want to thank the National Capital Commission for appearing today. I appreciate it and your agreement to respond to some of the questions with the documents you said you would get back to us.

    I'm going to excuse you all, please, and suspend this meeting for about five minutes. We will return in camera.

    Again, thank you very much.

    I'm suspending the meeting.

    [Proceedings continue in camera]