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Proceedings of the Standing Senate Committee on
National Finance

Issue 5 - Evidence - Meeting of February 12, 2008

OTTAWA, Tuesday, February 12, 2008

The Standing Senate Committee on National Finance met this day at 9:34 a.m. to examine the order of reference regarding the estimates laid before Parliament for the fiscal year ending March 31, 2008, with respect to the implementation of the Federal Accountability Act.

Senator Joseph A. Day (Chair) in the chair.


The Chair: Good morning and welcome to this meeting of the Standing Senate Committee on National Finance. My name is Joseph Day, and I represent the province of New Brunswick in the Senate and I am chair of this committee.


Welcome to the thirteenth meeting of the Standing Senate Committee on National Finance. The committee's field of interest is government spending and operations, including reviewing the activities of officers of Parliament and those various individuals and groups that help Parliamentarians to hold the government to account. We do this through estimates of expenditures and funds made available to those officers of Parliament to perform their functions, and through budget implementation acts and other matters referred to this committee by the Senate.

Today, we are continuing our examination of new appointments arising out of the implementation of the Federal Accountability Act. On December 11, 2007, we heard from officials from the Treasury Board Secretariat and the Privy Council Office on aspects of the implementation of the Federal Accountability Act, and specifically on matters concerning positions and offices created or modified under the act.

We will have two panels today. Our first panel is from the Library of Parliament. I am pleased to welcome the Parliamentary Librarian, Mr. William R. Young; Mr. Allan Darling, Senior Special Advisor, Parliamentary Budget Officer; and Mr. Jacques Sabourin, Acting Director General, Parliamentary Information and Research Services. As the Federal Accountability Act establishes the position of Parliamentary Budget Officer within the Library of Parliament, we look forward to your comments. Following that, we will have a question and answer period.

William R. Young, Parliamentary Librarian, Library of Parliament: Honourable senators, good morning. I appreciate the opportunity to meet with you to provide the committee with a status report on our effort to establish the Parliamentary Budget Officer within the Library of Parliament. To ensure that we have a good discussion, I have brought the two gentlemen with me today. Jacques Sabourin has been the Acting Director General, Parliamentary Information and Research Services for the last four months. Allan Darling, who came out of retirement, is a former Deputy Secretary to Cabinet, Deputy Secretary to the Treasury Board and most recently has been advising the World Bank on financial and budgetary systems in developing countries. I am pleased that he has been able to help me establish the Parliamentary Budget Officer.

We are here to listen to your advice and recommendations regarding the organization and the work of the PBO. They will help me answer any questions you may have.


In my efforts to establish the Parliamentary Budget Officer, I have tried to be consistent in following four guiding principles: to implement the law as set out in the Parliament of Canada Act; to provide non-partisan service to parliamentarians — which has been and continues to be — the hallmark of the Library of Parliament for over 130 years; to strengthen Parliament's institutional capacity to hold the government to account — in this case by giving Parliament access to additional expertise on economic and fiscal issues; and, finally, to ensure that parliamentarians continue to receive the best possible service from the whole Library.


All of us are aware that the Library of Parliament plays a unique role in the provision of professional, non-partisan services to senators and members of the House to support you in your work. As this work evolves and adapts to change, the library must also evolve if it is to meet its overarching commitment to effectively serve Parliament and you, its clients.

Some of you may remember my appearance before the Standing Senate Committee on Legal and Constitutional Affairs on September 19, 2006 while the committee was discussing Bill C-2, the Federal Accountability Act. I noted at that time the importance of fully integrating the PBO within the Library of Parliament. I also pointed out that the officer and the functions associated with the PBO should be recognized as having a specialized capability that would provide the library with additional expertise in giving advice and analysis on the state of the economy, the nation's finances and the expenditures of government.

Locating the officer within the Library of Parliament means that senators and members of the House can rest assured that he or she will functions as their servant, operating within the library's mandated approach and professional ethos in its service to Parliament as a whole. Appointing the officer and creating this capacity allows the library to build on the strong foundations of expertise that we already have in place. It avoids duplication of efforts and resources and generally provides for economies of scale wherever possible.

In short, it gives us an opportunity to strengthen our services to you.


While some of the functions associated with the Officer will enhance the library's ability to do what it already does.

However, there is an important new element — one that provides Parliament with a new dimension in exercising fully its role in overseeing the executive. Hence, the PBO's mandate is to provide independent analysis of the government's fiscal plan.

As you know, this means explaining the assumptions underlying that plan and assisting parliamentarians in asking relevant questions relating to the executive's economic and fiscal forecasts. I do not think that the PBO should provide an alternative fiscal forecast because I do not believe that this would enhance parliamentarians' understanding of the underlying factors that shape a government's budget. This information is already provided by several reputable Canadian forecasting firms.


As you know, the library's research staff currently provides Parliamentarians with analysis and information on the estimates. I foresee the Parliamentary Budget Officer taking a lead role with Parliamentarians to provide a more strategic approach. Although the officer will ultimately define this approach, I anticipate that it could include, for example, initiatives to simplify the presentation of information on expenditures to better reflect the specific interests of Parliamentarians.

The amended Parliament of Canada Act, section 79(2)(d), also provides for the officer to furnish cost estimates to Parliamentarians and committees. This is a role that is also currently performed by the library's research services. With the additional resources available to the PBO, I anticipate a significant improvement in the transparency and credibility of costing estimates. I also anticipate that the work of the PBO will focus on higher-level analysis that will improve Parliamentarians' understanding of alternative policy options that might influence future government expenditures.

I believe it is important to understand the distinction between the PBO's function and the mandate of the Auditor General. The Auditor General provides comprehensive analysis related to the probity and management of past expenditures. The PBO, on the other hand, is charged with helping Parliament to comprehend how and why the executive is moving in a particular direction in the future.

When the PBO function was included in the Federal Accountability Act, the government provided for an annual budget of $2.5 million to support the officer. This amount has since increased to $2.7 million. Taking into account the reality that any new operation requires phasing in, the estimate of the Library of Parliament for 2008-09 includes $1.6 million of this amount.

Under the leadership of the officer, we foresee building capacity in two distinct areas. First is an economic and fiscal analysis capacity that will be staffed by experts in economic modeling and fiscal forecasting. Arrangements will also be made to contract with private sector forecasting firms that maintain econometric models of the Canadian economy. This will enable the staff to develop its independent analysis of the state of the economy.

The second capacity, expenditure analysis, will provide additional expertise on the government's expenditure program. This expertise will be integrated into our current work for all parliamentary committees and the staff resources available to them.

Individual requests from Parliamentarians or committees for costing proposals or legislation will be prepared by the PBO in cooperation with our current research services staff. Overall staff resources for the officer and for research services will be augmented with outside contracted expertise. This will allow us to better respond to specific requests of committees for focused research on a specific issue.

Section 79 (3) of the amended Parliament of Canada Act provides that:

The Governor-in-Council may select the Parliamentary Budget Officer from a list of three names submitted in confidence, through the Leader of the Government in the House of Commons, by a committee formed and chaired by the Parliamentary Librarian.

This is through the Leader of the Government in the House of Commons.

Based on the interpretation of the mandate and the approach to implementing it that I have outlined for you, a job description for the officer was forwarded for approval and classification to the Privy Council Office in December 2006. I convened a discussion group in January 2007, nominated by the Canadian Association of Former Parliamentarians, and representative of all parties in both Houses. They greatly assisted in defining the skills and experience that candidates should possess to serve Parliament well and to interact effectively with Parliamentarians.

In late July, 2007, I received notification that the position had been classified as a GCQ5. This classification is roughly equivalent to an EX3, normally a director general level in the public service.

Following a competitive bidding process, the Library of Parliament contracted with the executive search firm, Ray and Berndtson, on August 28. I cannot commend this firm more strongly for the assistance that they have provided to us. Led by their senior Ottawa partner, Michelle Richard, they conducted an exhaustive national search process for qualified candidates. On November 30, I convened the selection committee required by the statute to review eight of the 24 candidates that had been identified through the search process. At that time, the committee identified an additional six candidates to be approached for the position.

The committee held interviews on December 20 and, on its behalf, I forwarded the committee's recommendations to the Government House Leader on December 21, 2007.


When I learned about your interest in our progress to establish the Parliamentary Budget Officer during your meeting last December 11, I forwarded to the chair, on December 14, a chronology of planning and implementation activities undertaken by the Library.

I understand that this document has been circulated to the committee members.


Throughout this process, I have benefited greatly from the comments and advice of the Honourable Noel A. Kinsella, Speaker of the Senate, and the Honourable Peter Milliken, Speaker of the House of Commons. As you know, they are jointly responsible for the operations of the Library of Parliament under my direction and, therefore, ultimately for the PBO. Your invitation to appear before this committee is a timely one. Selection of the PBO is a decision of the government, and I am currently waiting for it.

In conclusion, I would like to toot our own horn a bit. The Library of Parliament consistently receives accolades from Parliamentarians in both Houses for its work. We, however, do not rest on our laurels and are continually looking for both newer and better ways in which to serve Parliament. The Parliamentary Budget Officer will form an important element in the library's renewal of its services to Parliament and to Parliamentarians.

We would be happy to respond to any questions that the committee may have.

The Chair: Thank you very much, Mr. Young. We appreciate this background. I am sure honourable senators will have some questions.

In your opening remarks, you reminded us of your appearance before a Senate committee when we were dealing with Bill C-2. Indeed, I do remember that; it happened in September of 2006, and we appreciated your appearance at that time.

The purpose for this meeting is to see how things are developing since the act came into force in November 2006. The first person on my list is the deputy chair of this committee, who is from Red River, Manitoba, Senator Stratton.

Senator Stratton: I will be brief. You are awaiting the decision from the government?

Mr. Young: That is right.

Senator Stratton: Is there any indication as to when that will come?

Mr. Young: Not a firm indication, no. I know it has been under consideration. I think that you would have to ask the Privy Council Office exactly —

Senator Stratton: Who is the minister responsible?

Mr. Young: I submitted the name to Minister van Loan, as the Government House Leader.

Senator Stratton: I can give him hell tomorrow.

The Chair: As a follow-up, you gave three names to Minister van Loan on December 21 and he will choose one from those, is that correct?

Mr. Young: We submitted our recommendations as a committee. The discussions were somewhat interesting because the qualifications were complex. We were looking for a particular style of individual who would fit very well in terms of serving Parliament.

Mr. Darling can perhaps explain exactly the process here, because he was basically in charge of it.

Allan Darling, Senior Special Advisor, Parliamentary Budget Officer, Library of Parliament: The process is somewhat complicated. The executive search firm canvassed a large community, including private sector think tanks and econometric firms. They advertised nationally and received applications from faculty members of universities and provincial government departments, among others. They also actively promoted the position within the federal public service, as well as in other communities, and identified candidates at the senior levels in the Treasury Board Secretariat, the Department of Finance and the Privy Council Office.

The challenge they had, which was referred to by Mr. Young in his remarks, is that the position had been classified at what is the equivalent of a director general level in the public service. Many of the individuals they approached felt that that level was not appropriate for the responsibilities and types of support that Parliament should receive from the individual. It was felt that this did not reflect how serious the government was about the importance of the position. It was also felt that if a person were only selected at that level, their credibility in interacting with the senior levels of the bureaucracy around Ottawa would be somewhat compromised.

Finally, in selecting the individual, they were looking for someone who would interact well with parliamentarians, understanding that they were a servant of Parliament and were there to assist parliamentarians in the direction they wished the research of this office to be undertaken.

In the end, we did try to interview four individuals. One withdrew from the competition the morning of the interviews. Two other individuals were both very senior-level people and they both had put conditions on their willingness to accept the position. If those conditions could not be met, they did not feel that they should enter into the competition.

I should advise the committee that the person who was the clear consensus of all the members of the interview committee, and was extremely well qualified for the position, has also indicated, during his meeting with the committee and subsequently, that he would not accept the position unless it was classified at least at an assistant deputy minister level. This is one of the challenges facing the decision makers at the moment with respect to how to proceed with the recommendations from the selection committee.

The Chair: How many names have gone forward to the government?

Mr. Darling: There was one name recommended by the committee. In its recommendation letter, the committee indicated to the government that if they wished us to consider further individuals, it would not be useful to do so unless the classification level of the position is substantially increased.

Senator De Bané: Talking about the ADM level, are we talking EX3, EX4 or EX5?

Mr. Young: We were talking EX4.

Senator De Bané: Are you offering EX4?

Mr. Young: No. The job was classified as a GCQ5, which basically overlaps the EX3 and the EX4 categories; but a GCQ appointment is not eligible for performance pay. Therefore, ultimately, the pay scale would be an EX3.

Senator De Bané: ADMs are EX4s. How many EX4s are there in the Government of Canada at the moment?

Mr. Darling: I have no idea.

Senator De Bané: I would not be surprised if there are more than 100 EX4s.

Mr. Darling: I would not disagree with you.

Senator De Bané: Mr. Chairman, I think it would be good to keep that in mind. All the ADMs are at least EX4. It is not too much; that was my point.

Mr. Darling: In the direction of Senator De Bané's comments, when we met with the Privy Council Office last January to discuss the job description, I suggested that they should be thinking of this position in terms of relative equivalence within the federal public service; that what would be appropriate would be the assistant secretary levels within the Privy Council Office itself. It performs similar sorts of coordinating and information analysis functions for members of cabinet, similar to the role you are asking this officer to perform for parliamentarians. Other equivalents would be assistant deputy minister levels within the Department of Finance or the assistant secretary levels within the Treasury Board Secretariat. The working levels of all those positions are, at a minimum, EX4.

Senator Eggleton: It sounds like we are at a bit of an impasse here. You have recommended someone whom you think is highly qualified for the position, but that person will not take the position unless it is reclassified as an ADM equivalent. How will this be resolved?

Mr. Young: We cannot resolve this.

Senator Eggleton: You have submitted other names as well, have you?

Mr. Young: We did not. We submitted the name of the one person after an exhaustive process. I believe you have the report from Ray & Berndtson. It is not a huge community that we are looking at in recruiting someone. I believe they talked to over 400 people, initially.

The selection board, which was comprised of Maria Barrados, the President of the Public Service Commission, Don Drummond, the Senior Vice-president and Chief Economist of TD Bank, Bill Knight, the former commissioner of Consumer Financial Institutions, Allan Darling and I, went through the names initially. We found that, for various reasons, a lot of these candidates would not qualify.

At our first meeting, six names of people were added that we wanted contacted, and from that we had an interview list. As Mr. Darling said, some of these people screened themselves out because of the level. We were left with one extremely qualified candidate. I am not talking about anything like second best. That name was put forward with the consent of the committee and on its recommendation.

Senator Eggleton: The government will have to bite the bullet and reclassify this position if you want this individual. Otherwise, you are back to square one. Is that right?

Mr. Young: In my letter to the minister, I said that if this competition were to be reopened to identify candidates, the level would have to be significantly increased. This was the recommendation of the committee.

Senator Eggleton: You submitted your report on December 21, 2007. It is now approaching two months that this person has been waiting for an answer. Are you concerned about how much longer you have to get an answer and keep this person part of the contest?

Mr. Young: Obviously, I am concerned, but there is not much I can do about it.

Senator Eggleton: I welcome Senator Stratton's offer to try to expedite this matter.

Senator Stratton: I will see what he says.

Senator Eggleton: How will this function in comparison to the work of the Auditor General? The Auditor General looks at past expenditures within a less constrained timeframe than this situation will require. When the budget comes out, actual expenditures can follow quickly behind. Therefore, a quick analysis must be done by the Parliamentary Budget Officer and presented to the committees of the House of Commons and the Senate for examination.

I would imagine there would be many peaks and valleys in terms of how such a system would work. Can you tell us how that can properly meet the needs of parliamentarians, and be timely in the process?

Mr. Young: My expectation is that the individual will be appointed at an appropriate level so that he or she will have access to senior officials and be able to negotiate with them. An amendment to the Parliament of Canada Act, as part of Bill C-2, is the ability for the Parliamentary Budget Officer to have free and timely access to information. That will have to be negotiated with both Treasury Board and the Department of Finance to ensure that Parliament receives the information via the PBO.

Mr. Darling has prepared more details on this. Perhaps he would add a few comments.

Mr. Darling: New to the powers given to the Parliamentary Budget Officer is an obligation to provide an independent analysis to Parliament on the nation's finances, the state of the economy and the government's expenditure plan. Under the statute, the PBO must be in a position to report these elements.

In the work that I completed and the soundings I carried out in preparing the job description, and subsequently, it became quite clear that the Parliamentary Budget Officer will need a small staff of specialized economists to analyze what is happening on a continuing basis in reference to the state of the economy in order to be fully informed of the underlying forces. Ideally, because the GDP statistics are updated every quarter by Statistics Canada, the PBO should be in a position to provide quarterly updates to members of Parliament that explain the changes in the economy and the resultant impact on the fiscal plan.

In discussions that I carried out a year ago, because I thought we would move faster on the appointment, I met with officials from Treasury Board and the Department of Finance to open up discussions on the individual having working-level access to the working documents that the departments were preparing as the economy evolved. In that way, when the Minister of Finance produces an economic update or a budget, the underlying economic projections that have been used for the basis of the minister's position would also be available in advance to the Parliamentary Budget Officer, who can then formulate his or her views and recommendations as to what members of Parliament and senators should focus on. It will allow them to understand what has changed in order to gain insights into where the government's proposals are coming from.

The reception to the discussion was positive. The official from Treasury Board said that we should explore secondments of officers to assist the Parliamentary Budget Officer. As a general observation in the discussions that were held, I would say that there was very positive support by the senior levels of the bureaucracy and those central agencies for the establishment of this position, and assurance that they would work with the incumbent to make it successful.

Senator Di Nino: If Senator Stratton is successful in getting the position reclassified, would you recommend re-starting the process?

Mr. Darling: In my view, the canvassing done by the search firm in September, October and November touched the entire potential pool of people who have the appropriate skill sets to do this kind of work. It is a very limited community of individuals and they all know each other, which was interesting.

Senator Di Nino: You said that some withdrew because they felt that the level was too low. Would you consider looking at those people again?

Mr. Darling: If the government wished us to do that. The statute simply says that the government may appoint from the recommendations. It does not obligate the government to appoint. It could decide easily to redirect the classification. It is entirely their decision.

Senator Di Nino: Would you recommend that?

Mr. Darling: I do not believe so because, in my view, we have identified a well-qualified candidate.

Senator Nancy Ruth: As you all know, departments and agencies of the federal government are required to do a gender-based analysis. I thank the librarian for starting this training process within the Library of Parliament. This analysis is supposed to be prepared for all federal proposals.

Mr. Darling, you have talked about specialized staff but I doubt you meant it in the field of gender-based analysis. Will the Parliamentary Budget Officer be required to do this gender-based analysis in his or her undertakings? What provision is being made in the office to ensure that the expertise and experience exist at the foundation, from the outset?

Mr. Young: As you know, the Library has been doing training in gender-based analysis throughout the organization, in particular with regard to the research staff. I do not anticipate we will stop that training with regard to this particular office. It will be built in and be part of how we proceed with this office in terms of the training.

As Mr. Darling said, it is a small community. That is an impediment. There are also opportunities to recruit younger people and train them, though they often do not stay at the library. I have been committed to the principle of diversity in the workplace, and that includes providing training on gender-based analysis. It is something we will ensure is included in the establishment of the office.

Senator Nancy Ruth: If I were to give you a sample piece of legislation that I wanted this officer to implement and that legislation might have a greater economic impact on those who are disabled or female, et cetera, than it would on the average Canadian, how would this officer deal with something like that?

Mr. Young: The person in this post, like me, is working in the service of Parliament and parliamentarians like you. If this is an expressed wish of yours or of the committee, that would be one way of doing it. The other way would be to set parameters around this officer so that it is included automatically.

I do not have someone in place currently, but it is something I would encourage, if not require, the individual to do. It is important to take all those things into account as legislation goes through the process.

You may not know this but for nearly 15 years I was the analyst who served the committees that related to disability and children. This is something to which I am very committed.

Jacques Sabourin, Acting Director General, Parliamentary Information and Research Services, Library of Parliament: In recent training sessions with analysts, they are keen to have tools and learn more to enable them to consider systematically gender-based considerations when they examine a bill or are working on a project or cost analysis.

Our human resources department will also be involved in setting up an office like the Parliamentary Budget Officer.

Senator Nancy Ruth: I would be ecstatic if the PBO were instructed to routinely carry out such analyses. When I look at the notes before us from the Library of Parliament today, there is no mention of gender. Although there is an effort made within your department, it does not always happen. Anything you can do to strengthen that initiative would be great. I will be watching.

Senator Ringuette: First, I have a comment. I would like to take this opportunity to voice my gratitude for the excellent service that the researchers provide to my office and to this committee. Your operation is a model in efficiency.

I am puzzled about the classification of this position because this person will be an officer of Parliament. The Parliamentary Budget Officer essentially provides services to Parliament in the same way as the Auditor General, et cetera. I understand that the scope of the mandate is not as big. However, for the Privy Council to classify this position as a director general position is an insult to the kind of service that parliamentarians are seeking from this officer. I voice my support, along with my colleagues, in regard to ensuring that we get the right person to do the job for us, and that the compensation package is commensurate with the skill set.

In December 2007, you identified the need for 16 positions to be included in the office of the PBO. How will you recruit the 16 other positions and what will their classifications be? With regard to the current expertise that you have in public finance, what will happen to this group of employees?

Mr. Young: We have started to classify positions under the Parliamentary Budget Officer. We are probably looking at two executive level jobs.

The initial skill set we need to recruit is in econometric modeling and fiscal forecasting. The officer will need to concentrate on getting that capacity in place first because this is the new responsibility that has been added to the Library of Parliament.

We have an estimates group that assists the analysts and committees in putting together packages with the estimates. The Library of Parliament has an Economics Division. We are looking at establishing this new function. Part of that will be internal and part will be contracted out with econometric modeling firms to allow that data to be accessible to Parliament and to parliamentarians. Mr. Darling and Mr. Sabourin have been examining how we can leverage the existing resources and integrate those into what we do now and what we are proposing to do.

Mr. Darling: The point to emphasize is that, in many respects, the existing Parliamentary Information and Research Service is already doing much of the work envisaged in the statute. For example, you do send requests for cost estimates. Committees of Parliament review the expenditure estimates, and library staff has always supported them in that approach. We will still engage all of those staff.

The conceptual thinking being done suggests that what is needed is value-added through a senior level group to provide strategic direction to improve and focus the analysis presently undertaken. It would also provide a focal point for dialogue with parliamentary committees to ascertain where the members' interests lie in order to help structure the type of analysis provided.

The Parliamentary Budget Officer will have a small staff of expert, skilled people trained in the area of economic analysis and analysis of the expenditure management processes and systems of the Government of Canada. This will help better focus the manner in which analysis is undertaken by all of the research staff in support of committee deliberations in any of these areas. That is the best way to describe it. We think a staff of 16 is appropriate to strengthen the analytical capacity. However, a staff of 160 in the research branch will continue to assist in the work that this Parliamentary Budget Officer will be doing.

Senator Ringuette: I have a follow-up question: If we all agree that there is a misclassification for the officer position and you are currently looking at filling 16 other positions, you will need to go through the classification process again. If you do not resolve the officer position, then you are skewing the classification for the other 16 positions. How will you resolve that issue?

Mr. Young: That is a very good question.

Mr. Darling: Only two positions will be skewed by the classification. Those are the two supporting, executive-level positions — one in the economic analysis side and the other on the expenditure analysis side — that will head up the skilled teams. Below that level, you can classify positions according to the skill set you need. It is not driven by the relativities implicit in the Hay classification system that drives the level of classification.

Yes, you are right: If the classification as it presently is stays where it is, we will be looking to recruit two EX-1 people into those positions. In the Department of Finance, EX-1 positions are working level positions, not the leadership positions, in the economic and fiscal forecasting sections. It is another reason why the classification of the PBO position should be reviewed again by the government. The level of that position does have a downward impact.

The Chair: We now have eight minutes left with three more speakers.

Senator Nancy Ruth: Are any of those 16 positions for economists feminist economists?

Mr. Darling: No one has been hired.

Senator Nancy Ruth: You have created 16 categories, is that correct?

Mr. Darling: Sixteen layers. We would then look at the skill sets needed. If gender-based estimating in reviewing budgets is one of the skill sets, then that is the type of skill set that will be attached to one of the positions.

Senator Nancy Ruth: At least one of the positions.


Senator De Bané: Thank you, Mr. Chair. My question is for the Parliamentary Librarian. Am I right in thinking that we have three institutions in Parliament: the House of Commons, the Senate and the Library, the Library being under the joint authority of the Houses?

Mr. Young: Yes, you are right.

Senator De Bané: Why does it have to be the government telling you how to classify this position?

Mr. Young: The same thing applies to me, as well as the two clerks. These are Governor-in-Council appointments that come under the purview of the Privy Council.


Senator De Bané: As you know, we have three institutions involved in the budget of the Parliament of Canada: The House of Commons, the Senate and the Library of Parliament. The Library of Parliament, as Mr. Young has said, is under the authority of the two Speakers.

It is strange that that body, which is under the authority of the two Speakers and which has a separate line in the budget, has to rely on the government to classify that position.

With that being said, you are, of course, very familiar with the Library of Congress. As you know, in the United States their objective is to give to legislators information as good, as reliable and as sophisticated as the information that the executive has. This allows them to discuss with the executive the budget, et cetera.

Tell me frankly: Do we have the same type of service to offer our parliamentarians here as the Library of Congress supplies to the legislators in the American Congress?

Mr. Young: The Library of Congress is a mammoth compared to any other organization with an equivalent mandate in the world.

Senator De Bané: That is true. I was very impressed when I heard the librarian there say: Our objective is to give the legislators information as good as what the executive gets.

Mr. Young: I would suggest that that is our aim as well.

Senator De Bané: That is good.

Mr. Young: The Library of Parliament is of equivalent size. The House of Commons Library in England is approximately the same size. The Chilean Library of Congress is approximately the same size. I think the Parliamentary Library in Australia is about the same size.

Senator De Bané: As you know, Australia has 15 million people. We have 32 million.

Mr. Young: I understand.

Senator De Bané: One last question. On your statement, No. 3:

To strengthen Parliament's institutional capacity to hold government to account — in this case by giving Parliament access to additional expertise on economic and fiscal issues.

On page 2, you say:

Hence, the PBO's mandate is to provide independent analysis of the government's fiscal plan. As you know, this means explaining the assumptions underlying that plan and assisting parliamentarians in asking relevant questions relating to the executive's economic and fiscal forecasts . . . et cetera.

I will provide you with a very simple example. Last week, we had the pleasure of the Minister of Finance appearing before us. He explained how he intended to distribute geographically among the 13 provinces and territories the $1 billion he has for forestry. He chose one way of distributing that amount. Could we ask him: "Would you please give us the pros and cons of each of the different formulas?" Can we go to that extent and ask him?

Mr. Young: According to the mandate that has been provided, yes you can. With the appropriate econometric models at his disposal, that individual should be able to evaluate those things for you.

Senator De Bané: As a member of Parliament now for 40 years, I have met a great number of EX-4s in the government. Their job is among the most challenging and difficult ones.

As Mr. Darling has said, very few people in this country can fill this type of position. I am sure that a man such as Mr. Don Drummond, who was a member of the jury, or selection committee, a Senior Vice President and Chief Economist at the TD Bank Financial Group who was also the Assistant Deputy Minister of Fiscal Policy and Economic Analysis, he would concur that very few people can do an EX-4-level job. We have many EX-4 positions in the government. I hope through the good offices of Senator Stratton, we will elevate that position.

Senator Stratton: I have to interject. I will simply go to Mr. Van Loan and ask him where this situation is in the process, and if he could please expedite a decision.

The Chair: It is the second part of that that we are interested in.

Senator Di Nino: First, I would like to join with my colleague Senator Ringuette in acknowledging the good services that the Library of Parliament provides parliamentarians. I am certainly more than satisfied with the work they have done for me.

My question deals with the budget for this new office. I think Mr. Darling has partially answered it. However, Mr. Young, when I was listening to you, it sounded as if the kind of work this officer would be required to do on behalf of Parliament and parliamentarians was very extensive. Do you think the budget is enough?

Mr. Darling partially answered it by saying that most or much of the work is now being done but, for the record, I wonder if you could answer that question.

Mr. Young: We received a notional allocation from Treasury Board, based on their estimate. My position all along has been that Parliament will decide, based on demand. We do not know the extent to which these services will be used, particularly things like costing.

You may remember when I came before the Senate committee on Bill C-2, I pointed out that there were no limitations on what could be asked. The position or duties are comprised of any proposal that goes before Parliament at the request of any parliamentarian or committee. Ultimately, we do not know. It will be a demand-driven piece.

I am hoping it will be at a strategic level, which would mean not coming in and trying to duplicate the work already performed by the Department of Finance or Treasury Board. Instead, it would allow parliamentarians to take a strategic position in general, in terms of economic fiscal forecasting.

I am not sure that it is enough; I am not sure that it is not enough, at this point in time. I think Mr. Darling may have other comments here.

Mr. Darling: No; my personal opinion is that I think it is an adequate budget to get the office organized and operating effectively. Approximately two-thirds of it will be for salaries, but one-third will be for engaging outside consulting services. Right now, the Library of Parliament budget really does not allow for that.

As Mr. Young has said, it will only be as we see how parliamentarians respond to the services they are receiving and the types of requests they make as to whether we will have to augment that budget in the future.

Senator Murray: Is there to be a second round with these witnesses?

The Chair: The second round will be another panel.

Senator Murray: That is what I thought. I wanted to elicit some further comments and have some further discussion about the value-added that this officer will bring to the process — in particular, the budget process. However, I am sure there will be another opportunity. I am a member of the joint committee on the library, so perhaps I will take advantage of that opportunity.

Senator Ringuette: I have a supplementary question; it is tiny in regard to time, but it would have a big impact.

Two years ago, a motion was passed in the Senate that budgets and bills should be accompanied by regional impact studies. Will this new unit enable all these bills to be accompanied by a regional impact study?

Mr. Young: It should. Some of the contracting work we will have do will be with econometric modeling. Normally, those things are broken down so that they can be done by industry and region. This unit should have an increased capacity to perform that function.

Again, I hate to say wait and see but, in large part, the capacity and function will be determined by the nature and level of the requests that parliamentarians make. The officer will obviously be defining his functions in light of demand. If it is something that the Senate or Senate committees would like to have automatically done, I think we would make that something we would ask the individual to attempt.

Mr. Darling: Just to supplement that answer, if you pass a motion in the Senate that you wish this sort of analysis done by the Parliamentary Budget Officer, then I would advise you to have a champion who can ensure that that message is conveyed across the bureaucracy. In that way, it is not just his team that is doing the analysis; he is out there advocating to the departments that they must include such requests when they bring something forward.

Senator Ringuette: Let us say, I am anxious to meet that champion.

The Chair: Honourable senators, this brings to an end this particular panel. Mr. Young, we want you to convey to all of the members of the Library of Parliament how important the Library of Parliament is — including Guy Bombier, who sits beside me to help our committee, and his colleagues on every committee of the Senate and the House of Commons who help senators and members of the House of Commons do their jobs more effectively.

We are very anxious that this position be filled, and are looking forward to good news coming from Senator Stratton and his interventions on our behalf.

We thank Mr. Darling for coming back from retirement to help move this matter along. I appreciate that you did not anticipate that it would probably take a couple of years to get this done, but neither did we. We are a little anxious that out of a budget of $2.7 million, when you finally get this in place, you will only be looking for $1.6 million next year. That suggests to me that we will be a while before this situation is up and running in the way that we would like.

Nevertheless, we were very supportive of this initiative in Bill C-2 when it came forward. When it comes to dealing with the Parliamentary Budget Officer, the Standing Senate Committee on National Finance, in particular, will be one of his or her best customers. Thank you all very much, Mr. Young, Mr. Sabourin and Mr. Darling.

The Chair: As a continuation of our examination of new appointments arising out of the implementation of the Federal Accountability Act, I am pleased to welcome our second panel this morning. From the Office of the Procurement Ombudsman of Canada, we will hear from Mr. Shahid Minto, Procurement Ombudsman Designate of Canada, and Ms. Isabelle Deslandes, Senior Advisor. Mr. Minto, please proceed.

Shahid Minto, Procurement Ombudsman Designate, Office of the Procurement Ombudsman of Canada: Thank you, Mr. Chair and honourable senators. We welcome this opportunity to discuss the mandate and activities of the new Office of the Procurement Ombudsman of Canada. My colleagues and I are excited about the mandate and look forward to the challenges and opportunities that lie ahead. I am pleased to introduce Isabelle Deslandes, Senior Advisor in my office, who has accompanied me today. We will do our best to answer any questions you may have.

Mr. Chair, perhaps the best way to start is to tell you a little bit about myself. I am a Chartered Accountant and a Certified Fraud Examiner. I have a Masters degree in political science and a professional degree in law. I worked for 28 years at the Office of the Auditor General of Canada, including 14 years as Assistant Auditor General. During that time, I had the privilege of working with and learning from four Auditors General, including the current AG, Sheila Fraser. I was involved in the audits of some 25 government departments, agencies and Crown corporations in the preparation of over 100 reports, many of them related to government procurement.

In July 2005, I accepted an executive interchange assignment with Public Works and Government Services Canada to set up the risk management function. As Chief Risk Officer, I was a member of the executive committee and reported directly to the deputy minister. I was not involved in day-to-day operations but managed the department's risk management, ethics, fraud investigations and internal disclosure programs until September 2007.

Following a nationally advertised selection process, I was appointed last September through an order-in-council to my current position as Procurement Ombudsman Designate. The appointment was on a designate basis because the regulations that fully prescribe the duties and functions of the ombudsman had not yet been issued.

As you know, the Federal Accountability Act provides for the appointment of a procurement ombudsman who will operate at arm's length from government departments to promote fairness, openness and transparency in federal procurement processes. The office's mandate, which ultimately depends on the final form of the regulations, is four-fold: first, to conduct reviews of the procurement practices of departments and agencies and to develop detailed recommendations designed to strengthen fairness, openness and transparency of government procurement. The office will also do some benchmarking and identify and report on procurement best practices and success stories. This is the proactive part of the mandate.

Second, to respond to complaints from suppliers related to contract award and contract administration. For complaints regarding the awarding of contracts, the mandate is limited to contracts worth up to $25,000 for goods and up to $100,000 for services. There are no dollar value restrictions on our ability to address complaints about contract administration.

Third, to establish an alternative dispute resolution process that can enable the government and suppliers to avoid costly litigation when disputes arise.

Fourth, to perform, as directed by the Minister of Public Works and Government Services Canada, any other duties or functions relating to the procurement practices of government departments.

Mr. Chairman, the Federal Accountability Act does not give the office the authority to review procurement of accommodations through leasing, lease purchase or outright purchase. The mandate is focused on reviewing procurement of goods and services, including construction contracts. The Procurement Ombudsman will not make policy, and it will be the responsibility of deputy heads to implement the POC's recommendations.

Since my appointment last September, my colleagues and I have been using our time productively and responsibly to ensure that the office is up and running as soon as the regulations come into effect. As you can appreciate, some initial time and effort has been devoted to finding office space, acquiring computer equipment and hiring a small team of core staff to build our organization. We have moved quickly on to other tasks.

One of the most important things that we have done is develop a vision and a draft service charter for this new office. In short, we aim to be an independent, neutral, professional, knowledgeable and helpful office that responds quickly to suppliers' complaints and makes practical recommendations to improve the fairness, openness and transparency of government procurement. We will work with both public servants and suppliers to achieve positive outcomes. We have also developed draft standards, criteria and procedures for various aspects of our mandate. We have developed website content as well as communication tools and outreach programs to make our services known and easily accessible. Finally, we are working closely with Department of Justice officials to design the alternative dispute resolution process that I mentioned earlier.

We have reviewed the proposed Procurement Ombudsman regulations and have provided detailed analyses and comments to the government. I want to make particular mention of our efforts to consult and learn from stakeholders. We have met with about 20 deputy ministers to date as well as several representatives of the supplier community. We have also met with ombudsmen from other levels of government to learn about their operations and best practices. It is important that duplication and overlap with other procurement oversight bodies be avoided. To that end, we have held a number of meetings with officials from the Treasury Board Secretariat, the Office of the Auditor General and the Canadian International Trade Tribunal. In addition to confirming that our roles and mandates are distinct but complementary, these meetings have enabled us to establish a solid basis for future business relationships with these organizations.

There is one key issue that I would like to touch upon today: How do we ensure that the Office of the Procurement Ombudsman operates, and is seen to operate, in an independent and neutral manner? The government has taken a number of steps to ensure the independence and viability of the office. As mentioned earlier, I was selected through a nationally advertised competitive process and the appointment was made by an order-in-council. In addition, a reasonable start-up and ongoing operational budget has been provided. The Federal Accountability Act clearly stipulates that the ombudsman will submit an annual report to the Minister of Public Works and Government Services who, in turn, is required to table the report in Parliament. However, we were not set up as a separate entity under the Financial Administration Act. The Office of the Procurement Ombudsman receives its funding through a PWGSC appropriation. As a result, the deputy minister's accountability for the management of public funds, property and human resources, as well as his role as chief accounting officer, extend to this office.

Discussions are currently under way to ensure that the specific roles and accountability of both the deputy minister and the Procurement Ombudsman are respected. A Memorandum of Understanding will be signed shortly between the two organizations. To further ensure our independence, the office will use its own resources to develop its communications products and reports. We are consulting with the Department of Justice to develop the best way for the office to obtain independent legal support. Their views will significantly influence the designing of our legal service organization.

Honourable senators, this is a unique situation. While we have a great deal of flexibility in administrative matters and complete independence on program issues, we are part of the executive branch of the government. We are confident that the provisions of the Federal Accountability Act, supplemented by an appropriate MOU, will allow us the required independence while respecting other realities.

I am encouraged by the fact that senior government officials, including those of Public Works and Government Services Canada, the Treasury Board and the Privy Council Office have demonstrated a great deal of goodwill and support in setting up the office. The task is challenging, but not impossible. The Government of Canada, after all, spends several billion dollars annually in goods and services and enters into approximately 400,000 contractual arrangements every year.

My colleagues and I feel honoured and privileged to be part of this ongoing effort to strengthen the confidence of Canadians in the fairness, openness and transparency of the government procurement process. Thank you for the opportunity to be here.

Senator Murray: It would be an understatement to say that we are impressed with your professional background and qualifications, Mr. Minto.

I have a couple of questions. First, you indicate that for complaints regarding the awarding of contracts, your mandate is limited to contracts valued up to $25,000 for goods and up to $100,000 for services. Is that limitation contained in the act itself?

Mr. Minto: In the sense that the act was trying to avoid overlap with the mandate of the Canadian International Trade Tribunal, the limitations are contained in the act. The CITT has the mandate to look at complaints pertaining to awards of contracts over these limits. It was felt that there was a gap because no one was reviewing complaints regarding the awarding of contracts below the CITT limits. That is why this limitation was put in the act.

Senator Murray: I understand your point, but it seems to me that the CITT has a different role and criteria than you will have.

Mr. Minto: That is probably true. However, we are bound by the wording of the mandate.

Senator Murray: Of course.

Senator Eggleton: You say your mandate limits you to complaints of up to $25,000 for goods and $100,000 for services. However, you then say that there is no dollar amount involved pertaining to contract administration. Are not all complaints about some form of contract administration?

Mr. Minto: We thing that two kinds of complaints will be received. One will be someone saying "I should have been awarded that contract; however, I did not get my contract and nobody explained to me why." That is a complaint about contract award. In this regard, there are financial limits. If it is over $25,000 for goods and over $100,000 for services, we will direct them to the CITT. We may want to hear those complaints, but not for the purpose of resolving them.

Senator Murray: You may wish to hear it for a totally different reason. That is the point.

Mr. Minto: Yes. Second, on the administration side, the Government of Canada enters into many long-term contracts. For example, you buy a submarine and you get a 25-year maintenance contract, or you buy computer systems. Over the life of these contracts, people change, the market changes, businesses change, and people's understanding of the terms change. Thus you get into disputes on contract administration. In this regard, there are no limits on the value of the contract.

Senator Eggleton: It is ongoing.

Mr. Minto: It relates to ongoing matters. To date, we have been getting questions like "Where is my cheque?" — that sort of inquiry.

Senator Murray: With regard to the alternative dispute resolution process, will this be a voluntary process on the part of the parties involved, and will both parties have to agree to go there rather than to court?

Mr. Minto: The essence of this process is parties having a degree of confidence in each other, coming together and saying "We do not want to go to court, therefore let us find a better way to solve the dispute."

Senator Murray: At the end of the dispute resolution process, does the decision rendered become the final decision with no further appeal?

Mr. Minto: There is always the question of using the courts. No one will give up their legal rights to have a judicial review. However, the parties will come to us and agree at the outset that they will abide by this process. We will do nothing else after that. We will make a recommendation and form a determination at the end of the process to say, "This is what has happened."

Senator Murray: If one of the parties is not pleased with the decision of the alternative process, can that party go to court?

Mr. Minto: Absolutely.

Senator Murray: It is not only a matter of going to court on a matter of administrative law, or of natural justice having been abused. If the party does not like the amount awarded to him or not awarded, that party can go to court.

Do you know how much litigation has taken place over the past few years as a result of procurement decisions by the government?

Mr. Minto: I do not have the numbers with me.

Senator Murray: You say:

The Federal Accountability Act does not give us authority to review the procurement of accommodations through leasing, lease-purchase or outright purchase — the mandate is focused on reviewing procurement of goods and services, including construction contracts.

Does the Federal Accountability Act exclude review of the procurement of accommodations through leasing, lease-purchases or outright purchase?

Mr. Minto: The Federal Accountability Act, in this regard, is geared almost entirely towards government contract regulations dealing with procurement of materials, goods, services and construction contracts. Leasing is governed through the Federal Real Property and Federal Immovables Act, not the government contract regulations. Our mandate deals strictly with these items. We have asked questions in this regard. However, I do not have an answer for you about why it is excluded. There seems to be no policy reason of which I have been made aware. It seems that it did not happen because the structures of the CITT were being used as a model.

Senator Murray: It is not explicitly excluded. The act was drafted to not include it?

Mr. Minto: May I go the route of "explicitly not included" since there are definitions that limit what we can review?

Senator Murray: Implicitly or explicitly, your authority does not extend to leasing, lease purchase or outright purchase. You are not aware of — and I cannot think of — a legitimate policy reason why that should be the case. Knowing as I do, and as do some people around the table who have been observing these matters for a long time, this area is one with at least as much, if not more, mischief than almost any other area of government procurement. Over the years, it has been an area of controversy. I will leave it at that.

We may want to say something about that, Mr. Chairman.

The Chair: I will bring that to the attention of our colleagues. That is a good point. Thank you for bringing it to our attention, Senator Murray.

Senator Eggleton: I appreciate your desire to be at arm's length, to be independent. However, you are reporting to the Minister of Public Works. You are a part of Public Works and Government Services Canada and not independent of them. Therefore, you will need to overcome some suspicion about being under a minister and his department.

I can recall when I was Minister of Defence, we set up an ombudsman and that was set up, again, within the department. When we got to the regulations, there were provisions for not only the annual report to go public but also other reports on specific issues from time to time. There was a protocol by which that information could be made public so it would not appear to be shoved under the rug by the minister because it could be embarrassing to his department.

The Ombudsman for the Department of National Defence and the Canadian Forces is located completely outside of the Department of National Defence complex. That was symbolic of being independent, as opposed to rubbing shoulders on a day-to-day basis with people who may be the subject of some examination.

You said that you have reviewed the draft regulations. Those have not come out yet — at least, we have not seen them. Therefore, you must have some thought about where this is going. Please tell me how you will overcome the suspicion of being under the thumb of the minister and his department.

Mr. Minto: Having spent 28 years at the Auditor General's office, the one lesson you learned is that in order to have credibility, you have to have independence. The Auditor General is an officer of Parliament and is a different issue. We are part of the executive branch. That is our reality. We have been trying to find a pragmatic approach to dealing with this reality.

With respect to location, right now we are in temporary offices at Place Du Portage, Phase II, quite a distance away from the main PWGSC offices. However, we will be moving to another location. We do not want to be co-located with PWGSC. It would be embarrassing for a person coming to complain to us to bump into a PWGSC official.

The optics do work out in the way that you said. However, I do not report to the Deputy Minister of Public Works and Government Services Canada; I report to the minister. Also, my mandate is not just for PWGSC but is government-wide; it extends to all of the procurement for the Government of Canada, with some reasonable limits with the regulations. This position is not a PWGSC ombudsman but, rather, a procurement ombudsman.

The act specifies that we must complete an annual report for the Minister of Public Works and Government Services Canada. The minister, according to the act, must table that in Parliament within 15 days. That takes care of the public reporting issue.

There is the issue of everyday resources, such as who will process our bills, process our human resources and buy our materials. It made no sense for an organization this size to have an enormous administration component attached to it. I would rather take the money and put it on the program side. We have been having detailed discussions with PWGSC regarding how these services will be delivered. We have agreed to some principles. In the end, however, the money does come through their appropriation. That is a reality we have to accept.

However, we will do a Memorandum of Understanding that will clearly portray our independence. We will pay for the services they provide for us. It will not be a part of their expenditures. We never want to take money from that department's own budget. We have to be seen as independent from them.

Similarly, when we do this memorandum, we hope never to get into a situation where they can decide to take our resources. We must have a separation. The people at the Treasury Board, PCO and at the department are fully aware of this situation and supportive of it. I am optimistic that we will work something out.

Senator Eggleton: Will you be able to report from time to time on different issues and ensure that becomes public? You have mentioned the annual report. However, there may be issues in between.

Mr. Minto: Seeing that we are in the business of promoting transparency, we intend to be fully transparent ourselves. We will have a website. We will publish reports out of reviews of procurement systems and practices in departments to ensure transparency. That is the first part of the proactive aspect of a mandate that we talked about.

Under the act, we have to issue reports to each of the deputy ministers. We will put those on our website as well as important lessons learned. There are success stories. People always talk about the failures of the procurement system, but there are success stories there. We would like to put those out as learning tools, if nothing else.

Senator Eggleton: Thank you very much. I would make one additional comment. I agree with Senator Murray about the accommodations clause that comes with lease-purchase or outright purchase. That should probably be examined as part of this review, as well.

The Chair: We have made a note to follow up on that.

Senator De Bané: First, I want to tell you, Mr. Minto, how impressed I am with your CV, your track record and the positions you have held for the past 30 years. It is very impressive.

In 1978, 30 years ago, I served as Minister of Supply and Services. As you said, there are over 1,000 contracts that are signed every single day. There are 400,000 a year. The safeguards that existed to protect the integrity of the system impressed me. All Canadians have the right to sell to their government, et cetera.

I read your document and see that you will conduct reviews of procurement practices, standards of fairness, openness and transparency. That has always existed. Every week, the department publishes the list of all the contracts supplied during the week so that every supplier can see who won the contract, how much he bid and what he lost. If he is not happy, he can phone the minister, meet with him or call a press conference. There are complaints, but very few, as you know, because the system has many safeguards.

First, I would like to point out that strength and fairness already exist. Second, on the subject of responding to complaints: A supplier who feels he is not well treated can always complain to the minister, deputy minister or the Auditor General.

Tell me what will be different. You seem to suggest that those avenues did not exist up until your appointment. Am I mistaken?

Mr. Minto: Let me start by saying that Senator De Bané mentioned that he was Minister of Supply and Services in 1978. I am sure he does not recall this, but I was his auditor at that time. We have a history.

I will come back to the substantial issues. The issues you raised are very important.

We hope to add value on the issue for complaints. At the moment, there is no independent place for suppliers to go to complain. Yes, you can complain to the department, but they are the people you are complaining about. The supplier community strongly wanted an independent person.

In our role, we will be a very professional office but also a very nimble office. We can quickly go back into the departments, obtain the information and talk to the suppliers. For the most part, our experience shows that complaints can become inquiries. This is due to the complexity of the system and the multitude of transactions going on. People do not have time to answer inquiries quickly.

In the last two months we have established good liaison contacts in offices so that we know where to go; we know which buttons to press to get good information.

On the other hand, we will also be a neutral body. We will not be lobbyists for the suppliers or apologists for the government. These are commercial transactions we are dealing with. We will look at them as commercial transactions and act in a very neutral manner. The value-added is in getting answers quickly, and answers that are appropriate and correct on the complaints side.

Regarding fairness, openness and transparency, you mentioned the Auditor General's mandate. Let me emphasize, the Auditor General's office does not have a mandate on the complaints side. They have a general mandate to look at all government spending. However, they have a small team dedicated to procurement. We have had a lot of interesting discussions with them; and I used to head up that team at one time. They have a small team looking after contracting, because there are so many other expenditures that the OAG has to look at in the scheme of things.

We both feel that the chance of duplicating each other's work is almost nil. We do want to establish a business arrangement whereby we will talk to each other once or twice a year to exchange plans and ideas, so that there is no duplication or wasted effort and we get maximum results.

Senator De Bané: Will you have some authority over the different contracting departments or can you just make recommendations to them?

Mr. Minto: The only authority we have is to make recommendations after careful professional work. It is — and correctly so, under the principles with which we govern ourselves — the responsibility of deputy heads to deal with our recommendations: to accept them, implement them, or do otherwise.

We have one thing on our side, which is that we will make our recommendations public. We will publicize our information and then people will have to explain why they are not following those recommendations.

Senator De Bané: How many people are you projecting to have in your group?

Mr. Minto: When the business case was prepared for this office, I was not a party to that discussion. However, it was projected that we would have about 40 people eventually.

We are being very cautious. We started with a skeleton staff of five people, six with the support staff. The idea was that we would wait and see as the business develops. By the end of March, it is hoped, we will be about 10 people; and by the end of September 2008, up to 20 people. Then we will see how the business is. There is no point in setting up a big shop and having a lot of people here, without any complaints or business to deal with.

Senator De Bané: What do you think of this item that your budget is not a separate entity under the Financial Administration Act — that you have to ask the Department of Public Works for your budget? Do you find that that makes sense? The guy who oversees the department must ask the department for his budget.

Mr. Minto: This is an extremely important issue. Your first premise is right; we are not an independent department. However, your second premise is not totally correct. I do not need to ask the Department of Public Works for my budget. My budget is approved by Treasury Board. It is in a separate category from Treasury Board. Any changes to that budget must come through Treasury Board. That is the principle we have agreed to with the government.

I could not imagine a situation where we would be reviewing the work of the Department of Public Works and then giving them the veto over our resources. That would not happen.

Senator De Bané: This is a very important clarification. I am very happy that you are telling me that.

I want to say that Mr. Minto and I served at the same time in the department that awarded contracts. I was very impressed then with all the safeguards put in place by the department to safeguard the integrity. I did receive, once in a while, a letter from a supplier who thought that he was not treated fairly. However, I was very impressed with all the mechanisms put in place. One of them that impressed me the most was that the senior management of the department did not have the authority to sign contracts. They developed the policies, but it was the lower ranks who could sign contracts implementing those policies. There were many safeguards.

I am sure that you realize that that is really the priority of that department, to maintain the integrity of the system.

Mr. Minto: I do not think the system is broken completely. I think there are things in the system that need to be strengthened. However, I have not worked as an ombudsman yet. This is just based on my previous experience. Certainly, there are a lot of people working hard to maintain the integrity of the system in the public service.

Keep in mind, procurement is much more than contracting. Public Works is responsible for contracting only. Procurement starts from the first day that someone feels a need for something — how you plan from there, the requirements' definition, obtaining funding for that and obtaining policy approval; then you come to contracting. After that is the phase of receiving the goods and closing out the file.

Our mandate extends through the whole part of procurement. We have been talking about Public Works, but they are only in the middle, doing the contracting.

The Chair: That is an important clarification. We thank you for that, and for raising the point with respect to your budget. We are always mindful, for statutory agents who help parliamentarians, that it is important for you to be independent so that we can rely on your information. The Auditor General has raised that issue with us on a number of occasions — the independence with respect to the budgeting process. That is very helpful to us. We thank you for letting us know how your budgeting process will take place.


Senator Chaput: Thank you, Mr. Chair. Mr. Minto, your position was established under the Federal Accountability Act and you must fulfil your duties in accordance with the provisions of this act. But we know that all legislation has limitations.

You talk about the proactive role you play in reviewing practices. Does this act authorize you to push things ahead on this front? And if it is so, to what extent? You review practices and make recommendations. But can you go so far as to strongly recommend remedial action and even penalties? Or do you simply make recommendations in your annual report, to the same department, year after year, without there any being any change? And does your authority enable you to effect change or is this instead the responsibility of the particular department?


Mr. Minto: I will start by saying that the authority is to make recommendations; there is no question about that. This is not an audit function. For the first time in 30 years, I have to say I am not an auditor. This hurts; it is like taking off my skin.

The issue here is that we will be working with the deputy ministers to develop the recommendations: Our recommendations, we hope, with the business model we are developing, will be fairly detailed and prescriptive. They will be recommendations that everyone agrees are doable and we will specify the time frames in which they will be done.

We will publish this on our website and in our annual report. We will also go back and do follow-ups on these recommendations. If they have not been implemented, we will want to know the reason why. Sometimes policies change or some things cannot be done. However, if there is no adequate reason, we will publish that as well.

The only clout we really have is public disclosure. In addition, we will be sending a copy of the report to the minister; and we will be hoping that he will use his offices to influence the system.


Senator Chaput: With respect to the level of independence required for a position such as yours, you mentioned, and I quote:

We are confident that the provisions of the Federal Accountability Act, supplemented by an appropriated MOU, will allow us the required independence while respecting other realities.

Has this MOU already been developed? If so, what does this memorandum contain that convinces you that it will provide you with the independence required for your position?


Mr. Minto: I will start by saying that I was sincere when I said that we are encouraged by the goodwill shown by all the parties. The Deputy Minister of Public Works, people at Treasury Board and people at PCO have gone out of their way to help us to understand the mandate and to find ways to implement it.

The reality is that the money is coming out of someone else's appropriation. The Deputy Minister of Public Works is responsible for all of that. Given the scheme of things whereby we have $5 million and he is responsible for $2.5 billion, we do not want to overstate what is at risk. Under the Memorandum of Understanding, we have had several discussions, and on the financial side there are few outstanding issues. I followed the testimony of the earlier panel with a great deal of interest. We will probably have stronger and tougher discussions on the levels of people on the HR side.

At the end of the day, a tremendous amount of goodwill and interest has been shown. We met about 20 deputy ministers and officials from Treasury Board who all accept the vision that we have for this office. Everyone feels that there is a need for this office, and everyone understands that the only way that we can deliver our mandate is to be credible, and that is dependent on our independence. Given that, I am optimistic that it will all work out.


Senator Chaput: I see that this is the case. In your opinion, what would be the most important thing that this memorandum of understanding should have in order to give you the required independence?


Mr. Minto: My view is that the Department of Public Works will do the processing of our financial transactions, human resources and material management issues. Their job is to monitor what we do. We will never break any rules. Part of their job is to advise the Deputy Minister of Public Works and me as soon as they become aware of a situation whereby we might come close to the line. We would never do it intentionally, but things happen. That is part of their job.

We would want to take the responsibility for making the decisions. For example, we would take the responsibility for developing our programs, where we want to put our money, how we want to spend our money and, to the greatest extent, what levels of people we should have on our staff. We would want to take the responsibility for that but we would get advice from the government in terms of whether we are doing all of that in accordance with the rules, and whether it is equitable and fair. That would be the essence of this MOU. We would take responsibility for our decisions and be accountable for them.

Senator Di Nino: Congratulations on your new challenge, Mr. Minto. There have been some questions about your exclusion from the authority to review the procurement of accommodations through leasing, lease-purchase, et cetera. For clarification, is this area currently being reviewed by some other body that you know of?

Mr. Minto: Do you want clarification of our mandate for lease-purchases?

Senator Di Nino: Yes. You said that the authority to review the procurement of accommodations is not included in your mandate. Is someone else reviewing the procurement of accommodation through leasing and lease-purchase, et cetera?

Mr. Minto: Not in the way that the ombudsman's mandate is structured. Obviously, the Auditor General has an overall general mandate to audit all expenditures of government, which that office does, and they look at leases. If there were complaints from landlords about their contract administration, I do not know of any other independent body to whom they could turn. If someone had concerns about the fairness, openness and transparency of such transactions, I am not sure whether there is an ombudsman-type independent body that they could go to. They could always go to the deputy minister and complain to the department.

Senator Di Nino: The kind of independent review service that you will provide for Canadians in your mandate is not currently available for leasing and lease-purchases?

Mr. Minto: No. It is just not there.

Senator Di Nino: Thank you for that clarification. You talked about your mandate — and we have spoken about it several times — to conduct reviews of procurement practices of departments and agencies. We talked about fairness, openness and transparency.

I have limited knowledge in this area but there is one about which I have heard a number of complaints over the years in respect of the preparation and procurement of documents or requests for proposals. You can structure a document in a way that excludes certain industries or certain companies. One example might be that no foreign companies be allowed to bid, although I am not sure whether that is good or bad. When you prepare an RFP, the document dictates the terms and conditions that can be bid on. Does your mandate include a review of such documents?

Mr. Minto: The mandate includes the review of all practices and processes that would affect fairness, openness and transparency. For example, if we received many complaints from suppliers about the RFP, we would move it over to the first part of our mandate for a proactive review and do a systems-based and risk-based review to determine what was happening.

It is important to remember that fairness is the practice of providing equal treatment to all contractors; and openness is the practice of providing everyone with an opportunity to bid. The foundation of government procurement is openness and best value, and everyone should have equal access to that. If any system or process impedes that, we will speak up about it and report.

Senator Di Nino: I wanted clarification on that as well. We are talking about a highly competitive process that begins with the documents used to invite bidders. You have a mandate to start at the beginning and work all the way through the process?

Mr. Minto: We have that, but allow me to clarify. If a contract falls under the mandate of the Canadian International Trade Tribumal, for example, and a supplier tells us that the contract is for $100 million and the RFP was not properly drawn up, we do not have the mandate to respond to that supplier on that particular contract because it is CITT mandated. However, we do have the mandate to move the issue to the first step of a proactive review, and do a system-wide review to determine how often this happens and why, or whether it was a one-off or if there were other impediments.

Senator Di Nino: This is an important distinction. That concern has been expressed over the years by a variety of people and is an important distinction from what we were talking about before.

I have one last question or clarification. You talked about all of the things that would allow you the required independence, followed by, "while respecting other realities." The comment is interesting when said in that context. Could you educate me as to its meaning?

Mr. Minto: The other realities are that we are not an officer of Parliament. We are not set up as a separate department. The Deputy Minister of Public Works and Government Services Canada has obligations because our funding comes through PWGSC appropriation. We must balance those realities with the reality that we want to be an independent office. That is exactly what that comment alluded to.

Senator Ringuette: I congratulate you, Mr. Minto. I am confident that given the high degree of experience and knowledge that you bring to the office, you are the right person for this important position. However, I am sad to learn that your position is still on a designate basis.

I was part of the committee that reviewed the Federal Accountability Act, Bill C-2. The Senate was accused many times during the course of our review that we were delaying the bill. That was not true. What is true is that 18 months after the bill was sanctioned, there are still no regulations.

When do you expect the regulations will be approved by the government?

Mr. Minto: I thank the senator for her kind words. Keep in mind that I am the designate. There is another process to appoint the ombudsman, and for that there will be a different order-in-council. We should not presume where we are going with this.

My office and I were not part of the process to develop the regulations. We have made inquiries. Obviously, we have an interest. Whether it has taken too long or not is something you would have to discuss with other people. I am told that it is taking its normal course. However, I cannot comment on that.

Senator Ringuette: Have you no knowledge of when the regulations will be approved?

Mr. Minto: I have no official knowledge. However, we have been making inquiries. My expectation is that within the next few weeks it should be done. The regulations were sent out for comment on December 13. People were given 30 days to provide comment, and I understand that comments were received. A government committee was set up to review the comments, but I do not know more than that.

My office has contributed to those comments.

Senator Ringuette: You have contributed to the comments and not to the writing of the regulations? This is most unfortunate, given your background. You would have been a major asset in developing the regulations.

Mr. Minto: I do not control the process. It is a government process that was set out. I presume they are following the process as they should. I hope that our comments will be of some help.

Senator Ringuette: I hope this matter will be dealt with shortly. Otherwise, this Senate committee will be in a position to accuse the government of unduly delaying legislation via the lack of regulations.

What is your role and mandate with regard to the MERX process?

Mr. Minto: It is one way in which the government communicates with suppliers and makes available the information that it has. We will assess it from that point of view. Does it do the job of communicating the government's needs and does it give everyone an equal chance to access it and obtain the information they need?

We have not made any definite plans. This probably will be handled in the proactive part of our mandate, which is to look at systems and processes. We will deal with complaints as they occur. We do not yet have detailed plans developed of what and how we are looking at complaints. We are waiting for the regulations to be released.

Senator Ringuette: One option to eliminate unfairness is to ensure that all departments wishing to purchase goods and services would comply with using the MERX process.

Mr. Minto: I take note of your concern. This is useful information for our planning, and we will use it.

The Chair: Thank you Mr. Minto for being here. We are disappointed to hear that your order-in-council appointment as designate means that there will have to be another appointment process. I would have thought that you would have received an assurance that you would be the Procurement Ombudsman once the regulations were in place. Now you could be working on the various proactive investigations of departments and agencies and their procurement practices that is part of the mandate of that office.

Mr. Minto: I hope I have not misled you when I say "another process." Another order-in-council will have to be issued by the Governor General because this is the process. I do not want to make any announcements before that is done. I have an appointment as a designate and, if I am given an opportunity, I would be delighted and honoured by the appointment.

The Chair: Do you have a reasonable expectation and hope that you may fill that position when it is finally to be filled?

Mr. Minto: Let me say that we have put significant effort into setting up this office and to developing a methodology with which we can be working the day the regulations are announced. I hope that I will be one of the people considered.

The Chair: Are you currently doing a proactive plan, looking at these various procurement practices?

Mr. Minto: That is why we were consulting deputy ministers and people in the private sector, to understand their concerns. That is where these proactive reviews will go.

The Chair: Let me suggest that you may want to interpret your mandate broadly. You described the procurement processes as broad, with contracting being only a small piece. As Senator Di Nino raised with you, the pre-awarding of a contract — the requests for proposals and other aspects at the front end — is an important area to review.

Mr. Minto: We are encouraged by what we have heard today. We do intend to look at the whole process, not just contracting.

The Chair: This committee and the Senate both supported the concept of the Procurement Ombudsman. In committee, it was we who changed the name to ombudsman, which we thought was more appropriate than auditor.

We look forward to your moving full steam ahead on this important job. We will do what we can. I will speak to our internal lobbyist, Senator Stratton, who had to leave. It would be appreciated if Senator Di Nino could take that matter forward and speak to the Minister of Public Works, who sits as a senator, and explain how anxious we are that Mr. Minto proceed with this important job.

Senator Di Nino: Mr. Chair, do I have to register to be an internal lobbyist?

The Chair: I think you have made a public disclosure.

On behalf of the Standing Senate Committee on National Finance, Mr. Minto and Ms. Deslandes, thank you for attending this meeting.

The committee adjourned.

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