The Committee met at 2:00 p.m. in the Colonial Building.

MR. CHAIRMAN (N. Windsor): Order, please!

The cameraman is taking some silent footage in accordance with procedures of the House of Assembly. We follow the same rules here as we do in the House of Assembly.

I would like to introduce the members of the Committee: To my immediate right, Mr. Tom Murphy, the Vice-Chair, the Member for St. John's South; Mr. Danny Dumaresque, the Member for Eagle River; Mr. Alvin Hewlett, the Member for Green Bay; Mr. Bill Ramsay, the Member for LaPoile; and Mr. Art Reid, the Member for Carbonear, who is the newly-appointed member of the Committee, sharing his duties with us today for the first time. It is not your first time on the Public Accounts Committee though, Mr. Reid, is it?

MR. REID: No.

MR. CHAIRMAN: No, you were on before. I thought you were. Anyway, we welcome you back and are pleased to have you here.

First of all, I will ask the witnesses to identify themselves. I will start with the Auditor General, if she would identify the staff that she has with her this afternoon.

MS. ELIZABETH MARSHALL: Thank you, Mr. Chairman.

To my immediate right is Mr. Bill Drover, Audit Principal with the Office of the Auditor General; to my immediate left is Mr. George White, who is an Audit Manager with the Office; and to his left is Mr. Jim Mallard, a Senior Auditor with our Office.

MR. CHAIRMAN: Thank you very much.

Who is to be the spokesperson? Mr. Shortall, you will be?

MR. BRIAN SHORTALL: Yes.

MR. CHAIRMAN: Mr. Shortall, would you like to identify the people who are with you this afternoon?

MR. SHORTALL: Yes, I will, Sir.

On my immediate left, Dr. Mary Mulcahy, the Chairman of the Roman Catholic School Board for St. John's; sitting next to Dr. Mulcahy is Mr. Roger Lester, Assistant Superintendent in charge of finance, otherwise known as the business manager for our organization; next to Mr. Lester is Mr. Pat Royle, the Divisional Head of the Property and Services Division of the School Board; and next to Mr. Royle is Mr. Brian Farewell, the Divisional Head of the Purchasing Office of the School Board.

MR. CHAIRMAN: Thank you very much.

From the Department of Education we have Mr. Bob Smart, the Assistant Deputy Minister. I think you have somebody else coming -we have two names here - but perhaps not.

MR. SMART: We have people observing.

MR. CHAIRMAN: Anyway, I welcome you, Mr. Smart. It is nice to have you here with us this afternoon as well.

I would like to ask the Clerk if she would now swear in the witnesses.

While she is doing that, let me say that testimony is given under oath. We are simply taking evidence; we are not sitting in judgment here today, it is simply to hear your testimony and we report to the House of Assembly. Whereas these proceedings are fairly formal in that regard, we try to conduct them in a relaxed atmosphere. So if you wish to remove your coat or help yourself to a coffee during the proceedings, that is fine. We will have a coffee break later.

The Clerk, if you would.

Mr. James Mallard

Mr. Brian Shortall

Mr. Roger Lester

Mr. Patrick Royle

Mr. Brian Farewell

MR. CHAIRMAN: Thank you very much.

For the benefit of the new witnesses from the Board and other members, the Auditor General and her staff have been sworn in previously and are deemed to be still under oath; that is why they were not asked to be sworn in again this afternoon.

The topic here this afternoon: there are a number of comments made by the Auditor General in the report to the House of Assembly dealing with financial management, purchasing procedures and items of that nature, and the Committee, I am sure, looks forward to discussing these items with the Board members.

First of all, I ask the Auditor General if she would like to make, by way of an opening statement, some comments to introduce this particular topic to us.

Ms. Marshall.

MS MARSHALL: Thank you, Mr. Chairman.

During 1991, the Office of the Auditor General carried out an audit of the Roman Catholic School Board. At that time, the School Board had thirty-nine schools serving over 19,000 students. Our audit was designed to review the areas of Financial Management, Fixed Assets and Purchasing at the school board. This review was designed to assess whether the financial management system was adequate to provide the information to management and the Board for decision-making and control over the Board's revenues and expenditures, and to ensure compliance with The Schools Act and related regulations. The policies and procedures were adequate to ensure proper control over fixed assets, and the purchasing system was adequate to ensure monitoring and control of the purchase function and compliance with statutory requirements.

As a result of our audit, we report the following:

In the area of Financial Management we found many aspects of financial management at the school board inadequate, and these are included in the annual report. A strong system of financial management is necessary to ensure compliance with the provisions of various legislation applicable to the Board, to ensure compliance with the policies and procedures required by the Minister of Education in accordance with the provisions of The Schools Act and to ensure adequate accountability over public money.

In the area of Fixed Assets we found that many of the standard controls, such as reconciling asset counts to the records or the tagging of assets, are not in effect. The recording of additions and disposals of assets was inconsistent and incomplete.

In the area of purchasing, many of our concerns with the purchasing system at the school board related to a failure to follow procedures as required by The Public Tender Act. We have serious concerns as to whether there are adequate controls in place to ensure that the school board purchases are made in compliance with the required policies and procedures of the Board and The Public Tender Act and regulations.

MR. CHAIRMAN: Thank you very much.

Mr. Shortall, would you like to make a brief opening statement?

MR. SHORTALL: Yes I would, Sir. Our school board was pleased to have the opportunity to receive the report from the Auditor General's Department, as it provided us with an opportunity to determine areas of weakness in our organization and to take the appropriate action to correct these deficiencies. We are very receptive to the recommendations from the Auditor General, and we will be able to demonstrate this afternoon that they are already improving our financial management and that we have taken policy and procedural measures to follow up on the balance of the recommendations as well.

One of the priorities which our school board has established has been to ensure that it makes the most efficient and most effective use of its resources, and we feel the Auditor General's Report is assisting us in this regard.

MR. CHAIRMAN: Thank you very much.

I guess this sort of highlights the mandate of the Committee, which is to follow up on the Auditor General's report to see what action has been taken, to recommend any further action that might be required and, I guess, to find out why action has not been taken. So certainly, it is welcome to hear that some action has been taken.

Moving along now, I guess, to members of the Committee. Who would like to begin this afternoon?

Mr. Murphy, the Vice-Chair.

MR. MURPHY: Thank you very much, Mr. Chairman.

I would like to welcome members from the school board. I expect you all have a copy of the document of information that the Committee has in front of it. As I reference, I reference pages and what have you.

If you have a look at the comments of the Auditor General's Department initially, in 'Conclusions', under the heading of Financial Management on page 2 - I will just do a little preamble. I have a few specific questions, and I am sure you will bear with me. Well down in the first paragraph it says: "The budgeting and reporting process, as well as financial statement presentation, could all be improved." Now, I suppose we could say that of 99.9 per cent of school boards and businesses throughout the Province. But we, as a Committee, of course, struck in the House of Assembly, have the responsibility of asking you people to explain some of that expenditure when you consider that in excess of $66 million of taxpayers' money, or approximately $66 million of taxpayers' money, has moved from the Department of Education to the school board.

I refer you to page 4, which discusses some of the discrepancies that the Auditor General addressed. The one about which I would like to ask you, or some of your cohorts or people, Mr. Shortall, might be: I find it a little bit - whatever! - when we talk about no financial management policies and procedures manual that the Board would use. I refer you to your response on page 24. Your response was: "Many policies and procedures are from time to time approved by the Board, which, in fact, set the policy direction of the organization. These policies and procedures are contained in the minutes of the appropriate meetings." Are you saying to the Auditor General that with respect to a financial issue, of whatever magnitude, that would come up, the decision is made at a meeting of the Board and there is nothing to reference from a manual or a procedural manual?

MR. SHORTALL: Mr. Murphy, by way of procedure, if it suits you and the Committee, the business manager and myself could probably field most of the questions for you, because several of your questions are more in the area of his particular expertise.

As the Auditor General points out, we did not have a "procedures manual" that we could point to. The various procedures were found in policies adopted by committees, memoranda circulated internally in the organization. We are now in the process of putting together, and, in fact, we will be submitting to the school board's executive committee at the executive meeting in November, detailed financial procedures and a policy manual which will eventually be published and will address that particular recommendation. So it is not that these procedures did not exist, it is merely that they were not collated into a published document.

MR. MURPHY: And/or in a formal sense, as such. The reason that the question comes from the information provided to the Committee is: when you respond to the Auditor General and say that these policies and procedures are contained in the minutes of appropriate meetings, well, that is the information that we have as Committee members; and the reason that it even highlights it a little further, is the next item, that board minutes are not properly signed. So it leads us to believe that there are financial decisions made with taxpayers' money at board meetings, and then nobody is signing the minutes. That, to me, would be a very obvious discrepancy, I would suggest to you. And this is your response, of course, to the Auditor General.

Then, you go on, page 24, section 1.3, the second paragraph: "We understand the importance of having minutes appropriately approved and signed by the Chairman and Secretary and have taken steps to ensure this is done, in the future, at the appropriate meeting." I would imagine what you are saying to the Auditor General is, now that you have that controlled, plus you have undertaken to get somebody from MUN - I would assume that is looked after now - that you do have a policies and procedures manual in place that is a set of guidelines for your board, as such, in all areas of spending.

MR. SHORTALL: Yes we do. These, as I indicated, will be reported to the executive of the school board at its November meeting and it was part of a project carried out by a co-operative student from the Business School at Memorial whom we had retained at the school board.

The issue of board minutes: I would like to point out that it is not that none of the school board minutes were ever signed, it was merely that at the end of the meeting, or when the minutes were approved at the given board meetings, sometimes the business, the weigh of the business or the schedules of the individuals involved made it that the chairperson or the secretary did not actually attest or sign their signature, and they were done afterwards, two or three weeks later, three or four meetings at a time. We realize that is not the appropriate manner and we have taken internal steps to ensure that as soon as the minutes are, indeed, approved by the school board, they are now signed in the public meeting.

MR. MURPHY: Before I pass my questioning back to the Chair, let me ask you the obvious question: Are you now satisfied that you have a manual in place associated with your financial policies and procedures, and has there been a board meeting to accept that document?

MR. SHORTALL: I am satisfied that we have a draft manual in place which we are now following, and that will be submitted to the school board executive committee during the November meeting. I can't predict the outcome of that particular meeting, but I would assume that it would be ratified by the school board in due course.

MR. MURPHY: Okay, thank you. Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Murphy.

Mr. Reid.

MR. REID: I just want to put a general question to you, Brian. From reading the documents presented to us by the Auditor General and our research people, and from listening to you and reading some of your letters and your reply to the Auditor General's report, I am getting the impression that, yes, you are trying your best to abide by some of the recommendations made by the Auditor General, and I compliment you on that. But the problem I have with it, and the question I have is - and I hope my friends from Education will sit up and pay attention to this one: How did you manage for so long to get away with not abiding by good financial practices? Why is it only now, with some of these basic requirements that are in a number of acts, that you are coming to realize this is something you should have been doing over the past number of years?

MR. SHORTALL: I suppose, Mr. Reid, it is really a question from an individual person's perspective. Every year, we have had audited statements, approved by an auditing company, which have been submitted to the Minister of Education for approval, and for his information. At our annual general meetings every year, an annual budget is reported, and the progress of a given year. Board meetings are a matter of a public record, and we felt that our controls were fairly adequate. However, in deference to the Auditor General, the department has indicated areas in which they would like for us to tighten up our procedures and we are doing our utmost to comply with that.

MR. REID: I am not being critical, Brian. Well, I am being critical, because I think someone has to be critical, here, of the Department of Education. And the question that continuously comes back to my mind when I am reading this is, Where has the Department of Education been? Before the Auditor General did the audit, where was the Department of Education with regard to advising: Use the school board on what you should be doing and what you shouldn't be doing? I read a couple of letters there from a minister, but other than that, there was very little in this to show that the Department of Education was advising your board, as well as other boards, the proper methods of financial administration as it related to certain pieces of legislation. And I am not sure I can sit back and accept the fact that it took the Auditor General to come up with these discrepancies - and I am saying discrepancies, because I am thinking about the tendering act and different things, and I know you have explanations for this. But I just can't, for the life of me, understand what the Department of Education and the people in financial administration in the department were doing to be allowing, not only your board, but a number of boards in the Province, to be doing this for years and years and years; it became common practice to do what you did, and basically, what you are being told you should not be doing right now, by the Auditor General. I think there should have been somebody, before the Auditor General, who should have stepped in and said to you and to all the other boards in the Province: This is not right. This is the wrong financial practice - you should be using a different one. I don't know if you have any comment to make about that.

MR. SHORTALL: I don't really have a comment on it, Mr. Reid. I certainly accept the comment that you have made, in your opinion. I guess we can only respond to reports and evaluations that are provided us and this is what we are trying to do at this point in time. But I wouldn't want you or your colleagues on the Committee to get the impression that the school board was operating totally on its own, accountable to nobody, because there were the normal reports both to the public and to the minister and the Catholic Education Committee and so forth, over the year.

MR. CHAIRMAN: Mr. Reid.

MR. REID: Just a final remark, and I think we have to find it as a committee. I think it would be very interesting to ask the Department of Education people to come back here and put the question to them, you know, what have they been doing? And what are they doing with regard to the financial administration of boards around the Province and the advice that they are providing to boards? Because my personal feeling is that a certain amount of responsibility has to rest here on the shoulders of the Department of Education. And I don't think the Auditor General should be the only one to take the responsibility of going in and having to audit your books and come back and make recommendations to you.

One last question. Because I am a teacher myself, I am interested in one very specific question. Servicing of the debt this year, Mr. Shortall - in 1991, it is quoted here as saying that over $78 per student would be used to service the debt. What are we up to in 1992? Have you any idea?

MR. SHORTALL: Perhaps, Mr. Lester, may be able to give you a better guesstimate that I can at this time.

MR. LESTER: Yes, at this time, due to the decrease in the interest rates, our actual debt servicing cost decreased for the current year as compared to the $1.5 million that was estimated for 1991. It was actually down around between $700,000 and $800,000 for the year. I am not sure what that would work out to, per student basis.

MR. REID: Okay. So it would be less than $78?

MR. LESTER: Sure.

MR. REID: Mr. Chairman, I am going to leave it there. I opened my statement with that for a reason. I think we should come back to it later on. But I am going to leave my questions and let somebody else pick up. I want to ask a number of direct questions later on this afternoon, if you don't mind.

MR. CHAIRMAN: Mr. Reid, you will certainly get another opportunity. Mr. Hewlett, would you like to take up from here?

MR. HEWLETT: Yes, thank-you, Mr. Chairman. To the school board: If, for instance, a board decided that it needed to purchase twenty widgets or whatever and a decision was made to do so, and the administration of the school board decided to go and purchase those particular items at a given shop or wherever without resorting to public tender or quotations, etc. What sort of mechanism is in place to ensure that you meet the requirements in The Public Tender Act or other such statutory requirements? I mean, apart from an occasional spot audit by the Auditor General, what sorts of checks and balances are on your board which is quasi-independent under our denominational school system to see that on a daily basis or on an ongoing basis you do meet the requirements of The Public Tender Act? Is there a big brother watching, so to speak?

MR. SHORTALL: I guess there is always a big brother in all of our lives, Mr. Hewlett. But I will refer to my business manager to explain that to you because it falls under the purview of his responsibilities with our school boards specifically.

MR. CHAIRMAN: Mr. Lester.

MR. LESTER: Thank you. What happens is, internally, we have a process set up whereby nothing through the Board now gets purchased without the issuance of a purchase order. We have, as well, requested of anybody who supplies the Board with goods or services that he not supply them without the purchase order, that leading to the internal process whereby a purchase order goes through our Purchasing Department and they then ensure that the appropriate purchasing policies and procedures, in accordance with The Public Tender Act, are being adhered to.

MR. HEWLETT: Okay. With regard to that particular process, is there, apart from your Purchasing Department - and I am not saying they wouldn't behave properly, and so on. But is there an arm's length or a superseding body, apart from an occasional spot audit, that would ensure that the Purchasing Department is following the policies as presumably laid down by the school board, itself?

MR. CHAIRMAN: Mr. Lester.

MR. LESTER: Yes, well, currently, internally again, there is, I guess, no external watchdog on it. But internally, requisitions that exceed the public tendering $5,000 limit are circulated to other senior staff to be approved, and again ensure that The Public Tender Act has been, in fact, adhered to.

MR. HEWLETT: So it is essentially a sort of peer groups' - group need, for want of a better phrase, at the management level?

MR. LESTER: I guess you could call it peer group.

MR. HEWLETT: One further question, Mr. Chairman. Some years ago when I worked in the Premier's Office - I indicate this was some years ago. Working on the staff there, one is often called upon, I guess, to take an ombudsman-type role. I was approached by a contractor - as I indicated, this was some years ago - indicating that he had bid, I think, on a school building, some $3 million or $4 million, and that came in as the lowest bid. But, in his opinion, because he was of a religion other than the school board concerned, and I cannot even remember which school board it was, they were going with other than the lowest tender. This struck me as somewhat strange, but not being into financial administration at all, I referred it to the Department of Education or Public Works, one of them, and asked them to check into it. They did, and, in due course, out of my causing an enquiry to be made, more than anything else, the lowest bidder did receive the tender. I presume people drew back from original intentions. That is all I can presume. I was just pleased that justice had taken its course.

But could such a thing happen today under your current rules and regulations? As I said, that was several years ago. I was surprised that someone would have to come to me as a political aid and make a complaint that someone other than the lowest bidder was being given a multimillion dollar contract. And if I hadn't interceded, if the tenderer wasn't willing to take the school board to court or cause some other fuss, then presumably, someone other than the lowest bidder would have gotten the bid. I can't remember which board in particular it was now. But that was the circumstance I did run into. Is it possible that could occur in this day and age, do you think?

MR. SHORTALL: I would say it is not possible for it to occur in the jurisdiction of the Roman Catholic School Board for St. John's, Mr. Hewlett. We try our best to adhere to The Public Tender Act. We have received quite an education in that piece of legislation over the past couple of years, particularly, and we will be doing it moreso. Right now, we award to the lowest tender generally in the idea of that value of a contract for building construction or whatever. The tenders would be received according to the requirements. They would be opened in public. The bids would be reviewed by a professional consultant who would make a recommendation to the school board as to the action and the course that we should follow, and religious denomination or persuasion of the principals of a given company is simply not a consideration in our awarding tenders.

MR. HEWLETT: Thank you, Mr. Shortall. So what you are saying, basically, is that the rules and/or procedures involved now would essentially, especially in large contracts, assure compliance with at least the spirit, if not the letter, of The Public Tender Act?

MR. SHORTALL: Sir, in all matters, not only would we comply with The Public Tender Act, but I assure you that, as I said, the religious persuasions of those with whom we do business does not become a criteria for where we place our business, how much or when.

MR. HEWLETT: Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Hewlett.

Mr. Ramsay, would you like to continue?

MR. RAMSAY: Yes, I would, this being, I suppose, according to the Auditor General at our second last hearing in Stephenville, the second school board that we have done, a kind of examination of it. And it brings to light, I suppose, in running such a large organization as the Roman Catholic School Board for the city, that there are bound to be a number of situations and things that fall by the wayside. I am just wondering now, do you feel that all matters have been addressed? I note in some of your correspondence here that the response is to the Audit General's report, but I also am looking at it from a standpoint of wondering if everything has been done to the satisfaction of yourselves? You note that there is a draft Policy and Procedures Manual that you are using as opposed to one that has been ratified by the Board.

I note also some things there where decisions were made by your Finance Committee without any prior board approval having been evident. As to whether or not there was such approval is not clear. It may have been granted, I suppose, that the Finance Committee make these kinds of recommendations and/or authorize these certain expenditures, but there was no evidence of that.

I just wonder if these kinds of things have been reconciled now, and if you feel that you have reached a point where, given further scrutiny in the future, you would give yourself an A rating in this? Because, anything to do with education, I guess, we get into letters and percentages. Students would want to look at it from that standpoint. Anyway, Mr. Shortall.

MR. SHORTALL: We have entered into a process whereby we are reporting to the finance committee of the school board our progress on implementing and following up each and every recommendation of the Auditor General. We are satisfied with the progress we have made to date. We have some recommendations that we have yet to follow up on. One, in particular, has to do with the matter of the fixed assets. That is one in which we are currently investigating ways and means of responding to that particular thing. It is under investigation - or under study, I should say, would be a more appropriate term.

Your reference, Mr. Ramsay, to the role of the finance committee - what we have done with that is we have reviewed the terms of the finance committee carefully with the committee and with the executive committee who essentially oversee that committee's work and also with the staff consultants involved, to ensure that matters are being followed according to Hoyle. So I guess what I am saying to you is that we are following up as best we can, and I am generally satisfied that our organization has taken a turn for the better since we have received these particular recommendations.

MR. RAMSAY: You haven't passed your finals yet, then?

MR. SHORTALL: I would not be presumptuous.

MR. RAMSAY: Okay. With reference to a comment made by my colleague, Mr. Reid, as to where the responsibility lay for this kind of thing, when a situation arises - I just wanted to get into that question that he raised, as far as the area of responsibility goes. You have, I suppose, three parties involved: you have the administration of your school board, you have your board, itself, and you have the Department of Education. So, in your estimation, Mr. Shortall, where does the responsibility lie? Is it all three, or does it lie at your feet, at the Superintendent's desk, or does it lie with the Board?

MR. SHORTALL: My response, Sir, is that it lies, in varying degrees, with all three, depending upon the role and the outlook of the particular body. From an administrative viewpoint, it is my responsibility and Mr. Lester's to ensure that proper procedures are taken and the organization is administered efficiently. We are accountable to the school board. The school board, through its public meetings, as well as by its reception of an audit on an annual basis from our financial consultants, would obviously oversee not only that the policies were in place but that we were adhering to them as best we could. The Department of Education - we would obviously be accountable to that as well. So it would be shared, I would think.

MR. RAMSAY: What I'm getting at is - just to go a little further into that - responsibility for, say, compliance with The Public Tender Act. If, in fact - and we got into this in our last school board, when we had a school board there, the Appalachia, I think it was, out in Corner Brook. If a situation arises where The Public Tender Act is not being followed according to Hoyle, as you mentioned, or according to the legislation as set down, I would think that you received some advice from the Department of Education. But also, as administrators, you are given rules and regulations to follow or legislation which you have to follow. So, with Appalachia, just as a reference to what they came across, they didn't realize they were going about it in the wrong way, and when brought to their attention, they rectified it immediately. In a certain instance, they pointed out that through their lack of awareness, this was the case.

Now, if you look at the fuel oil contract that is referenced in here, as one case in point: I suppose it was a matter of interpretation, because the Episcopal Corporation was not a body that had to adhere to The Public Tender Act, not being a public - or under any responsibility to operate under The Public Tender Act. That was one case where I suppose it was a matter of interpretation at the time.

I just wonder, with regard to The Public Tender Act and how it is followed, just what was the situation that allowed that not to be followed at that point in time when these particular things - not only that, there were a couple of others, I understand.

MR. SHORTALL: Yes, there were several others. I think, with respect to the fuel oil, your comments are very much to the point, also the time of the year and the height of the heating season. We felt some urgency to avail of the supply at a more reasonable cost and we did eventually go to tender on that. I think there is a fair amount of documentation in this particular matter here.

There are some other references concerning the issuance of certain purchase orders where, in retrospect, we agree that things did not proceed as they should have done. We have taken internal measures to ensure that does not happen again. We are satisfied that in the cases where orders were given to purchase things like carpet or whatever without going to The Public Tender Act, per se, it was done because of the extenuating circumstances of the construction project that was at hand, given the fact that school was due to open within a week or ten days of that particular time.

So we are satisfied from that point of view. However, we recognize that there was not 100 per cent compliance in those regards and we have addressed it internally again, as the documentation indicates. We feel that we have controls in place inside the organization now to ensure that it doesn't happen again. In fact, we have even gone to the point of advising our personnel that should they place orders without going through our proper procedures, they will be responsible for the cost and may face greater discipline as a result.

MR. RAMSAY: The final thing I wonder about is exceptions to The Public Tender Act, which, in turn, are filed with the Department of Works, Services and Transportation. In these particular cases, was that part of the procedure followed or not - I am not exactly sure in looking at the document - in registering said purchase as an exception with the department in the proper order?

MR. SHORTALL: To be honest with you, it was not done then, it is being done now.

MR. RAMSAY: Okay. That is all I have right now, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Ramsay.

Mr. Dumaresque, would you like to proceed?

MR. DUMARESQUE: Thank you, Mr. Chairman. I would like to ask the school board, in line with your opening statement on the most efficient and effective use of public funds, do you have any flexibility with your budget, the budget that you get from government? And now that the school tax is not there but you get a direct grant in lieu of the school tax, do you have any kind of flexibility with that budget?

MR. SHORTALL: Yes, we have flexibility. Mr. Lester may want to comment on that a little further, but we certainly have flexibility within the headings for which the money is provided to us; there are some limits to the amount of flexibility, obviously, that we could employ, but there is some flexibility for us. Our hands are not completely tied.

MR. DUMARESQUE: But could you re-allocate, say, some -

MR. SHORTALL: In other words, I could not take capital funds and use them for operating expenses and that type of thing.

MR. DUMARESQUE: No, but could you take some operating funds and use them for another operating expense?

MR. SHORTALL: I would think so, Mr. Lester, that we could do that at this point in time?

MR. CHAIRMAN: Mr. Lester.

MR. LESTER: We have the flexibility whereby we set our own budget based on the revenues which we receive prior to this year, both from the Provincial Government and the school tax - now 100 per cent from the Provincial Government - the restrictions being that some of the funds are designated to the board for specific reasons, being library resource materials, teachers' salaries being an obvious one. We cannot redistribute those funds, but the rest of our revenue which we do get is considered, I guess, somewhat discretionary in the fact that we can allocate it between administration, instructional materials and supplies, and maintenance.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: I am particularly interested in the student assistant issue. Have you had any shortfall in the hours that you have to apply to the student assistants? And what is the dollar figure we are talking about that you don't have this year, that you had last year, as it relates to meeting the needs of the most challenged children in your schools?

MR. CHAIRMAN: Mr. Shortall.

MR. SHORTALL: Mr. Dumaresque, since that particular item was not raised, per se, in the report, I don't have those particular figures with me at the moment; however, our school board received this year an increase in its hours for student assistants. Having said that, we could certainly do with more. There are a lot of needs out there that are not yet being addressed and we are appreciative of the extra assistance we received.

The exact increase, I have an idea of the hours. Mr. Lester may be able to put it in dollars and cents for you better than I could - but it is a guess.

MR. LESTER: As Mr. Shortall said, I am not really sure of the exact amount. I know that there was an increase this year, but the exact dollar figure I couldn't tell you right off.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Is it fair to say, as another school board on the West Coast told us, that they can take some money from some of your discretionary items to apply to student assistants if, in fact, your board deems that a priority exists in that area?

MR. SHORTALL: Well, there was a memorandum circulated by the deputy minister, or the assistant deputy minister - I forget which one - which authorized boards to take those particular measures if they saw necessary.

MR. DUMARESQUE: Yes, because we were in to the school board in Western Newfoundland and found that there was a $40,000 shortfall as far as meeting the needs of the disabled students in that particular area was concerned, and, in fact, $20,000 was an operating surplus and certainly, as I note, even from your statements, you have indicated there in certain parts where savings can be had by the board. We found that still these children are in school and that even $20,000 or $30,000 couldn't be re-allocated to this particular aspect of education. Obviously, I find that reprehensible.

Can you assure us, maybe through the school board, that that kind of situation would not arise in your situation here in St. John's?

MR. SHORTALL: There are many needs which confront a school district, Sir, both from the purchase of instructional material to the acquisition of educational personnel, student assistants, what have you. These measures are proposed and reported to a budget which is passed by the school board on an annual basis.

We are satisfied, as an organization, that our budget is properly allocated to our needs. Obviously, some people would prefer that larger sums of money were apportioned to different headings, but, you know, that is a matter of opinion and part of the decision-making process. But we feel that to the degree possible, we have a fair balance of allocating our funds to the various needs which we have.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Okay. I have just a couple of other questions, Mr. Chairman, on a different issue, and that is the public tendering process. You indicated earlier that in the last couple of years you got a great education on The Public Tender Act. It has been in place for quite a number of years, not the last two years. Why did the education on this particular act only occur after the Auditor General's report indicated that it should?

MR. SHORTALL: Perhaps I am guilty of making a capricious comment. Speaking personally, I, myself, have received a great education on The Public Tender Act, since this is only my third year as superintendent of the school board. With respect to the organization, our purchasing officer, Mr. Farewell, as well as the business manager, both Roger Lester and his predecessor, Mr. Miles Furlong, would certainly have been aware of the requirements of The Public Tender Act for educational bodies and would have been doing their best to follow it, Sir. We have memoranda and internal procedures to outline that. Obviously, they weren't up to the level that they now are, and this is one of the benefits we have received from this study.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Another item on the public tendering process as it relates to school books: We have found, certainly, in other school boards and, indeed, the Public Libraries Board, vast amounts of money are being spent on instructional material and textbooks without going to the public tendering process? What is your school board doing as it relates to books?

MR. SHORTALL: Student textbooks, as I assume you are referring to, we would be purchasing through the School Supplies Division at the Department of Education, Sir.

MR. DUMARESQUE: I notice that you have textbooks allocation there on your budget, schedule 11, page 76, $69,000 for 1990-1991, and you have $155,000 for library resource material. Is that publicly tendered or is it just done on a line item?

MR. LESTER: That funding you are looking at there, Mr. Chairman, is, part of what was referred to as the textbook allocation program whereby we. I guess, saved some funding through the non-replacement of our K to 8 textbooks and received a grant from government in lieu of that replacement; that is what that actually is there. Our textbooks that we normally get are all purchased - or, for the most part, purchased through the book supplies division of government and would not go to tender, from our perspective. We play, I guess, the intermediary part here, in reselling the textbooks to the children.

MR. DUMARESQUE: So it is clear, then, that you don't have to go outside and you don't buy books other than through the Department of Education which goes through the public tendering process.

MR. SHORTALL: You may find, Sir, that in many of our libraries for example, books would be purchased from suppliers other than the Department of Education, but across the board, if you like, in terms of student learning books and so forth, that kids would have to purchase to go home and do their homework in high school sort of thing, these would all come from school supplies; however, you would find textbooks, encyclopedia, dictionaries, etc., purchased from sources other than the Department of Education. You will find that happens.

MR. DUMARESQUE: Right, fine. Well, that is what I am wondering about. Would they amount to more than $5,000?

MR. SHORTALL: Oh yes. You will find that essentially in the libraries grant, that in sum total, we would be spending many thousands of dollars in that regard.

MR. DUMARESQUE: And none of that would go through to public tendering?

MR. SHORTALL: If the amounts ordered exceeded the $5,000 limit, yes, they would.

MR. DUMARESQUE: If the amounts ordered, how do you - like at the beginning of the year, would you come together and say we are going to need ten encyclopedia, fifty Robinson Crusoe or whatever, you know, would you do that at the beginning of the year and then issue a tender for it or would you -

MR. SHORTALL: Perhaps I should ask our director of purchasing or our business manager who can probably give you a more direct answer than I could to that one.

MR. CHAIRMAN: Mr. Lester.

MR. LESTER: Our budgets are spread out to our thirty-nine schools. In that light, what each individual school may get for textbooks would be relatively small in comparison to the overall budgets allocated to resource material. They, in turn, do their own requisitioning to us for small amounts and spread the expenditure of that fund over the year. So, in light of that, there is no collective, I guess, collation of information and material required for the year at the beginning of the year to tender. They normally buy things as they come up. They want a particular - as I said, probably an encyclopedia. That is a school-based decision. It is not one that we make centrally and then determine that we need ten of those things and tender them. They do them individually.

Where we know that materials are going to be used across the district, we do try our best to go to tender by collecting requests from the schools and get an accumulation of the information, tender it, and then distribute it to the schools afterwards.

MR. DUMARESQUE: I can conclude, then, that you don't have the same mind-set as the Public Libraries Board which is of the opinion that because you might only need ten Robinson Crusoes across the district, and then have ten Charles Dickens' across the district, they treat both of them as two separate orders, and because they are not over $5,000, they don't have to go to public tender, even though combined, they may be up to $300,000. You are not, obviously, treating it on the same level as that.

MR. LESTER: No, we treat it on a school-by-school basis. As I said, where we know that there is an accumulation of the same product or like products going to various schools and they will be all buying that particular item, we will tender it.

MR. DUMARESQUE: Okay. One final thing that I noted, Mr. Chairman, that I would like to - just a point of interest, I guess - get an answer on. On the same page, 176, schedule 1, under Miscellaneous Revenue, I notice $202,345 as revenue from interest on investments. Which is up almost $100,000 from the year previous. First of all, what would the school board have as an investment to return on, and why would we see such a jump in - what stock do you have?

SOME HON. MEMBERS: Hear, hear!

MR. SHORTALL: I will defer to Mr. Lester to give you the specific information, Sir. I wish we did.

MR. LESTER: So do I. The interest that you see there is interest that has accumulated on our various bank accounts over the year. You will also see an expenditure side and expenditure for interest which are basically netted together. But this is the side here where the bank takes all our accounts, including our deposits for teachers' salaries and all those items as they come in, for a couple of days. We earn interest on the accumulation of those accounts and they re-deposit it to us. There are no investments as such. It is strictly cash-on-hand deposit.

MR. DUMARESQUE: Okay. Thank you.

MR. CHAIRMAN: Okay, Mr. Dumaresque. Maybe I will get into a couple of questions myself. Following along with the public tendering process, the comment is made here on page 9 of the document: 'Tender bids not adequately controlled.' Can I assume that was one of the items that has been brought to your attention that you are now dealing with that simply relates to tenders coming in and deposited in a sealed depository and opened in the proper methods? Have those matters been dealt with now?

MR. SHORTALL: Yes, they have. The only item there that we technically did not have in place was a locked tender box. They were kept in a secure place previously but since the receipt of the Auditor General's recommendations, we now have a tender box and matters are done according to the specifications.

MR. CHAIRMAN: Let us get into some of the items that have been referred to here by the Auditor General. Purchase order 50588: an expenditure of $8,500 approximately, for various items did not go to tender and the matter is not reported to the minister as required. There is an invoice on page 103 relating to that, if you would like to look back at those. Purchase Order 50588: Industrial Arts materials as per the attached list for the Holy Spirit School in Manuels. I see a whole list of requisitions, and a whole list of invoices from Canadian Tire. Somebody simply went off to Canadian Tire and bought $8,500 worth of what I would describe as odds and sods for an industrial arts program. And it was all done basically on the same day. Why would this not have gone to tender, first of all? And secondly, if there was a good reason for it, why was it not reported to the minister?

Mr. Shortall.

MR. SHORTALL: I would draw your attention to the date, that it was approaching the month of August. A lot of material had to be purchased for that particular industrial arts room. The majority of it, as you can see, are very small quantities for, as you described, quite an assortment of odds and ends that you would put into a room. It was in that manner, it was for those reasons that time was not taken to go through the tender process. Even though the material requisition is dated July 5, you will notice that the purchases were not made until August 13. There was an internal delay in the office with respect to the processing of these particular materials at the time, and in their rush to get the industrial arts shop on stream for early in September when the processing was done in August, they were purchased directly. I would agree, now, that if it had been today, we would have had a proper report in to the Auditor General or, rather, to the minister, and in that regard the matter, of course, would have been tendered according to the recommendations that we have been given.

MR. CHAIRMAN: Well, I just say, the requisition was back in July, you actually got them in August. School opened in September. How come there was an urgency all of a sudden? How come, all of a sudden, we discovered that we needed all of this stuff for an industrial arts program? Surely, we knew prior to that - and if not, if it was a pressing emergency, did we invite three quotations on these items or simply give somebody a blank cheque to go to Canadian Tire and pick up what they needed? - which is what it appears to be. Some of it wasn't picked up until October 13, I see by page 133. So, you know, we have to question the urgency and the rationale for this, and, I mean, declare violation, it appears, of The Public Tender Act here.

MR. SHORTALL: I will ask our Director of Purchasing, Mr. Farewell. He will probably give you more specific information, Mr. Windsor, in that regard.

MR. CHAIRMAN: Mr. Farewell.

MR. FAREWELL: That particular requisition dated July 5, 1990 was actually forwarded to the Purchasing Department in August month. That was the date that the industrial arts teacher made out the requisition, and, indeed, it did not make its way down to Purchasing until August. The individual met with me when I got back from holidays. He, himself, went out and sought three different quotations from two other suppliers because of the wide diversified number of items that were there and the availability of products, and the opening of school, at which time it would be very difficult to secure proper specifications for that number of items, and that was why it went in the manner it did. But the actual requisition did not make its way to Purchasing until actually early in August.

MR. CHAIRMAN: Nevertheless, the requisition was for $8,500. That, obviously, is outside the guidelines of the $5,000 limit for purchasing. Why did we not know the 5th of July that this needed to go to tender? Surely, a two-month period with an urgency placed to it, red flag, we could have gone through a process. These are not unusual items, they are off-the-shelf items. Every one of them are available at Canadian Tire, Neil Soper Hardware, Stokes Hardware, and I don't want to be commercialized here, but any number of other places, you could get these same items. These are not specialty items that have to be ordered, for which there is a long delivery time. It would certainly appear that there was adequate time, if one wished, to call a tender on this and have it supplied through a proper process. And if not, where is the documentation for the three bids that you say were requested? We don't have that. I assume, if it were available we would have had it.

MR. FAREWELL: The three individual quotations were obtained by Mr. Alexander. I think, as Mr. Shortall said, if hindsight be known, we would probably really find what an emergency situation was concerning that particular order. The order was initiated by an industrial arts teacher. It did not make its way through the proper administrators of the school board until August month. Again, on hindsight, I am sure, if we had to do it over again, we would have held up the industrial arts class and properly called for tenders on these particular items, but that is the procedure that was deemed to be necessary at the time.

MR. CHAIRMAN: Let's have a look at the next item. Purchase Order 51388 on page 146 is of particular interest to me - 51386, 51387, 51388, 51389 and 51390. These were all issued on the same date to the same supplier for carpeting supplied to the same school. The total sum of it is something in the magnitude of $27,000, I believe it is. Would you like to explain why we have five purchase orders issued on the same date?

MR. SHORTALL: I think the basis of the explanation comes down from the nature of the work that was being done at the school at that particular time. You will note that it was very close to the opening of the school year. Holy Trinity School was under construction, or under renovation. Decisions were being made almost on a room-by-room basis as to whether flooring should be replaced or left as was, and decisions were taken by individuals in the field. They did it on a room-by-room basis and didn't give adequate consideration to the overall cost of the total job, as you correctly point out.

The firm in question was working on the site at the time, having been awarded a tender which was put out to the market in July and having come in as the low bidder on that particular thing. That particular firm was in the school. I think, in the haste of those responsible to ensure that the building was open, and making decisions on a room-by-room basis, as opposed to a total project basis, decisions were taken in that particular order.

Quite rightly, we have - we indicated ourselves, you will note, that the purchase order date and the date on the requisition are quite different. The work was clearly done before the purchase order was issued. This was noted by our business office almost immediately as soon as the paper work began to flow through. We investigated it at that time. We had rather lengthy meetings of our executive committee and the property and services committee of our board - these would be the committees of school board trustees who oversee these particular programs - as early as September. We were concerned about it at that time, but I can say that the decisions were taken in the field in an effort to get the building open and they were taken on a room-by-room basis. As I have indicated, Mr. Windsor, it is something that we have since taken some significant measures to ensure would not be repeated.

MR. CHAIRMAN: Well, I guess there is some comfort in knowing that measures have been taken, but surely, we knew at that point in time, and I might suggest that the reason there were five purchase orders were to have each of them less than $5,000. It appears to be a deliberate attempt to circumvent the provisions of The Public Tender Act.

The Auditor General pointed out that an accounting of business to that same contractor, as listed on page 142, for a three-month period total, is something in the order of $56,000. That is hardly casual work, hardly something that would go through direct purchase order. It is all clearly something that should have been planned. Either there is a tremendous weakness in the planning here or there is a tremendous weakness in the desire to comply with The Public Tender Act. Fifty-six thousand dollars worth of work over a three-month period to one contractor, without tender, all issued by individual purchase order with no evidence of any other documentation that other quotes were invited, certainly causes this Committee to be very concerned.

MR. SHORTALL: As Superintendent, I certainly share your concern and I think our school board shares your concern, as well. We have, as I said, had our own internal review of this, taken at considerable length. It is a situation that we feel, hopefully, or we can tell you, will not recur. It might be that I could ask the divisional head of that area to give, perhaps, some further explanations as to the rationale for those particular decisions.

The firm or the supplier in mind has been a consistent low bidder in contracts or in tenders over the years in this particular area. However, I can only say that we share your concern. We followed it up as best we could internally. We were satisfied that no wrongdoing was intended. And we do agree with you that the procedures were not followed to the letter and we have taken steps to ensure that in the future they will be. From where I sit and from where our finance committee sits, and the executive committee of our school board, we feel that the decisions taken were done out of a desire to get the building ready as soon as possible for school opening and not intentionally to subvert the requirements of any legislation. However, I would tend to agree with your concern, Mr. Windsor.

MR. CHAIRMAN: It sounds like a good time to take a ten-minute coffee break. We will recess for ten minutes.

MR. CHAIRMAN: We will call the meeting back to order. The first thing I will do is apologize for the coffee. It has a close resemblance to tar. The Chairman of the Board has asked for some Tim Horton's coffee next trip, so maybe we will have some for tomorrow.

AN HON. MEMBER: We will be awake for a week.

MR. CHAIRMAN: Mr. Murphy, you indicated you would like to follow on this same line of questioning.

MR. MURPHY: Well, I had some questions about carpet procurement and what have you, and I guess Mr. Shortall has basically answered them. But I find that for sure, if there is one business - there are a lot of people out there selling and supplying carpet, and to see just one firm having in excess of $80,000 worth of business makes one wonder, Mr. Shortall, and I guess that is a fair comment. But let me go back to - how many schools does your school board control?

MR. SHORTALL: At the time of this report, thirty-nine.

MR. MURPHY: Thirty-nine schools. I asked this question out on the West Coast. Thirty-nine schools. Now, I would imagine, and I am picking upon my colleague, Mr. Ramsay - and I don't know about grading the board: It would seem rather reasonable to get an enrolment from each school early in the year, understanding that the enrolment is how the school board captures most of its money. And the Auditor General commented, I might add, when we were involved with the school board on the West Coast, on enrolment. I find it a little difficult that there is not a system in place. And I find the Department of Education - understanding that enrolment figures must be verified because that is where your budget comes from. You know, if the board had an enrolment invoice, I suppose, for want of another word, to the Department of Education that was less than the students, you know, it wouldn't make much sense. Now, when the Auditor General tells this Committee of the House that operating grants are reviewed, disclosed, that the enrolment figures were not being verified by the school board - and the school board's response is rather evasive. It says some things, but it does not zero in and say look, every month, or every semester, at the first of the year, at Christmas and what have you, we ask each principal - I find this a little difficult.

MR. SHORTALL: We found it a little difficult, as well, Mr. Murphy. Each month, every school, under the signature of the principal, submits a monthly return to our office outlining the number of pupils with a variety of demographic information on a class-by-class basis in each and every school, and that is also done on an annual basis; and in that sense, we are verifying them. I may not be sending anybody out from my office to do an actual count, but I am taking a verification under the signature of my principal every month at my central office for verification purposes. We also have to track all of our dropouts and account for them, balancing the kids who have dropped out with the new entries, and justify a number and report that regularly to the Department of Education, as well. There is, in addition to that, a fairly formal method of verification. There are a variety of other checks. For example, the Canadian Test Of Basic Skills is regularly administered to students at various grade levels. The Canadian Cognitive Test of Student Abilities is administered to all of our Grade IV pupils, for instance, the public examination results and the like. All of these things would be reviewed by senior staff and while they are being reviewed there is an opportunity to ensure that the test scores relate to the number of students who are actually taking them. So there is an informal and a formal monthly reporting in place. But there is not so much - I don't send somebody out and say: I want you to make a surprise visit to this particular school and go into that particular class and count heads.

MR. MURPHY: I wouldn't expect you to do that. But you are satisfied at this particular time - and another thing that would occur to me is that there would be some kind of ledger that would indicate numbers from each school and what have you.

MR. SHORTALL: There is a daily register, Sir, that every teacher has to complete on a daily basis, and that forms the basis of a monthly report. So attendance is taken each day.

MR. MURPHY: If a physical audit were done - and the school year is not that old right now, it is just over a month or a month-and-a-half old - if an audit were done tomorrow, from your viewpoint, would the enrolment figures be dead on, a little high, or a little low?

MR. SHORTALL: If you are asking whether I could produce the bodies that I have on paper, I think I could.

MR. MURPHY: I wouldn't have to go anywhere. I will just leave it alone, but that the Auditor General would go in and, through their process of auditing, find discrepancies, that they would have problems with verifying enrolment, I find it a little difficult to understand - because we are counting people, not pencils, of course.

Let me move on. I have a couple of more questions, Mr. Chairman. If you look at Item 8, on page 6, Mr. Shortall, down at the bottom: Just briefly, why would the school board get into consultants?

MR. SHORTALL: The school board would use consultants, possibly, in analyzing the heat efficiency of our buildings, for example; it would use consultants in supervising construction projects, major physical extensions to buildings; we would make use of consultants to assist in the interpretation of complicated tender, such as for an information management system and so forth. These are some examples of where we would use them. Possibly, our financial consultant - we would engage financial consultants to assist us in ensuring that our office procedures were satisfactory and so on.

MR. MURPHY: Yes. I notice that the Auditor General suggested to the board that they might want to follow guidelines similar to the ones that are laid down by government in the employ and/or the contracting of consultants. I also want to refer you to page 28 in your response, Item 1.8, where you say that - and I look at the last sentence - "A policy regarding this item is, and has been, under the examination of one of the Board's committees for some time." That would seem to be, to me, a touch evasive in saying, Look, we will worry about this, kind of -

MR. SHORTALL: No, Sir, the policy in question was adopted by our school board on April 29, 1992, and is in place now, and it is being followed.

MR. MURPHY: And is that similar to the government guidelines?

MR. SHORTALL: Yes, it is. It was modelled after that particular policy.

MR. MURPHY: Okay, fine. Now, I am a great believer in volume purchasing. I suppose, looking at it from an ecumenical standpoint, there are school boards out there dealing with different denominational education, that is the way our system is, and maybe the way it will stay - and maybe it will change as time goes on. Who is to know?

However, I would think that if you buy half a carload of consumer goods, you know, you pay a certain price for it. If you buy a carload you pay a different price for it. And this takes me back to such things as fuel consumption. I often wonder why the RC School Board and the Amalgamated School Board can't get together at some time before the school year and collectively tender 226 schools on the Avalon, or whatever the case might be. Because we don't need to discuss how difficult it is to find all the dollars we need for education and health. Now, I am not only talking about fuel, I am talking about a lot of other consumables. Has this ever been addressed? Because it would make sense to me that both boards or all boards would save a fair amount of dollars, if you went out there - it might cause the industry some anxiety knowing that one oil company was going to supply all the schools, but if that were at two cents a litre less, it would also make a lot of sense from a standpoint of dollars.

MR. SHORTALL: Mr. Murphy, there is an ongoing liaison between my office and that of Mr. Lee, the Superintendent of the Avalon Consolidated Board. We regularly liaise on a four to six-week basis.

Such items of that nature, of co-operation both in purchasing and in programming areas, form the bulk of the agenda items. There is also an ongoing liaison between the chairperson and table officers of the RC Board in St. John's, with the Avalon Consolidated Board, and again, these kinds of topics form the basis of a lot of discussion.

I will ask Mr. Lester to give you some information on some joint purchasing and some means of co-operation that we have already engaged upon in that regard, if you would be interested.

MR. MURPHY: Yes.

MR. CHAIRMAN: Mr. Lester.

MR. LESTER: Yes, as a matter of fact, the fuel oil that is noted here, we discussed going to tender on that very item, itself, except for the Avalon having had a contract in place at that time.

We do talk back and forth, and our board now is, I guess, co-operating with the Government Purchasing Agency and going out on bulk tenders for things such as paper and sundry supplies that are used in schools all over the Island, so we are moving more and more towards that group.

MR. MURPHY: So, what you are saying, Mr. Lester, in effect, is that you are doing that presently and you are hoping it will intensify. Do you see a dollar-saving there with it?

MR. LESTER: In a lot of cases, yes, we do see some dollar-savings. There are other situation where there are not; but, for the most part, we have seen benefit from group tenders.

MR. MURPHY: So the endeavour is worthwhile, is what you are saying?

MR. LESTER: Yes, I believe it is.

MR. MURPHY: Just one other question before I pass it on to another colleague.

Earlier in the year we heard some - and this is a great concern to me because of my background - about the safety and maintenance of schools from a student's standpoint. Are you now satisfied that the compliance that you were asked for by city and/or any other agency, whether it be government or city, that everything is okay and that the fire hazards and safety hazards are out of the way?

MR. SHORTALL: We are satisfied that our buildings are life safe and do not pose any hazards to our children in this regard; however, I would point out that in terms of 100 percent compliance with the building codes in 1992, we have instances where we are not able to make that compliance. We are moving toward it as our budgets permit, but we are not there.

I specifically refer to what I call 'big ticket items' - the extension of sprinkler systems and so forth that will take some time for us - lockers - these things will take time for us to get there; but in terms of exits, fire warning detection devices and so forth, we are satisfied.

MR. MURPHY: Fine, thank you very much, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Murphy.

Mr. Reid?

MR. REID: I just have a couple of quick questions (inaudible).

MR. CHAIRMAN: Mr. Reid, do you want to get closer to your microphone there and give us a little volume, if you will.

MR. REID: Sorry about that, Jack.

I am fascinated here with your cheque numbers as it relates to the Baker Flooring Company. You start off at 126 and you end up with cheque number 504,573. Was there some change in accounting in that process there?

MR. SHORTALL: Mr. Lester, if it is okay.

MR. LESTER: Yes, there was. We implemented a new financial system and I think what you have there is a combination of cheque numbers that came off the old system and then created on the new one.

MR. REID: Quite a difference.

MR. LESTER: Yes there is.

MR. REID: The other thing I wanted to ask, and I am going to ask this of Mr. Shortall: Mr. Shortall, apparently, you don't deal with anyone other than the Baker Flooring Company to do work on floor covering and floor repair in your schools, with your Board?

MR. SHORTALL: My understanding, Mr. Reid, is that we do and we have received quotes from other companies. I would ask Mr. Farewell, perhaps, if he could give you some specific examples, but as far as I understand, there is no policy restricting our purchases to Baker Flooring.

MR. CHAIRMAN: Mr. Farewell?

MR. FAREWELL: Regarding any tenders that exceeded $5,000 in flooring, we have gone to public tender on flooring requirements. Actually, the policy, our in-house policy, would also cover from $1,000 to $5,000. We have secured three written quotations for that dollar value, while less than a public tendering is a school board policy in purchasing.

MR. REID: You do have a habit then, Sir, of paying a number of contracts within the one cheque, I assume, because if we look back to the seventh day of the seventh month in 1991, there is a cheque issued to Baker Flooring for $380, which was cheque No. 171, and that cheque also includes: $98,63, $2,100, $1,400, $1,500, $500, $1,100 and so on, up to and including $4,067, and if you add up, that totals ten contracts for ten different schools, paid for by one cheque, No. 171, and you get over $13,000 worth of work.

Now, the question I would have for you, Sir, would be - someone would have to sign that cheque, someone would have to see that cheque and I can't, for the life of me, understand why someone wouldn't say: Well, my God, if we are paying Baker $13,000, isn't that a little over the public tendering figure of $5,000 and should that not have been tendered? I don't know if you understand what I am saying, I think you are looking at the same book as I am, page 142. In a number of cases there, you have a habit of issuing one cheque to cover a number of contracts.

Now, my friend, I was in municipal politics for years, and I used to have to abide by the $5,000 ceiling, as well, and always, when the Treasurer of the Town of Carbonear wrote a cheque, I made sure that the cheque was for less than $5,000, even though, on a number of occasions, I issued contracts for less than $5,000. And I am surprised that something as simple as that would not be picked up by somebody in your financial department; I just make that comment. I am not satisfied, by the way, and I suppose what I could do is ask you to give me a breakdown on those other people who bid on some of these jobs, but I am not going to ask you to do that because I have problems with another one back here that I want to talk to you about.

Holy Trinity, for example, the very first one was $4,973. How many contracts came in for that particular job or whatever? But anyway, I really don't need an answer, because I am not pleased with this at all. Let's go back one page to 141. We have a letter here from Atlantic Roofing Co., outlining seven different jobs, and it sort of caught my eye when I read it, because if you look at the wording it says: "We are submitting for your review and consideration the following alternatives to the work specified." So, I am assuming that there had been work proposed by contract or whatever, and you went back, or someone went back to Atlantic Roofing and said, Well, we need some changes or we can't afford to pay this amount money, and please have another look at it and come back with another price.

Well, there are seven contracts there; I don't have the information pertaining to, from 1 to 6, but I do have a little bit of information pertaining to Beaconsfield Junior High, which on - and if you notice the dates, July 31, 1991, Beaconsfield Junior High, the price from Atlantic Roofing was $143,193. Now, turn the page back again to 139, and you will find, I believe, if I am not mistaken, the same contract - don't forget now, in July, it was quoted $143,000 - the same contract was quoted, stipulated price contract on August 31, for $193,752. Now, that confused me enough, but then I went back and looked at page 134 and 135, and I find that the same contract is now reduced to $127,700. Mr. Shortall, do you know anything about that at all, that you could explain this to me?

MR. SHORTALL: I will ask Mr. Royle to give you some information on that because he has the information that you require.

MR. CHAIRMAN: Mr. Royle.

MR. ROYLE: Yes, Sir. During that summer period, the Board approved approximately a quarter of a million dollars to go towards roof replacement throughout our system. The school board went to tender on several projects - those are the ones that are listed there - and the bids came in over budget. We cancelled some projects and awarded others. We spoke with the low bidder, Atlantic Roofing, regarding the Beaconsfield Junior High School project and advised them we were over budget. They made the recommendation that they would come back with another product to do the roofing system. Also, we, as a board, tried to downsize the project. Instead of doing four levels, we decided to do just one level. That would reduce the low bid directly, there. Also, they submitted a letter here to alter the specification and use another product which we found very compatible and, in light of the situation at the school, where we did have some very serious leaks creating a lot of interior problems in the building, we went back to our Property and Services Committee of the Board and a decision was made to proceed with the change in building material at the lower price.

MR. CHAIRMAN: Mr. Reid.

MR. REID: You do realize that what you did there was the cardinal sin in contracting? I hope you do. Maybe you should speak to some of the local contractors that bid on government work through Works, Services and Transportation, because I know, in the past year there have been a few dicey ones up there in Transportation, Mr. Chairman, that had to be rectified through intervention and so on. Because of the fact that you deleted sections 2, 3, and 4 of your contract, in Appendix A on Page 139, then immediately, a re-tendering process should have begun. Under the Public Tendering Act, it had to begin. You couldn't change the contract at your wishes and whims without going back to all the contractors who had bid, regardless of what the price was. You were saying to me that you didn't do - which ones did you complete on Page 141? Did you do Roncalli?

MR. ROYLE: No.

MR. REID: St. Thomas?

MR. ROYLE: Yes.

MR. REID: And Mary Queen of the World?

MR. ROYLE: Mary Queen of the World, yes.

MR. REID: St. Pius?

MR. ROYLE: No.

MR. REID: St. Pius X?

MR. ROYLE: Elementary, yes.

MR. REID: Areas one and two?

MR. ROYLE: Just area one.

MR. REID: And you did Beaconsfield?

MR. ROYLE: Yes, we did Beaconsfield.

MR. REID: Let me ask you this question: Did Atlantic Roofing get all the contracts?

MR. ROYLE: No, Avalon Roofing did St. Thomas of Villanova, and Mary Queen of the World was done by a contractor from Placentia - the name escapes me right now.

MR. REID: Were the prices lower than those of Atlantic Roofing?

MR. ROYLE: Oh, yes, we go with the low bid on all projects.

MR. REID: I am not being - well, I shouldn't say I am not being critical, ladies and gentlemen, I do this for a reason. I suppose, as an elected representative of the people, and for the fact that somebody up above me there somewhere had enough faith in putting me on the Public Accounts Committee, I have to ask these questions. And I hope and pray that the end result of this today is going to be that not only you, as a group, but every other group that comes before us takes the idea of spending public money - and I shouldn't say, more seriously, but maybe that is the right word to say. For me to sit here and look at you educated people - and I am not blaming you in the least, because this has been going on and is going on all over the Province, and it is not your fault, it is something that you have been conditioned into and have been allowed to do, and being board members, I suppose, and being changed so often in your positions, you are not abreast of things like, for example, our friends who have been in the Department of Education and some of our friends who have been in the Auditor General's office for so long, so I am not being critical. I am making points to you that I hope Brian Shortall, the Superintendent, will certainly take into consideration, and hopefully, with some of the rules and regulations that this government and previous governments have set down as it relates to financial administration in the Province, are abided by.

The last one I have for you is about the tender for the supply and installation of both software and hardware for a complete student and financial administration system at central board office. I am not sure of this, and I stand to be corrected, but I don't believe that tender went in the paper for very long. It was for a very short period of time. Am I correct? Do you know what I mean?

MR. SHORTALL: I defer to Mr. Lester to give you the specific information, Mr. Reid.

MR. LESTER: No, it is my understanding it was in the paper for our regular period of time and the tender was open for two weeks. We did, in fact, put an extension and notify the people who had picked up bids on that tender.

MR. REID: The Auditor General says here: The school board staff were unable to provide us with a tender evaluation and unsuccessful tender bids for the purchase of the information management system.

MR. CHAIRMAN: If I could just interrupt, Mr. Reid. A question on the length of time. According to pages 50 and 51, it appears, according to the requisition to The Evening Telegram, it was for Saturday, September 22, and the same thing on the next page.

AN HON. MEMBER: It was for one day.

MR. CHAIRMAN: For one day - is that correct? - the dates on page 50 there, requisition No. 51678, one insertion Saturday, September 22.

MR. RAMSAY: And it closed on Friday, October 5, according to the ads.

MR. REID: Are you familiar with that, Mr. Shortall?

MR. SHORTALL: Yes.

MR. REID: So it was in for one day.

MR. CHAIRMAN: And the Globe and Mail, the following one was (inaudible) I think, the same thing.

MR. RAMSAY: It was in The Globe?

AN HON. MEMBER: Yes.

MR. REID: Well, if you go back and look at your - I can't imagine being a contractor in the business of providing such a system and having to go through the tender documents to accede to your wishes for a system, and only have that amount of time to be able to fulfil the requirements. I am not accusing you of anything here but I am just absolutely flabbergasted when I read twenty-five, thirty pages of requirements, and an ad being in the paper for one day. It sort of surprised me to think that there was anyone out there, other than someone who probably - notice I said probably - knew that the contract was coming out.

I am not sure if that happened or not. I don't mean to say that, but I find that particular incident - if I am reading this right. I could be completely wrong. But if I am reading this right, that particular contract certainly wasn't given under the act with the proper amount of time advertised. I am surprised that someone didn't - maybe someone did and we don't know about it - that someone didn't come in and kick up about it.

MR. CHAIRMAN: Mr. Shortall, do you want to respond to that?

MR. SHORTALL: Yes I would, Mr. Windsor. A number of weeks were provided from the placement of the advertisement and when the tenders were opened. In fact, an extension was provided at the request of some of the companies. A number of companies did respond to that in addition to the successful bidder. I believe we had - seven or five?

MR. LESTER: Five, I believe.

MR. SHORTALL: Five bids which did come in, and these bids were fairly extensive. The specifications were prepared in consultation with our own internal advisors, as well as officials at the Department of Education, because it is a major investment on behalf of our school district and a major step forward. So we felt that we were going to the open market in an up-front valid manner. We didn't receive - at the first indication that the time frames were a little short, we arranged for an extension.

MR. CHAIRMAN: Let me just ask, along -

MR. REID: Yes, go ahead.

MR. CHAIRMAN: Who developed those specifications? Were you able to do those? They are fairly extensive. Did you do those internally? Do you have personnel who are that knowledgeable in these types of computer programs that could have generated that degree of detailed specification for you, or did you have a consultant do that for you? What would the case be?

MR. SHORTALL: It was a mixture of both, Mr. Windsor. I'll ask Mr. Lester to give you the specific information on it.

MR. LESTER: Yes, we have some in-house expertise. As well, some of our principals are well-versed in this particular area, and they were involved in the development of the package. They were involved, as well as our central office people, in reviewing the end result.

MR. CHAIRMAN: There is very detailed - is this a specific package now? Would this be a package that most software suppliers would have on the shelf, basically, or would it have to be written specifically for this?

MR. LESTER: No, it was an off-the-shelf program, but there are not a lot of suppliers in Canada who have that system.

MR. MURPHY: If I might, Mr. Chairman, just to pick up on that. When you look at the amount - and my colleague, Mr. Reid, makes a good point. There are a lot of people out there supplying that particular type of equipment. It would seem to me that these specs would eliminate an awful lot of people out there. Just off the top of your head, Mr. Lester, of the reputable companies that are in the software business now, and in association with the computers that you required, how many would be able to respond to that particular set of specs?

MR. LESTER: Off the top of my head, I wouldn't be able to say for sure, but from what information I have there are probably half-a-dozen or so in Eastern Canada. As I said, that is strictly off the top of my head. I am not sure.

MR. MURPHY: Well, that is a fair number.

MR. CHAIRMAN: And you have had five bids.

MR. LESTER: Yes.

MR. CHAIRMAN: Mr. Reid.

MR. REID: The other thing that bothers me, gentlemen, is the fact that the Auditor - I am saying the Auditor General says this. I am not assuming it is true, but the Auditor General says that after you requested the other tenders on that particular - the unsuccessful tender bids, they weren't available. They were, for some reason, lost. Have you found them since, by any chance?

MR. LESTER: No, Sir, we have not.

MR. REID: Did you know that? Did you know that the Auditor General -

MR. SHORTALL: We had quite a search when the Auditor requested it. We were able to find the analysis of the tender as documented by our purchasing officer and the secretaries at the time, with the prices from the various bids, but a cardboard box containing the actual documentation was unfortunately lost.

MR. REID: Thank you, Sir, very much.

MR. CHAIRMAN: Thank you, Mr. Reid.

Mr. Hewlett.

MR. HEWLETT: Thank you, Mr. Chairman. A question maybe to the Auditor General at first. Page 7 of the document indicates that there appears to be some confusion as to the role of the school board's auditor, especially with regard to, I guess, what might generally be referred to as compliance auditing. I ask the Auditor General if she has an opinion as to who should give a directive, if a directive, as such, is needed, that the auditor for the school board is responsible for auditing the school board's accounts both as regards the dollars and cents, and also in compliance with the various acts of the Legislature governing the school system in our Province. Is that a decision or function of government to decide that the auditor is to have a compliance function? Is it your opinion that the auditor should have a compliance function but government does not yet require that function? Where does that lie?

MS. MARSHALL: Under the legislation, there is some compliance auditing required to make sure that the school board is complying with the legislation. I would see it as being the role of the school board to determine what additional compliance work needs to be done. When they engage their auditor they would say: Well, you know, we require you to do the regular test audit but we also require you to do some additional compliance auditing, in accordance with the legislation.

MR. HEWLETT: Okay, thank you. I still have a problem relating to the question I asked in the first round. If a board, either rightly or wrongly, does not decide to have its auditor do extensive compliance auditing or whatnot, who in the system, apart from the occasional spot check, like that of your own organization - there appears to be sort of a breakdown in the accountability of expenditure of public funds here. Who, along the line, is ultimately responsible if you are not involved in a given instance, with ensuring that the organization - be it a school board in this particular case - is actually requiring of its auditor that it do certain compliance functions? If you hadn't come upon this yourself, and you mightn't review this particular board or a given board for several years, who in the system is supposed to keep tabs on this and remind a board if it is negligent in that regard?

MS. MARSHALL: That is clearly the responsibility of the Department of Education. They receive the financial information and the audited financial statements from the school boards and they should be going through this material, making sure that all the compliance auditing has been carried out and that there is an unqualified opinion on the financial statements, etc. So it rests with the Department of Education and they should be doing this on an annual basis when they receive the financial information from the school boards.

MR. HEWLETT: To your knowledge, is the Department of Education rigorously applying this particular test in all school boards in the Province?

MS. MARSHALL: No. Based on our review of the school boards that we have audited to date, we have come to the conclusion that the Department of Education needs to increase its monitoring of the school boards.

MR. HEWLETT: I see. This can be done, then, given the existing denominational education system, without interference in established denominational rights as regards education and so on. It can be done in the regular process of the Department of Education following up its monies as given to the boards.

MS. MARSHALL: Yes, I see it as a regular part of an internal audit process. I think the Department of Education should have some sort of internal audit function which would be continually monitoring the school boards - not just reviewing their financial information but also visiting with the school boards and doing a certain degree of monitoring and overseeing of the activities.

MR. HEWLETT: Does the department, to your knowledge right now, have some of that function in action, or needs more, or has none?

MS. MARSHALL: At the present time there is no formal internal audit function at the Department of Education.

MR. HEWLETT: Thank you, Mr. Chairman. Just as an observation, I mean, Education is one of the largest expenditures -

AN HON. MEMBER: Second largest, I think.

MR. HEWLETT: - in our entire governmental system. Humongous amounts of money are expended. I find it somewhat passing strange that a department responsible for such a large expenditure of money would not be keeping tabs itself and is relying on the occasional spot audit of the Auditor General and the meetings of this particular Committee to keep tabs on what is, as you say, the second largest expenditure in the entire government. I pass, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Hewlett.

Mr. Ramsay.

MR. RAMSAY: Thank you. I just want to go into a little detail on the flooring contracts surrounding the numerous purchase orders for flooring that are less than $5,000. Looking through what we have available here, I notice on one, a note referring to other suppliers. The document on page 150 - I think, 'Genuine - late and high' is noted, and 'Victorian - no quote'.

That is the only reference I see on any of these documents, although probably there are other internal documents that may have referred to other quotations. The reference on page 150 is the only reference I see to that particular issue of other contractors having been contacted about these particular contracts. I would just like to get a comment on that as to what other contractors may or may not have been contacted with regard to this. Because you did note that the contractor was on site at this particular job, although there are a number of jobs, as I note here, in a variety of schools. So I just wonder if you could explain a little bit about that and what was actually done to get any other contractor's opinions as to what their bid would be, or what have you.

MR. SHORTALL: I will defer it, if it is okay with you, Mr. Ramsay, to Mr. Royle or Mr. Farewell in that regard, because they were closer to that than I was at the time.

MR. ROYLE: This is the Holy Trinity Elementary project which was a retro-fit project. We converted the school from a high school setting to a primary school setting. In July of that year, monies were approved for this project and we went for quotations for some flooring work to Baker Flooring, Genuine Flooring, and Victorian Flooring. A purchase order was requested on August 23 - No. 51386, I believe. As Mr. Shortall explained earlier, due to it being late in the year, Baker was authorized to proceed with that work. That was kindergarten classrooms and music rooms, I believe.

This particular requisition you are referring to, page 150, was for additional work at this school, and in the staff room and kitchen area, which wasn't initially anticipated to be done. We were hoping to get along with the flooring that existed in that area at the time. So a decision was made at the school to go ahead with this. We contacted Baker who was on site. He gave us his quote - the price that is shown there. These other two contractors were also advised. I should note that these two contractors could meet our specifications. Sometimes we have a lot of difficulty getting flooring contractors who can actually meet our spec. We asked for a quote right away because of the lateness in the season, and school opening within ten days, I guess. Looking at the requisition here it appears Genuine did put a quote in. It was high. The dollar value is not written here. We would have that back at the office. But they also submitted the quote late. Victorian Carpets didn't want to quote. So we proceeded to go with Baker Flooring.

MR. MURPHY: Mr. Ramsay, if I might. Just to follow up.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: From experience I note that there are probably at least fifty different types of carpet - jute back, hemp back, cushion back, and all kinds of traffic carpets. Nowhere in any of these documents - you mentioned, Mr. Royle, your specs - do I see anything indicating a certain type of carpet, a certain type of conformity.

MR. ROYLE: Yes, we do have a spec.

MR. MURPHY: Do you?

MR. ROYLE: Yes, very much so. The quotation sheet would have the specification provided if it were faxed out to the contractor or, in fact, it were given over the phone. The requisition there didn't really give a spec, it just provided 'Supply and install carpet'. Let's assume that is per specification.

MR. MURPHY: Yes, one would again have to assume where it says 'supply and installation'. You know, I would have suspected carpet as per specs or colour etc., but I don't see that anywhere.

MR. CHAIRMAN: Are you through, Mr. Murphy?

MR. MURPHY: Yes.

MR. CHAIRMAN: Mr. Ramsay.

MR. RAMSAY: Okay, I just want to - I have no problem giving, Mr. Murphy time to make up for his recent visit.

AN HON. MEMBER: (Inaudible).

MR. RAMSAY: I suppose, yes. Anyway, it is a running battle, isn't it Danny?

On looking at page 142, 143, 144 and 145 - and there were references made to it - on total, the number of jobs that are here, I suppose, well, we are talking about, if you break it down by invoice, you are talking about a total of probably sixty invoices, I guess - I am just guessing now, I haven't counted them - sixty different invoices to a dollar value of $90,000 approximately according to the totals on the pages, and quite a substantial amount of work for a small business, such as the business that performed this work. Not one of the invoices is over the $5,000 amount, although, as mentioned by my colleague, plenty of the expenditures were paid for with a cheque which would, in fact, exceed $5,000 for a number of different amounts of work.

On looking at that, if I were a person who had no knowledge whatsoever of the carpet business - well, I do know the carpet business fairly well having been involved in it for some time in the past. But just on a first glance, I would look at it and be suspicious. It would bring the red flags up. It would certainly make me - if I were someone who was prone, in the profession I was involved in, to investigate something, I would certainly investigate it, because it would make one think that there was something out of kilter, something illegal or otherwise.

Again, it is my position on this Committee to look at this information and say, you know, what would the public think if they knew that within this area, in this city, there was $100,000 worth of government work, basically, through the school board, being done, using taxpayers' money without public tender on any of these jobs that have been done. Now, I went over and got the phone book and I decided that I would look at carpet; now again, of course, you are talking about a spec, and possibly a limited number of carpet dealers or contractors who can live up to the spec, although, I don't know, there has been no assessment done. But on looking in here, I have counted in excess of twenty-five carpet suppliers, and as for flooring suppliers and contractors there are another twenty-five, so, in the order of about fifty businesses that possibly all could have supplied to this particular $100,000 worth of work, who never had the opportunity to do so. Possibly three or four may have had by virtue of a phone call or a fax to a specific preferred contractor who had done work in the past. And looking at that and thinking, if I were the one who was doing this, how much scrutiny I would think, that I would be under, I mean, it would just scare me as to the consequence of having allowed that to go on.

Where I mentioned about the idea of it possibly looking illegal or otherwise, you know, I think it is one where a judgement call would have to be made, on looking at it, to investigate - if, in fact, I were in that situation - to investigate it and see if there was a cosy relationship between said contractor and whoever is in charge of making decisions on the purchasing. Regardless of the rationale that one comes up with, if I, as a contractor, was able to develop a good working relationship with a school board and they were willing to give me $100,000 worth of business without blinking an eye, and with just going and calling a couple of other contractors who normally provided this kind of work, I would certainly try to maintain that relationship.

As we know, in the past, government officials at the Provincial Government level, and even at the Federal Government level, have been investigated for this kind of thing going on through government purchasing agencies, departments, what have you, because this kind of documentation would make someone put up the red flag and say: There is something wrong here. And it is scary to think that it can be brushed aside, just saying: Well, we did it then - we are not going to do it anymore. I think it has to be checked into further and I would ask for a comment from the school board with relation to that.

To get into a little bit of the specifics, I have something further on the purchase orders and when they were issued, following, but if I could get a comment on just what - would it bring the flags up in the administration as well?

MR. SHORTALL: When it was brought to my personal attention, it certainly brought the flags up, of concern, and I share the comments you made as to other people in our organization. This was the subject of some discussion at both the property and service committee, as well as the finance committee of our school board, and we satisfied ourselves to the degree that what appears to be - we feel that it was done perhaps more of a comment on the absence of completely adequate planning, and I think that if some of these particular jobs had been more properly planned over a longer period of time, we would have had a better handle on the overall needs and then would have gone to tendering, but what we were into, as we explained with Holy Trinity, was short-term planning which lends itself to these kinds of inappropriate activities. But we are very concerned about it. I share your reservation, and I assure you that we gave serious consideration to the matter at the time and we have taken steps to ensure that it does not recur.

MR. RAMSAY: Further to that, just the one reference to, when this was happening, the number of purchase orders that I noted from you and something was talked about the dates. On September 4, there was a purchase order issued, on page 146, for $3,750; the requisition was made on 23 August, the same year. So the purchase order was supplied after the requisition was made. Is that the correct procedure?

MR. SHORTALL: It is a totally incorrect and unacceptable procedure. It did occur and the reason for the delay is that the business manager and the purchasing people recognized what was happening and that some consideration was given to it after the fact. It should not have happened, and the individual responsible has been taken to task about it and we will be doing our best to ensure that it doesn't happen in the future, Sir.

MR. RAMSAY: Okay. I sort of thought that.

Now, with reference to the discussion we had a little earlier about these situations and how work had been done at a school or schools because the contractor was on the site and the other quotations were had by phone or fax or whatever, and it was decided to proceed; but subsequent to that you mentioned something about executive committee meetings or something, to discuss the matter, or the board dealt with it, or was it just the administration who dealt with it, because of the problems associated with it?

MR. SHORTALL: Later that month, in September, there were some concerns, not only in the area of purchasing but in some other budgetary matters, that that particular job seemed to have gone over budget and so forth. There were concerns raised and the matter was reported to the appropriate school board committees and eventually there was a joint meeting of both the property and service committees, as well as the finance committee, to thoroughly investigate the matter. And the executive was satisfied that while what had happened was not acceptable to them, and they didn't want to see it continue, that there had been no wrongdoing, as such.

MR. RAMSAY: Finally, I just want to comment that it would appear, and I just say, it appears from the information - we are here to gather information - it would appear from the information that there was, as another member of the Committee said, an attempt, in certain cases here, to selectively place an amount less than $5,000 on invoices for rooms done in the same school. It just seems too coincidental, and I think, if that is the case, then basically, I guess, there is nothing can be done about it; but it really is a difficult situation to pass any other comment on, other than just to state the fact. That is the way it looks. Anyway, thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Reid, you indicated that you wanted one moment.

MR. REID: Yes, I am sorry, Mr. Chairman, but I got thrown off. I just wanted to read something into the record, and this is found on Page 28.

MR. CHAIRMAN: Page 28?

MR. REID: Page 48, I am sorry.

MR. CHAIRMAN: Page 48? Thank you.

MR. REID: It is the Roman Catholic School Board for St. John's, and it is the minutes of a meeting of March 28, 1990. The point I want to make to you, Mr. Chairman, is the fact of the date, if you will just bear with me:

"A special timed presentation with respect to the possible investment by the School Board in some technology which would assist the District with office" - and so on. "The specific proposal presented was the Brunswick Data Package which had been selected for chosen study after several years of investigation."

Then, it goes on, in the next paragraph, Mr. Chairman, to talk about the advantages of that particular system. Then, October 5, 1990, remember I said: School board meeting of March 28, 1990, and then October 5, 1990 an ad went in the paper for such a system, and ultimately, who was the successful tender? - the Brunswick system.

It is apparent to me, Mr. Chairman, that the board had already made up its mind on March 28 that it was going to be the Brunswick system, and still went to tender.

MR. CHAIRMAN: Mr. Shortall, would you like to respond to that?

MR. SHORTALL: Yes, I would like to clarify it.

This kind of technology is complex and quite involved, as you might be aware. To my understanding, we were the first school district in this Province that is moving to put all of our schools on an on-line system of information. The package contained not only a financial administration package, which was central to the system, but a pupil information package as well.

As the minutes indicate, there had been a committee in place for a number of years attempting to investigate commercial packages which would appear to have filled our needs.

The reference to the Brunswick proposal being submitted at the March 28, 1990 meeting simply is a report from a study group which had spent some time in New Brunswick, visiting school districts in that province, which were using this particular system.

The decision taken by the board at that time was to proceed with the steps necessary to achieve that kind of innovation in our own school district. Those steps which would be necessary would have been: Number one, the development of the specific specifications; number two, the tendering, and eventually, the actual purchase and installation. As I pointed out, when these specifications were being prepared there was considerable discussion with our own people in the field, as well as with our advisors at the Department of Education. Indeed, we had meetings with the Deputy Minister of Education and the Assistant Deputy Minister of the day in the spring of that particular year, to ensure that the department was aware of the substantial investment we were considering in this type of technology. We received their assistance in devising the specifications and, in fact, Mr. Lester was invited to represent part of our school board on a provincial committee which is currently studying this kind of technology in the school system.

MR. REID: I have no problems with that, Mr. Chairman. I believe I started this morning or this afternoon by saying that there are two hands in this mess, if you want to call it a mess, and one of them is the Department of Education. And I don't have any hesitation - our two colleagues, our two friends, are gone this afternoon and I was sort of hoping they were going to stay around. I think the department has to be brought to task on some of this stuff, too, because it is just as much the department's fault, as far as I am concerned, to allow a board to break the public tendering process, and that is basically what this points to. If a government allows an agency like a school board to break the public tendering process, as far as I am concerned, the government itself should be brought to task.

MR. CHAIRMAN: Thank you, Mr. Reid.

We are rapidly running out of time, so I am not going to move on to other members of the Committee to ask questions. We will have to come back tomorrow. We have to leave at 4:30 because this building's doors lock electronically at 4:45 and unless we want to be enshrined in the archives, we do have to leave.

I want to make one comment - just sort of a light comment. On Page 81 and 82, you will see a listing of the invoices from Brunswick Data, taking us from December 1990 through to 1992. Two-thirds of the way down on Page 81, you will see invoice No. 91105 in the amount of $845.30 paid by cheque No. 139267 on 31 May. On Page 92, halfway down, you will see invoice 91105 in the amount of $845.30 paid by cheque No. 66, ten months later. Your computer system couldn't be that good.

MR. SHORTALL: I ask Mr. Lester if he could give you some light on that particular matter. I am sorry, I can't!

MR. WINDSOR: With that comment, I leave Mr. Lester to think about that overnight and perhaps research to see if, indeed, that invoice was paid twice by two different cheques ten months apart, as it certainly indicates.

We will adjourn until 10:00 tomorrow morning, Mr. Porter, and we will continue with the questioning at that time.

Thank you all very much.