May 6,
2015
GOVERNMENT
SERVICES COMMITTEE
The
Committee met at 9:00 a.m. in the Assembly Chamber.
CHAIR (Forsey):
Good morning everyone.
First of all what we will do is we will introduce our Committee right
here on the right. Before we
introduce the minister and his staff, we have to elect a Vice-Chair again this
morning.
Christopher we will start with you just with the introductions.
MR. MITCHELMORE:
Christopher Mitchelmore,
MHA, The Straits – White Bay North.
MR. SIMMS:
Randy Simms, Researcher, the
Opposition Office.
MR. MURPHY:
George Murphy, MHA for St.
John's East.
MR. MORGAN:
Ivan Morgan, Researcher, NDP
caucus.
MR. CROCKER:
Steve Crocker, MHA, Trinity
– Bay de Verde.
MR. CROSS:
Eli Cross, MHA, Bonavista
North.
MR. DINN:
John Dinn, MHA, Kilbride.
MR. K. PARSONS:
Kevin Parsons, MHA for the
beautiful District of Cape St. Francis.
CHAIR:
Okay, thank you.
We need
a Vice-Chair for the Government Services Committee.
Could we have a motion or a nomination for Vice-Chair please?
MR. K. PARSONS:
I nominate Steve Crocker.
CHAIR:
Kevin Parsons nominated
Steve Crocker as Vice-Chair.
Can we
vote on that?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Vice-Chair, congratulations
Steve.
MR. CROCKER:
Thank you so much.
CHAIR:
It probably should not take
too long this morning. We normally
put aside three hours for Estimates.
We probably will not use that this morning.
In the meantime, we will alternate back and forth, ten minutes each for
the Liberals and the NDP.
We will
start with the minister to introduce his staff.
You have a couple of minutes if you need a couple of minutes to address
the crowd. If not, that is quite
fine. We can carry on with
questioning.
MR. KENT:
Thank you, Mr. Chair.
Good
morning everybody. We will do
introductions first. Of course, my name
is Steve Kent. I am the Acting
Minister Responsible for the Government Purchasing Agency.
MR. PUDDESTER:
I am Leigh Puddester. I am the
Deputy Minister for Procurement Reform.
MS HEARN:
Good morning, I am Patricia Hearn, Chief Operating Officer for the Government
Purchasing Agency.
MR. CURTIS:
Good morning, I am Ken Curtis, the Departmental Controller with the Government
Purchasing Agency.
MR. CARD:
Jason Card, Director of Communications, Service NL.
MR. LEGGE:
Dwayne Legge, Executive Assistant to Minister Kent.
MR. KENT:
Thank you, Mr. Chair.
I will
make a few brief opening comments and then we will get into the questions, which
is the main reason why we are here.
It has
been a really interesting day so far, though, Mr. Chair, I have to say.
I wake up and the NDP is governing Alberta.
So congratulations to my hon. colleagues across the House.
I spent the next part of the morning working the drive through at
McDonald's with Paul Lane.
Now I
come into work and I am sitting across from my former deputy mayor and the
current mayor of my city. So, it
has been a strange day so far. Then
at lunchtime, George Murphy and I are getting a haircut together in the lobby of
West Block. So, it has been a
bizarre day already, and I fear it is only going to get worse, Mr. Chair.
MR. MURPHY:
(Inaudible).
It seems like Budget cuts are affecting everything these days.
MR. KENT:
Yes, indeed.
I am
the Acting Minister responsible for the Government Purchasing Agency, so I am
pleased to appear before you to discuss the Estimates figures for the agency.
I am fairly new to this role, as I think members are aware.
I am filling in for one of our ministers who are on leave at the moment.
I have
had a number of meetings related to the agency.
I am happy to answer whatever questions I can.
In the meantime, I am also very happy to defer to my colleagues here from
the agency who are more than happy to answer any questions in more detail than I
am able to provide.
I want
to thank you all for joining us. I
want to thank our staff for help in preparing for today's session.
As everybody is aware, the Government Purchasing Agency is the central
procurement unit of the Government of Newfoundland and Labrador.
It is responsible for managing the procurement process for goods and
services on behalf of all government departments.
The agency processes and oversees in excess of 19,000 procurement
transactions annually, including 500 public tenders which, in total, are valued
at approximately $250 million.
The
agency advertises bidding opportunities related to goods and services, as well
as posting tender notices for construction and related services.
The agency not only conducts government purchasing under the authority of
the Government Purchasing Agency Act, but also oversees the Public Tender Act,
which is the primary legislation that governs procurement within the Province's
public sector.
In
addition to these regular duties of the agency, we have also been actively
working on developing a new public procurement act.
Through this process, the provincial government is following through on
its commitment to the wise use of public funds, which in turn ensures the
maximum value is achieved for the people of the Province.
There is still work ongoing to finalize that procurement framework which
is inclusive of the act, regulations, and policies.
This work could include ongoing consultations with key stakeholders into
the future.
Our
government is being very thorough in its approach.
It is taking some time. When
we bring a new act to the floor of the House of Assembly it will be the right
legislation to meet the Province's needs.
I want
to make the most of our time this morning, Mr. Chair, so I will not give a big
speech. I am happy to take
questions from members of the Estimates Committee.
CHAIR:
Okay, thank you minister.
I
forgot myself. I am Clayton Forsey,
Member for Exploits and Chair of the Government Services Committee.
The
minister has already got a day's work done and it is only 9:00 o'clock in the
day. It feels like 5:00 o'clock to
him probably.
Anyway,
we will begin the questioning and we will start with you, Chris.
MR. MITCHELMORE:
Okay, line 1.1.01 –
MR. KENT:
It is a good place to start.
MR. MITCHELMORE:
– 01, Salaries, the budget last year was $2.24 million and the revised Estimates
show $1.5 million in Salaries.
Could the minister explain the $700,000-plus drop?
Were positions eliminated?
Were there vacancies? How many
people are working for Government Purchasing Agency, if we could get a breakdown
on that?
MR. KENT:
Sure, thank you for the
question.
Of
course the Salaries line includes permanent employees, temporary employees,
overtime, and other related salary costs as well.
The drop balance that the hon. member refers to of $733,200 in the
Salaries line resulted from a couple of factors.
First
of all there was a vacant deputy minister and executive secretary positon for
most of the year. Mr. Puddester, in
addition to serving as the Deputy Minister Responsible for the Government
Purchasing Agency, is also the Deputy Minister of Service Newfoundland and
Labrador. We pay him very well
there so he cannot receive two salaries of course.
That
explains part of the drop balance.
As well, there are four vacant positions recently designated for strategic
procurement. There are also vacant
positions within general operations and there has been some staff turnover
during the year.
The
vacant deputy minister and executive secretary position results in about just
over $141,000 of savings. The other
positions I just mentioned that have been vacant either for the full year or
part of the year, that total is close to $592,000.
MR. MITCHELMORE:
Okay.
Since the Estimates this year go back to the same value as what was
budgeted, the $700,000-plus increase, does the department plan on filling the DM
and the executive secretary position?
Or will those continue to remain under the leadership of the Service NL
Deputy Minister?
MR. KENT:
At this point in time our
intention is to have the current deputy minister continue.
We have no immediate plans to add an additional deputy minister at this
point in time.
MR. MITCHELMORE:
Why are the salary figures
at $2,247,600? Shouldn't they be
revised down at least to $141,000 if that position is not going to be filled?
MR. KENT:
Part of the challenge which
faces all government departments and agencies is that there continues to be
salary increases that need to be factored in as well.
That would explain some of that amount.
Leigh,
I do not know if you want to add anything else.
MR. PUDDESTER:
I guess the key thing is that although there are – as the minister said at this
point – no plans on filling that position, there is a contingency built in there
that in the event there is a change in organizational structure, that there are
sufficient salary dollars there to cover that off.
Obviously, if the position is not filled, that will be a savings that
will result.
MR. MITCHELMORE:
Okay, so for Budget
2015-2016, currently, how many permanent employees are there?
How many temporary employees?
How many vacancies?
MR. PUDDESTER:
The Government Purchasing Agency has a staff complement of thirty-two permanent
positions. There are also eight
temporary positions within the agency.
Right now, three of those temporary positions are vacant and fourteen of
the permanent positions are vacant.
MR. MITCHELMORE:
Under the Operating Accounts
of Salaries, the Employee Benefits, you have budgeted $1,500.
There was none utilized and you are adding, still, the $1,500 in Employee
Benefits. Would these be employee
benefits at the executive level because the deputy minister position is not
filled, so it is not being used?
MR. KENT:
The Employee Benefits line
provides for workers' compensation costs that are incurred as a result of staff
being injured while at work. It
also includes some miscellaneous registration fees for any training courses or
seminars.
We hope
no one is injured on the job. It is
always our goal to not have any injuries in the workplace.
There is potential that there will be some usage of that budget line for
registration fees for professional development for staff.
MR. MITCHELMORE:
Just to clarify then, if
this is for workers' compensation fees and none were submitted last year, what
is going on with the mandatory fees for workers' compensation?
MR. KENT:
The mandatory fees would not
be in that budget line. What this
line provides for is any workers' compensation costs that are incurred if
somebody is injured on the job. It
does not relate to the mandatory employment-related costs.
MR. MITCHELMORE:
The transportation costs
last year, there was $23,000 spent out of a $70,900 budget.
Can you explain a breakdown of why maybe almost $50,000 was not utilized?
Were there things that were planned in terms of consultation around
procurement that did not take place?
MR. KENT:
The Transportation and
Communications line includes a number of items.
It includes travel by employees of the agency, postage costs,
telecommunications expenses, and courier charges, for example.
The drop balance of $47,900 was mainly due to reduced travel as
Newfoundland and Labrador withdrew from participation in trade agreement
negotiations. The agency actively
participates in those negotiations, so there were some savings as a result of
the Province withdrawing from participation in those negotiations until further
notice.
In
addition, expenditures relating to training and auditing were limited based on
vacancies, also based on spending restrictions that were implemented partway
through the fiscal year throughout government, and also timing changes in the
implementation of the new legislation that we are still working on.
MR. MITCHELMORE:
Would it be possible to get
a listing of the fourteen permanent vacant positions and the thirteen, a
description of what those positions are, and the three vacancies as well as the
current positions that are filled?
MR. KENT:
We will endeavour to provide
that information. That is not a
problem.
MR. MITCHELMORE:
Thank you.
The
Professional Services line last year was revised; $80,000 was allocated and
$148,100 was spent. That is a
ballooning number. I am wondering
if you could explain what purchases were made in terms of Professional Services.
Was a consultant hired to do specific work within the Government
Purchasing Agency?
MR. KENT:
That is a very good
question. The line item includes a
couple of things. It provides for
auctioneering fees for the disposal of government assets and that occurs every
year. It also includes consulting
services related to procurement opportunities, and also related to legislative
issues which explain the difference last year.
The increase of $68,100 was due to additional auction fees, and a
consultant to assist with RFP development and strategic procurement.
I can
give you some information on what that consultant work included.
It consisted of amending the policy and procedure manual as it relates to
legislative reform. It also
included the development and implementation of standardized procurement
templates for RFP development and also for strategic procurement.
Finally, that consultant work also consisted of management of existing
strategic procurement contracts while focusing on strengthening them and
redefining them for future years as well.
MR. MITCHELMORE:
Would we be able to get a
copy of this new updated policy and procedure manual?
MR. KENT:
We can certainly provide it
once it is finalized as well. It is
still under development, is my understanding.
Certainly as soon as it is available we would be happy to provide it.
MR. MITCHELMORE:
Could we get a breakdown of
the fees as to what were the auctioneering fees and what actual assets were
disposed of?
MR. KENT:
We can provide that
information. That is not a problem.
Just to your previous question, I should also note that a lot of that
policy and procedure development that is underway relates to the development and
drafting of the new legislation that we are working on.
It is tied in. That still
continues to be a work in progress.
We can
get you details on the audit fees.
That is also not a problem. I am
happy to provide that.
MR. MITCHELMORE:
Would you be able to provide
the information around the contract and what the terms of reference would be for
this consultant when it comes to RFP development?
MR. KENT:
Yes, we can provide that
information.
MR. MITCHELMORE:
Is this consultant doing two
different aspects? You are talking
about RFP development. Government
has already endeavoured into a number of RFP contracts.
Are they following the current rules for a RFP policy and procedure
manual? If so, can we have that
document? If not, if it is just a
work in progress as you are saying, what are the criteria when it comes to RFPs
here in the Province?
MR. KENT:
You are asking if there have
been any changes to the RFP process in the Province?
MR. MITCHELMORE:
Yes.
MR. KENT:
What I will say, generally,
is that despite the fact that we have not brought in new legislation, our work
on improving procurement practices in government continues.
We are always looking for opportunities to get better value for
taxpayers' money, and there has been a number of initiatives related to
strategic procurement reform undertaken that has saved taxpayers considerable
dollars.
I will
ask Mr. Puddester to elaborate a little further.
MR. PUDDESTER:
With respect to Requests for
Proposals, there are no changes in place in terms of the rules around those.
Those would be governed by the current Public Tender Act or guidelines
for the hiring of consultants. I
think what you are seeing is that we are starting to consider the use of them
more frequently than in the past where there has been a predominant focus on
tenders as opposed to Requests for Proposals.
The
development of some of the templates were around trying to provide some
consistency and best practices for public bodies to consider if they are going
to use RFPs rather than tenders. I
think that has been the change. I
am not sure if I have answered your question.
MR. MITCHELMORE:
Sure.
When
RFPs are called, are the criteria made public around how a company would be
chosen that would be somewhat open and transparent – because there may be 50 per
cent allocated to financial reasons, technical, or whatnot.
Can the public find out, when RFPs are reviewed or selected, what aspects
were pertaining to technical, what aspects were financial, or if there were
other reasons why a company, may be a Made in Newfoundland and Labrador content
or other regulations – when these are put forward, is there information given on
that, Mr. Puddester or minister?
MR. KENT:
You go ahead.
MR. PUDDESTER:
I cannot speak for every RFP
because each public body would be responsible for issuing their own.
They are not centrally issued necessarily by the Government Purchasing
Agency; however, good practice when it comes to Requests for Proposals is to
provide an explanation to the bidders as to how a decision on a winner will be
made. That would typically include,
as you said, a listing of the various criteria that would be used to judge a
proposal as well as the waiting that would be used, as you said, financials at
50 per cent, previous experience at 25 per cent or whatever the combination.
MR. MITCHELMORE:
Okay.
MR. PUDDESTER:
Those would typically vary
depending on the nature of the work that you were acquiring and obviously the
individual circumstances.
Typically those documents would all be available publicly either through the
Government Purchasing Agency's website or the websites of the entities that were
issuing them. That information
would typically be in those.
MR. MITCHELMORE:
Minister, based on what you
have said in this consultant work that is ongoing, the March 5 tabling of the
procurement by public bodies act has died on the Order Paper.
It is not coming back in the House of Assembly.
You are saying a series of consultations need to take place, et cetera.
When can government expect or the people of the Province, business,
companies that do government purchasing, contracts with government, anticipate
seeing this new legislation?
MR. KENT:
It is a fair question and
one that I know has been asked previously in Estimates.
It is very difficult for me to pinpoint when that legislation will be
ready. I can tell you that we still
have more work to do. We want, for
obvious reasons, to be very thorough.
We want to ensure that we get it right.
It is not simply a matter of making some minor adjustments to existing
legislation. It is also not a
matter of simply looking across the country and picking somebody else's
legislation and changing a few details and adopting that.
We are
trying to come up with something that is unique and progressive and reflective
of the realities of doing business in Newfoundland and Labrador.
That work is ongoing. I wish
I could be more precise with you, but I can assure you that as soon as that
legislation is ready to go we will be having discussions as a Cabinet and
ultimately bringing that legislation into the House of Assembly.
I cannot say whether that will be this session or not.
MR. MITCHELMORE:
Thank you. Minister.
CHAIR:
Thank you, Christopher.
I appreciate you starting off in the right spot this morning because I
neglected to call for the subhead, which I will right now.
So we will call for the subhead.
CLERK (Ms Murphy):
Subhead 1.1.01.
CHAIR:
Subhead 1.1.01.
With
that, George, you will get your fifteen minutes.
CLERK:
Ten.
CHAIR:
I am sorry, ten.
MR. MURPHY:
Thank you very much.
Good
morning, Minister, and good morning to all of your staff.
Thanks for the work that you are doing, in advance.
Mr.
Minister, just to pick up on some of the lines of questioning that have already
occurred here this morning, what are some of the issues that are holding up the
new procurement act? Are you at
liberty to say what some of those issues may be?
MR. KENT:
I really do not have
anything further to add beyond what I just outlined, I would say, respectfully.
There are no specific issues holding things up, as you suggest.
It is more of a case that the work is continuing.
Our research is continuing.
We continue to look at what is happening in other jurisdictions.
Now, as a result of new ATIPP legislation coming into place, we also need
to examine if that new legislation has any impact on the work that we are doing
in terms of procurement.
We just
want to make sure that we get it right.
We want to be thorough. I
look forward to seeing us introduce new legislation because I think there are
opportunities to take procurement reform in this Province even further.
There have been a number of initiatives in recent years that we have
undertaken that have resulted in significant savings for taxpayers.
We need
to continue to do that work, and that work is definitely not on hold while we
development new legislation. We are
always looking for opportunities to do better in that regard, but ultimately we
want to put a modern, progressive legislative framework in place and we want to
make sure we do it well and do it correctly.
MR. MURPHY:
Okay.
You
mentioned earlier as well in the line of questioning about a consultant that
have been awarded some of the work here as regards to the new regulations that
will be coming in. Can you let us
know who the new consultant is? Was
it an unsolicited Request for Proposals that was put in on the part of this
party or if government went looking – was it a tender process, for example, for
the consultant work?
MR. KENT:
There were two consultants
involved. One is a gentleman named
Mr. Joe Day, who is actually a former employee of the Government Purchasing
Agency with considerable background, experience, and expertise.
Particularly given some of the turnover and some of the vacancies that
exist at the Government Purchasing Agency, having somebody with Mr. Day's
experience and skills has been extremely valuable in the ongoing work of the
Government Purchasing Agency.
In
addition to that, there was a law firm contracted to assist with some of the
work on the RFP templates as well.
So those would the two consultants involved.
MR. MURPHY:
Which law firm was that?
MR. KENT:
Mr. Puddester, do you have
the name of the law firm? I do not
have it at my fingertips.
MR. PUDDESTER:
I believe the name of the firm was actually the Procurement Office out of
Ottawa, so they are public procurement specialists.
MR. MURPHY:
Okay.
All right, thanks for that.
Just to
come back again to earlier discussion, you mentioned trade negotiations.
There were some costs as regards to the trade negotiations that were
happening. Can you adlib on trade
negotiations, with whom?
MR. KENT:
Any trade negotiations that
the Government of Newfoundland and Labrador are involved in, there is a role for
the Government Purchasing Agency to play.
While those negotiations are typically led by the Department Business,
Tourism, Culture and Rural Development – which is a mouth full – there is a role
for the Government Purchasing Agency because of the procurement implications of
some of those negotiations.
As a
result of the Province withdrawing, for the time being, from participation in
trade agreement negotiations, as a result of issues related to CETA, which I
know members are well familiar with, there has been some savings in the
Transportation and Communications budget line for that reason.
MR. MURPHY:
Okay, so it is just from the
CETA negotiations themselves that these savings were realized or were there
other negotiations?
MR. KENT:
The one we actually withdrew
from was the Agreement on Internal Trade.
MR. MURPHY:
Agreement on Internal Trade,
okay.
I want
to ask about the role of the Government Purchasing Agency and their role with
other departments, for example, the Department of Transportation and Works and
their role in awarding a contract to Damen shipyards.
Did Government Purchasing have a role in briefing the Department of
Transportation and Works, for example, on the issues of the impacts of free
trades agreements, that sort of thing?
Was there any consultation with the Government Purchasing Agency on that?
MR. KENT:
I would say upfront that the
Government Purchasing Agency regularly consults with other government
departments, as required. For
instance, even in the short time that I have been the Minister of Health and
Community Services, my department has had reason to seek advice and guidance on
procurement practices from the Government Purchasing Agency.
The health authorities would do that from time to time as well.
As to
your specific question around Transportation and Works, I will ask Mr. Puddester
to respond. It pre-dates me.
MR. PUDDESTER:
The Department of Transportation and Works is responsible for the procurement of
capital projects including, in this case, transportation-related ferry contract.
So that contract would have been led by themselves.
I am
sure there were consultations with the Department of Justice lawyers who would
have procurement experience, but they did not ask the Government Purchasing
Agency for any input into that.
That would not be unusual.
MR. MURPHY:
That would not be covered by
you people at that particular time.
I am
just wondering because, of course, one of the oversights with the contract was
the realization that we had a free trade agreement with Chili at the same time
and there was a way that they scored it, one purchase over the other from
Romania. I was just wondering, your
department did not have any influence or they would not set guidelines in this
particular case over procurement.
Whose responsibility would that be to make a department aware, for example, that
there would be a free trade agreement in place that would affect purchasing in
this particular case?
MR. PUDDESTER:
The Department of Business,
Tourism, Culture and Rural Development have primary responsibility and ownership
of our trade agreements. The
minister mentioned GPA's involvement with the procurement aspects because most
trade agreements do have a procurement element.
Our role in negotiations has typically been to advise on the
procurement-specific issues. Our
legislation is quite open in this Province when it comes to procurement aspects
of trade agreements, so we rarely have any issues locally in terms of the
impacts those agreements would have on our specific Province.
MR. MURPHY:
Okay.
MR. PUDDESTER:
In the case of that contract, they would have taken advice, I would assume, from
the Department of Business, Tourism, Culture and Rural Development.
MR. MURPHY:
Okay.
The
Auditor General has had issues in the past with public tender exceptions, as we
know from past reports. Last year,
we were told in Estimates that there was money allocated for travel, for
auditing, and training around the Province that would help people to ensure that
they understand and comply with the Public Tender Act; training on when they can
use exceptions to open calls and how to make sure that they are doing those to
be compliant with the act. I notice
that the department has – well, in this particular case, fourteen permanent
positions are gone. What are we
doing as regards to education around the Province when it comes to this now,
what the Auditor General was talking about?
MR. KENT:
You go ahead.
MR. PUDDESTER:
We did have auditor positions in the staff complement.
We did have some challenges in filling those positions last year;
however, two of three positions are now filled.
We do have auditors in place.
We are proceeding to develop the audit program for the current year,
which would address reviewing the procurement activities of various public
bodies.
In
terms of the exceptions, though, that are reported, those are not generally –
when exceptions are reported by departments all of them are reviewed by the
staff, the Government Purchasing Agency, and follow-up with the departments and
public entities who have filed forms – Form B is for exceptions – those are made
anyway. So they were not held up
because of the lack of auditor positons.
Typically, about 25 per cent of all exceptions are quarried –
MR. MURPHY:
Yes.
MR. PUDDESTER:
– to seek more information or clarification as to the rationale for the
exception. That activity is going
on. There are audit positions now
in place to review the practices of those other bodies.
MR. MURPHY:
Okay, that is good.
So
there is money in this budget for more training then obviously, according to
that. I guess, Mr. Chair, at this
point I will carry on with a couple of line items that I have because I have no
further questions that come to mind right now.
Just in
Purchased Services, $139,000 was budgeted for but only $65,000 was spent.
I take it – well, maybe you should give me the breakdown on what happened
here, why the money was not spent, and of course $89,000 was budgeted for this
year.
MR. KENT:
Thank you.
I will
speak to a couple of the Purchased Services numbers.
First of all, to provide some context, the Purchased Services line
provides for advertising, copier rentals, maintenance, printing, and other
general purchased services. It also
covers membership in the Purchasing Management Association as well.
The
decrease of $50,000 mainly relates to one-time funding received in 2014-2015 for
training material and an e-procurement system and based on timing changes
related to the new act as well as procurement system requirements under CETA, it
is now anticipated that the development of an e-procurement system will occur in
2016-2017 instead.
The
drop balance of $74,000 relates to timing changes in the new legislation and the
development of the system.
MR. MURPHY:
Could you tell me how much
membership is in this Purchasing Management Association?
MR. KENT:
I cannot, but maybe somebody
else can.
MR. MURPHY:
Who would be the other
members of this association, for example?
OFFICIAL:
(Inaudible).
MR. KENT:
My officials tell me it is a
fairly small figure. It is probably
approximately $1,000. It is not a
big amount of that line.
MR. MURPHY:
Who would be the other
members of this purchasing association?
MR. KENT:
Other jurisdictions across
Canada would be members.
MR. MURPHY:
If we could have a list, out
of curiosity if nothing else, just so that we can see, if that is possible.
MR. KENT:
Yes, we would not have the
full list of members of that association in our possession, but we can certainly
get it for you. That is not a
problem.
MR. MURPHY:
Sure, okay.
Just
down here to Revenue – Provincial in line 02, if I can get a breakdown of what
was happening here. I am thinking
that this might be monies that people might have had to put in for proposals,
that sort of thing, tenders.
MR. KENT:
So, the Revenue – Provincial
line that you are referring to is revenue that we received from the disposal of
assets.
MR. MURPHY:
Okay.
MR. KENT:
For instance, in the last
fiscal year, there was an auction that took place in Deer Lake, there was an
auction that took place in Holyrood, and there was one in Grand Falls-Windsor as
well. There were a number of
disposal tenders, and that line also includes the sale of items by the
auctioneer.
In
terms of the difference between the numbers from year to year, there was an
increase of approximately $100,000 over the previous year's revenue.
That is because we conducted one additional auction.
There was also a significant additional disposal tender.
So that would explain the difference.
The
revenue for auctions fluctuates from year to year based on the disposal
schedules of departments. Those
kinds of items that could be included range from vehicle to furniture to scrap
metal, and the auctioneer fee is based on gross sales.
The auctioneer's fee is 12.8 per cent.
That is covered under Professional Services.
MR. MURPHY:
Okay.
There
is nothing else I can think of at this particular time, so I will digress to the
Opposition, if the Opposition has any questions at this particular point in
time.
CHAIR:
As you can see, I want to
treat you the same as Christopher, so we just let the time go on, the extra five
minutes for you, because we only started you at ten.
MR. KENT:
It is time well spent, Mr.
Chair.
CHAIR:
So you are finished, George?
MR. MURPHY:
I think so.
CHAIR:
Okay.
Back to
you, Christopher.
MR. MITCHELMORE:
I wanted to ask of the
current fifteen employees that are with Government Purchasing, is there any
indication that some of these will be retiring within the next five years; and
will that impact, based on government's attrition plan, the staffing levels at
the Government Purchasing Agency?
MR. KENT:
We are subject to the
attrition targets, like other government departments and agencies.
Our target for this year is one position, and I believe it is three
positions over the next five years that represent the attrition target.
Like every organization, there are retirements and resignations from time
to time. Certainly, the Government
Purchasing Agency would be no different in that regard.
MR. MITCHELMORE:
Okay.
Minister, would all of those positions be permanent positions that are in
the target or would some of them be temporary positions as well that would fit
in that target?
MR. KENT:
It could be either is my
understanding.
MR. MITCHELMORE:
Okay.
I want
to go down to the Purchased Services and what Mr. Murphy was talking about
around revenue, around the auctioneering fees that you said there were
additional auctions. This year you
are projecting less revenue so you are anticipating having less auctions and
less sales from surplus assets or things that need to be disposed of.
MR. KENT:
Truthfully, it is always a
best guess. We cannot predict from
year to year exactly how many auctions will happen or what value will be derived
from items that are sold at auction.
This
past year was a little higher than normal because there was an additional
auction. There was also a
significant disposal tender that was in addition to what was anticipated.
So we anticipate that this next year will be similar to past years.
We think it was a little higher than normal last year, which is a good
thing if we are generating additional revenue through the proper disposal of
assets that are no longer needed for public purposes.
We think that the $258,000 is a good guess based on the trends over the
last number of years.
MR. MITCHELMORE:
So of the $25,000 that is in
the Estimates for Professional Services, what percentage of that is budgeted for
auctioneering fees?
OFFICIAL:
(Inaudible).
MR. KENT:
Sorry, I am just making sure
I am giving you accurate information.
All of that line is for auction services this year.
In the Professional Services line this year, there are not fees for
consulting work budgeted.
MR. MITCHELMORE:
Right.
Getting
back to my previous question about the report and the consultant that was hired
for the RFP and the approval, since there is no payment this year, in this
year's budget, when do we anticipate that a report will be made available to the
Government Purchasing Agency that can be made public?
MR. KENT:
There were two elements of
work done in the previous fiscal year, as I outlined.
One was a law firm was engaged to assist with the templates for the
Request for Proposals. Mr. Day was
engaged to assist us in the development of policies, procedures, and other
things that would be necessary as we advance the legislative reform that is
contemplated. That is ongoing.
Our work is ongoing, but the consultant's input into that process has now
concluded.
The
result of his work is not a formal report, per se.
He has been involved in working with the agency in the development of
policies and procedures and assisting in the development of the new legislation.
MR. MITCHELMORE:
Okay.
You had
also confirmed that government has pulled out of AIT.
Is that correct?
MR. KENT:
That is correct.
MR. MITCHELMORE:
There is no other trade
agreement that government has currently suspended negotiation talks.
Because it appeared that there were a number of others made public
previously around the Asia-Pacific or TTP, South Korea, and there is a variety
of ongoing that Canada would be having with the world.
MR. KENT:
To clarify, we have
suspended our involvement in all of them.
The only one that the Government Purchasing Agency was actively involved
in at this point in time was the Agreement on Internal Trade.
If you have questions related to the status of those other negotiations,
they would probably be better directed to the minister responsible.
MR. MITCHELMORE:
Of course, I agree.
The
AIT, though, there is already a current trade agreement in place for AIT.
The current round of negotiations were to enhance or expand the role; is
that correct? Would the department
or the government in general still have to follow the current agreement that was
signed?
MR. KENT:
My understanding is yes,
that is correct, but our role is to offer input on procurement-related issues.
We are not the agency of government that leads trade negotiations, or
even manages or co-ordinates trade negotiations.
That is typically led by the Department of Business, Tourism, Culture and
Rural Development.
MR. MITCHELMORE:
Okay.
I do
not think that I have any other questions at this time, but I do believe my
colleague for Mount Pearl South, who is responsible for this portfolio, has a
question.
CHAIR:
Before I do, I go back to
George. Do you have anything else,
George, before we clue up?
MR. MURPHY:
No, Sir; I am good.
CHAIR:
Okay, that is fair.
Do you
want to clue it up, Paul?
MR. LANE:
Yes.
Thank you, Mr. Chair.
Mr.
Minister, in terms of the Auditor General, the Auditor General did a report back
in 2012 and had a number of concerns around purchasing.
According to my notes here anyway, he reported a total of 1,472
exceptions that were valued at over $100 million.
We were assured at the time that there would be training that would be
taking place to deal with all those issues.
I
recall there were issues there around exceptions, for example, and people just
using emergency in areas where I think most people would feel and I think the AG
felt that it was not an emergency, and there was plenty of time to put out RFPs
, tenders and so on. There were a
number of other issues. As I said,
over 1,400 of them.
I am
just wondering what training has taken place.
I assume it would be led by the Government Purchasing Agency.
Perhaps the departments themselves would actually do the training, I am
not sure, but certainly you guys would be the lead on it, I would imagine.
What has been done in terms of training in the departments to assure that
the Public Tender Act and the RFPs and all that stuff is being applied the way
it should and to also ensure that all of the documentation is being filled out
correctly? I believe that was
another area of concern that there was a lot of documentation that was not
filled out, or it was not filled out properly and so on.
If you
can comment on that, please.
MR. KENT:
I certainly can.
Thank you for your question.
As you joined us in progress, I want to begin by wishing you a Happy McHappy
Day. Your drive-through performance
was questionable, but so was mine.
They did allow me to handle the money.
I am a little uncomfortable from a safety perspective that you were
handling the food, but I know that organization has good quality control
standards, even on McHappy Day.
To your
question, first of all, the Auditor General in 2014 did provide an update on
progress that has been made on the 2012 recommendations, and considerable
progress has indeed been made. On
the training question specifically, I am going to invite Leigh and Patricia to
comment. I can tell you that there
has been informal training conducted internally.
There is not a formal training program as such, but I will allow Mr.
Puddester to start.
MR. PUDDESTER:
Yes, training is an important part of the mandate of the Government Purchasing
Agency moving forward. The
strategic plan for 2014-2017, that was one of the primary focuses.
The plan talked about initially the focus was going to be on developing
some training material in an approach for the GPA staff, and then once that was
in place, it was going to start to be broadened to the public sector overall.
So some
work was done on that in the most recent year, and I will ask Patricia to speak
to that in just a second – and again, that will then be expanded outwards.
What I would say, though, is the training specific to exceptions is just
one part of what we would want to be training civil servants on how to do.
Obviously, it is a very large act, and the focus would be on ensuring
they have got a good understanding of how to use the act quite broadly,
including those exceptions. There
is not a specific program focus just on exceptions; it is a broader issue that
we are trying to deal with.
MR. LANE:
Yes, thank you.
I understand that; that was just one part I was keying in on.
MR. PUDDESTER:
I would ask Patricia if she might to just elaborate on the training that has
been done.
MS HEARN:
Sure. Thank you for your question.
In
terms of the Public Tender Act, it encompasses the exceptions as well as the
rules for public tendering. In this
past year, we have taken on a journey of training both the public sector
employees within core government, in the departments, as well as we have reached
out to other government-funded bodies.
Within the Province, we have in excess of 500 government-funded bodies
that follow the Public Tender Act.
So it
is a challenge, of course, to get the training out and to reach all entities.
What we have done in this past year is we have had seven sessions to
train all entities in terms of the contractual obligations of the Public Tender
Act, including the exceptions that fall within the legislation as well.
In
terms of your second question, filling out – I think the Auditor General
referenced filling out the Form B or the exception report incorrectly.
What we do on a daily basis, these forms come directly to the Government
Purchasing Agency. We have the
expertise in-house for many, many years now that we will provide clarity to each
individual exception. When a
question comes up, if it is not filled out properly or correctly, we will
actually contact the government-funded body directly, have a one-on-one
conversation to explain and bring clarity to the exception itself.
What we
do then is we roll up all of those questions throughout the year that come in as
a result of the Form B's and we incorporate that into our training material as
we move forward.
MR. LANE:
When you talk about the
government-funded bodies – first of all, it is the same training I imagine, but
we are talking about internally in terms of all of the government departments
and agencies that we would be doing training.
Are there any measures in place or training, for example, for
municipalities because they also have to follow the Public Tender Act?
Or if there is no training, is there any monitoring or whatever to make
sure that those bodies are in compliance as well?
Like school boards and things like that also.
MS HEARN:
Yes, we do. We roll out the
training to both core government, which is the departments, and we invite as
well government-funded bodies to attend where possible.
Within
the St. John's region, we hold one-on-one in-person training.
We also provide for virtual training for any individual across
Newfoundland and Labrador to attend as well.
MR. LANE:
Okay, thank you.
The
only other question I had – and I am assuming, again, in a general sense it
would fall to this division, but certainly it applies to all departments.
We have heard of the concept – I believe my colleague here for Virginia
Waters may have referenced it in the House yesterday or the day before – this
phenomenon that I think she said it was March madness, where basically you have
this scenario where because come March 31 is year end and you have departments
that have budgets and I guess there is thought that if you do not spend the
money you will not get the money next year.
So you hear all of these stories all the time about let's purchase some
new vehicles. Even though the
vehicle we have might be fine, let's buy a new one anyway.
Let's buy new furniture.
Even though the furniture we have may be fine, but let's update it.
Let's paint everything.
Let's tear up the carpets, whatever.
What
measures are in place, if any – because it is one thing to have practices in
place to deal with if you make a purchase, that you are required to put out
RFPs, tenders, whatever, but is there any mechanism or monitoring, or auditing
or whatever done at all in government to ensure that when departments are making
these purchases that somebody at least spot checks to make sure that this is a
reasonable purchase, this is a needed purchase that is being made.
MR. KENT:
I have seen the light – the
little red one I mean.
I will
provide some general commentary because the issue you are raising really does
not involve the Government Purchasing Agency directly.
We exist to ensure that proper processes are followed when government is
involved in purchasing, as you are well aware.
MR. LANE:
Yes.
MR. KENT:
There are numerous checks
and balances in place in the public service to prevent the phenomenon, as you
refer to it, from occurring. It is
one of those issues that I, too, have heard over time, and as a minister it is
an issue that I have definitely watched for over the last couple of years.
In this past fiscal year, there has been even greater scrutiny.
There has been a freeze on any discretionary spending so we, as
ministers, expect and demand that our deputy ministers and the executives in our
departments ensure that the freeze is adhered to and that discretionary spending
is not occurring.
Exceptions, when there needs to be money transferred from one budget line to
another or there is some other sort of deviation, those decisions have to go
directly to Treasury Board for approval.
As the Vice-Chair of Treasury Board, I have seen numerous issues come to
the table where we really examine them carefully; they are under very close
scrutiny to make sure that there is good justification for any funds being spent
and that they are truly necessary.
I think
government has gotten better at managing that dynamic and ensuring that funds
are not spent unnecessarily, and that is even more important when you are in
tough fiscal times as we find ourselves.
I know the Premier and the Minister of Finance and other members of
Cabinet would have no tolerance for discretionary spending that is not
absolutely necessary, and any spending decision has to be justified.
MR. LANE:
Still on this same train of
thought, I suppose, I am wondering – you say you have auctions a couple of times
a year or whatever. Maybe you can
comment on the frequency; you may have already and I may have missed it.
You
have auctions, so at some point in time I am assuming – and you can correct me –
somebody decides that this surplus equipment, maybe it is table and chairs, or
whatever it might be that a particular department or division within the
department from any part of the Province that has this equipment they no longer
need so it is going to be auctioned off.
Is there a warehouse somewhere, for example, that all of this excess
equipment would go to, to be stored until you have enough of it to do an
auction? Can you explain how that
system works for me?
MR. KENT:
There are some warehouses,
but there are other options as well.
I will let Mr. Puddester speak to that.
MR. PUDDESTER:
There are a couple of different things that happen.
First of all, if it is things like furniture, filing cabinets, chairs and
things, the Government Purchasing Agency actually operates its own small
warehouse where we will take that material and try and reuse it within
government first because oftentimes we will have other departments who need
chairs, filing cabinets, or whatever.
Before, obviously, we dispose of those through an auction process we will
try and reuse them internally.
Again,
that is done through GPA's own small warehouse.
When it comes to assets that are surplus for government's needs, those
would typically be spread out all over the Province and be all sorts of
different types. They would often
be held by the department wanting to dispose of them until we can arrange for an
auction to take place. That would
be based on critical mass, where the items are, what they are and those types of
things. I think sometimes we also
give them to the auctioneering firm to hold until we are ready as well.
MR. LANE:
Okay, that is great.
The first part of your answer kind of answered where I was going.
I was wondering about it being reused because, obviously, from a cost
perspective it would not make sense if you have equipment and you are putting it
in storage for auction and now you have another department who needs that
equipment and are going to buy new stuff, so I am glad to hear that there is
some reusing going on.
In
terms of that reuse, is that something that if you hear about someone looking –
if I could put it this way: Does every department know or whatever, or is there
a protocol, if you will, in each department that says if I need some new chairs
before I issue a purchase order to buy new chairs, I must first contact
Government Purchasing to see if we have chairs that can be reused; or is that
discretionary, they can do it if they feel like it; or are they required to do
that? Do you know?
MR. PUDDESTER:
I might ask Patricia to
answer the details on that one, if I could.
MS HEARN:
What we offer through the
Government Purchasing Agency, through our Intranet, is a website that shows what
we currently have at our warehouse accessible to core government users.
Any public servant who is looking for a chair, a desk, some of the small
more office furnishing type things, they can go online and see some photos that
we have up.
We do
not have a policy in place or a procedure in place where it is mandatory to do
that. The departments have the
right to spend their money as they choose, but they do have access to our
database of what we currently have.
That changes daily, so we try to keep that updated as much as possible so that
you can see, in real time, what we currently have at the warehouse.
MR. LANE:
Thank you for your answer.
I am a little disappointed with the answer, but thank you for it.
I think it could be argued that we should have a policy.
It is fine to say here is our inventory, go look at our online catalogue;
but if you do not want to look at it, you can go and buy brand new stuff because
you do not want to use that, even though what we have is perfectly fine.
Just as
a comment, I suppose, for the record, I think that it is something that should
be looked at to make it mandatory, but I do thank you for that answer.
MR. KENT:
Can I just speak to that,
Mr. Chair?
CHAIR:
Yes.
MR. KENT:
I will not prolong the
discussion, but I just want to be clear that we have an expectation – there is
certainly a good general understanding among departments that we should reuse
first. What I have witnessed in the
departments that I have been in is just that: you reuse the good equipment.
Then there is equipment that may no longer be in great condition and
certainly not in perfect condition and may no longer be suitable for reuse.
That is often the equipment that ends up in surplus, that ends up going
to auction, that ends up in warehouses.
I just
want to be clear that there is a very good amount of reuse occurring, wherever
possible, and the equipment that ends up not being reused and going into a
warehouse to be sold at auction is usually far from perfect condition, just to
be clear.
MR. LANE:
Thank you, Mr. Minister.
On
that, I am wondering if you can provide us, if you do not have the numbers per
se, with a sense of what is the uptake.
If you have this system in place, then I would like to know: What is the
uptake? How many departments are
actually doing that?
Do they
all know about it?
MR. KENT:
They definitely –
MR. LANE:
It is the first I ever heard
of it. That does not mean anything
just because I never heard of it. I
have never heard of that process before.
MR. KENT:
All I can tell you is that
in the various departments that I have been in, it has been clear that practice
is in place. Equipment is reused.
There are people in departments who coordinate the assets that are within
that department and ensure that equipment is put to good use.
If somebody is in need of a new desk, or whatever the case may be, the
first objective is to find that equipment within the system, as opposed to
simply getting a purchase order.
It may
be difficult to quantify exactly how much of that is going on, to your
particular question, because each department is managing its assets.
I can certainly tell you from experience I have seen it happening in
every department that I have been in.
It is one of those issues that executives within departments would be
paying close attention to also.
MR. LANE:
Okay, thank you.
The
last question I have – and it relates to what my colleague here asked, but I do
want to go back to it just for a second – is the procurement by public bodies
act. As was indicated on March 5,
that piece of legislation was introduced and it basically died on the Order
Paper.
Now we
are into May 2015. That is over
three years. Now we are still
talking about – I believe the words you used, Mr. Minister was that it is an
ongoing process; we are trying to gauge best practices and we want to get it
right. We obviously agree.
If we are going to do it, let's do it right.
We are talking over three years and we still have not seen it.
I am
just wondering why that big gap? I
know that you have not been responsible for this portfolio up until now, or
recently, but it was a full three years where somebody had an opportunity to get
it right. As a matter of fact, it
was already written. If it was on
the Order Paper it means it was written, ready to go.
Obviously all the work at the time was done.
Maybe it needs to be tweaked, but it would seem to me that three years
later and now we are still talking about trying to get it right; that seems like
an excessive amount of time to redo, or revamp, or tweak what was already there.
I am
just wondering, I know on a go-forward basis you are going to say, well, I
appreciate that, but why the three years of nothing, or what seems to be
nothing?
MR. KENT:
I appreciate your question.
First of all, I do not feel it would be fair to say nothing has been
done. In fact, we can demonstrate
that is not the case. I will not
rehash everything I have already said because I do not really have a lot new to
say beyond what I have already said this morning on this issue.
I can tell you that despite the fact we have not brought in new
legislation, there are many initiatives to improve procurement within government
that have been ongoing and that have saved money over those three years that the
member is referencing.
Beyond
that, the legislation is taking more time than anticipated.
We are continuing to work on it.
There have been issues raised that we want to further explore.
As we outlined earlier, we have engaged expertise to assist us in that
work. We are developing the
policies and procedures. So we are
looking forward to introducing that legislation as soon as it is ready.
I
cannot say for certain that it will be in this session of the House.
That remains to be seen as our work continues, and that depends on the
legislative agenda, of course, too.
I have spoken to this issue a couple of times this morning and I do not really
have a lot else to add, Mr. Chair.
CHAIR:
Thank you.
MR. LANE:
That is all I have, Mr.
Chair.
Thank you.
CHAIR:
Okay.
Thank you, Paul.
Paul
Lane, the Member for Mount Pearl South, right?
MR. LANE:
South, yes.
CHAIR:
Never got in on the
introductions in the beginning. He
was just a little bit late getting in, but thank you anyway.
MR. KENT:
His drive-through orders
were late as well, Mr. Chair.
CHAIR:
Thanks for the reason.
Okay,
we will call for the vote. We will
call for the subhead.
CLERK:
Subhead 1.1.01.
CHAIR:
Subhead 1.1.01.
Shall
the total carry?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, subhead 1.1.01 carried.
On
motion, Government Purchasing Agency, total head, carried.
CHAIR:
Shall I report the Estimates
of the Government Purchasing Agency carried without amendment?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
Thank you.
On
motion, Estimates of the Government Purchasing Agency carried without amendment.
CHAIR:
There were some Government
Services Committee minutes circulated from yesterday, May 5, for the Department
of Transportation and Works.
Can I
have a motion for adoption?
MR. DINN:
Moved.
CHAIR:
John Dinn.
We do
not need a seconder for that, do we?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
Thank
you.
On
motion, minutes adopted as circulated.
CHAIR:
Okay, I thank the Committee.
I thank the minister for filling in and doing a great job this morning on
such short notice, because he is only acting, and the staff as well.
With
that, I will ask for a motion for adjournment.
MR. DINN:
Moved.
CHAIR:
Moved by John Dinn.
Thank
you very much.
MR. KENT:
Thank you.
On
motion, the Committee adjourned.