:
I'd like to commence the meeting.
I want to extend to everyone a very warm welcome to today's meeting. Bienvenue à tous.
This meeting, colleagues, is called pursuant to Standing Order 108, chapter 7, “Acquisition of Leased Office Space”, in the May 2006 report of the Auditor General of Canada, referred to the committee on May 16, 2006.
We have before us two witnesses. From now until 12 o'clock we have the Honourable Alfonso Gagliano, former Minister of Public Works and Government Services, and from 12 to 1 we have the Honourable Ralph Goodale, who, at a later time, was also a former Minister of Public Works and Government Services.
I want to extend to you, Mr. Gagliano, a welcome to the committee. Can you hear me okay? Is the technology working?
What I'm going to do is ask Mr. Gagliano if he has an opening statement. Then we are going to have one round of eight minutes each, so I urge members, if you want other caucus members to speak, to share your eight minutes. The Liberals have two eight-minute segments, the Conservatives have two, and the NDP and Bloc each have one.
Mr. Gagliano, have you any opening comments or a statement?
First of all, Mr. Gagliano, thanks for participating in our inquiry. We've been involved with this for some time.
Have you followed some of the evidence, some of the information the committee has already dealt with? Or, since you are quite a distance from us, have you not been able to get the information we have?
On the last day we heard from the deputy minister, Madam Cochrane. Are you familiar with the information she gave to this committee?
:
You were wondering why the committee wanted to meet with you. It is because you were Minister of Public Works and Government Services for five years and we are having trouble understanding how decisions are made within that department, particularly regarding the leasing of office space at Place Victoria and at Place Bonaventure. We have had a few meetings on this issue. You may have a good idea of the ties that bind Public Works and Government Services Canada with another department, the Economic Development Agency of Canada. You were there long enough.
Two days ago, we heard from Ms. Janice Cochrane, who was your deputy minister and also served as deputy minister to those who followed you. She was telling us that the lease that was signed with Place Victoria was, in her opinion, a routine lease. Do you agree with that statement? Judging from your own experience, was it really a routine lease?
:
First of all, I was not there, I do not have all the facts. I left the department on January 15, 2002, and I believe that this happened in April 2002, therefore three months after my departure. It is obviously an unusual case. In fact, if my memory serves me well and if the documents that I read over the last few days are correct, a call for tenders was launched in February 2001 and the bids were open, I believe, a week after I left, at the end of January 2002. The winning bid was announced and the bidder was informed. As I was saying when I was there, it is a little late in the process to start changing your mind.
However, Ms. Cochrane said that they did an analysis, after having received the request from the new Minister of Economic Development Canada, and they decided that it was possible. I do not have the data from that analysis, I was no longer there. I was not the one who made the decision, therefore I cannot comment. You'll understand that it is a hypothetical question for me.
:
Good morning, Mr. Gagliano.
You were minister until January 2002, but we were told that, on December 13, 2001, your office had requested information on all the leases in the greater Montreal area, among others. At the time, were you made aware of that request and the reason why it had been made?
:
Excuse me, you're running down the clock here, and it's just not true.
I have an e-mail from Suzanne Cloutier, who says, in an e-mail to other public servants:
For your information, here are the results of the meeting with JM Bard about the following files: Canada Economic Development: File on hold....
Keep the Minister's office informed of any new developments.
So Ms. Cloutier, after coming out of a meeting with your chief of staff, concluded, “file on hold”. She didn't indicate here that he was seeking more information about the process.
So I think we should zero in on the truth here, because what you're telling us is not the truth.
:
Thank you very much, Chair.
Thank you, Mr. Gagliano, for taking the time and responding to our request.
I'm sure you appreciate what our difficulty has been throughout this. There was a need for more expanded new space. The train was started. The process was going down the road. Your office put a hold on things and then it got started up again. We got through the whole process, all the way through our whole flow chart here--tens of thousands of dollars probably to go through the whole process for Place Bonaventure. Then, at the very end, for a reason we can't yet find out, nor can we determine who made the decision, there was a decision taken to do a complete 180-degree turnaround and go back to what was then the fourth winning bidder. We're having a problem with it, and that's why we're continuing to push this, sir. There is an unanswered question here.
I appreciate you weren't the minister at the latter stages. So I want to obviously focus on when you were minister. For instance, can you help me understand. It's this business of starting and stopping and starting and stopping that confuses me the most. The process is going along. At tab 7--and you probably have the same book as we do, or something similar--on June 12, there is a memo from the regional director, Quebec region, to the ADM real property services.
On that date, this memo says:
At the June 12, 2001 meeting of the Investment Management Board (IMB), a request to approve a lease project via public tender call was submitted for Canada Economic Development (CED) [...].
The rest of it is the detail.
Then--and this is on June 12, 2001--in the fourth paragraph it says:
A few hours after the board met, we were informed that the Minster's office had an interest in this project. It asked the region to put the project on hold.
Former Minister, can you tell us why? What was the rationale for that hold?
:
I don't know. This is the first time I've found that when I read those documents. I have no clue. The only information I had on this file was the memo from the deputy minister on July 31, I believe, informing me that the decision of the department was to go and tender publicly, and the tender was started.
I read all the documents. The only comment I can make on this is that my staff was asking questions. Therefore, they were waiting for answers from the bureaucrats and the file did not proceed as expediently. But I don't think there was a stop. My staff didn't have any authority to stop anything. The deputy minister would have definitely come to see me on that. I think they were asking questions and the answers were slow in coming, so there was a bit of delay.
In fairness to the process, from February 2001, that's when the client department asked to start the process, and the letter of interest would open at the beginning of September 2001...I think it's a reasonable amount of time.
:
On July 19--the following month--there was another memo sent from Mr. Arès to Suzanne Cloutier.
Somebody help me out. Suzanne Cloutier. Who is she? Her title? Nobody knows, okay.
Anyway, there's a memo here, Mr. Gagliano. It says:
Yes, CED has been informed of our strategy and is in full agreement with our approach.
CED is adamant that this project be carried out without any hitches and is even surprised that PWGSC “officials” seem to want to prevent things from going smoothly according to our schedule.
This again is just one more wrinkle. What you answered, on its own, I accept. Now you add this and it's just one more wrinkle. CED are now the ones that are saying go full speed ahead.
Why is your office getting involved, mucking things up, yet at the end of the day that's the department that pulled the plug, that made the recommendation that they ought not go forward? What's with the starting stopping, starting stopping? What's the hesitation? What's being talked about that is such a problem?
Give us some idea. You must have some idea. You paid a lot of attention to real estate in Quebec, particularly in Montreal. You must have some idea what the concerns were of your own officials on a major file.
We seem now to have got to this point about h-o-l-d, which in English spells hold. I haven't had much experience with leasing and being a landlord, but in terms of hold, there are different reasons why properties or tenders can be put on hold.
Mr. Gagliano, have you seen other bidding processes that were put on hold for a period of time?
:
Let me be clear here. It is different here from a tendering process. Once the tender process goes public, you cannot touch it any more. It is like the train that has left the station and you have to go to the end. There might be modifications, amendments, and there is a process to deal with that, but before you take the final step to go publicly through advertisements, through letters, to interested parties and say that's what we are looking for, do you have anything to offer, there is a process of discussion, preparation, and so on. There are different meetings and there are documents at different levels.
At first the client department would be the Department of Public Works and then the original, the local. There are different people who have a say, have to look, and in this case even the minister's office has to be informed, and they asked questions. So there might be some delay only in that period of the discussions. Once the final decision of July 31 is made when the deputy minister informs the minister that the process is going ahead, that's it, hands off, and let the process do its job.
I would like to remind not only you but the committee that all the bureaucrats, all the officials, appeared before you. From the bottom up--from the director of the project to the assistant deputy minister--all said that there was no indifference from my office or on my part.
I can assure you no one, nobody.... I don't even know today. Besides that I read in 2004 that Mr. Saputo acquired an interest in Place Victoria, I don't know who the owners are, either of Place Victoria, Place Bonaventure, or any other buildings. It's not my business.
:
Mr. Gagliano, on Tuesday, we seemed to define that most of the so-called loss, or money being spent that maybe shouldn't have been spent, was a result of having two leases at the same time, which indicated that we had certain ratios of occupancy or lack of occupancy.
As minister for a five-year period, do you know of other regions or cities, other than Montreal, where we owned more office space than we could occupy, in other words there were certain leases that were not being occupied? Was that a concern to you, as a minister? Were you aware that there was a vacancy rate of maybe 3% or 5%, or 1.5%, as Madam Cochrane indicated to us, which would be a considerable cost to the Government of Canada?
:
Well, the record is contrary to that. We have one gentleman who actually objected to the political interference. In fact, he could not recommend that the tenant remain in Place Victoria by virtue of the fact that he could not justify it to his deputy and to the minister, by virtue of the fact that the economics weren't working and he was the number four bidder.
So there was interference. We know perfectly well that Claude Drouin's letter turned things around on its ear, and I'm trying to find out why you, as a former minister of the department, seem to think you had no capacity to influence anything when your parliamentary secretary could, just by virtue of a letter, turn things around on a dime after they had all been concluded.
:
Wait a minute. I think you have your facts wrong here.
Claude Drouin was not my parliamentary secretary. Claude Drouin became secretary of state responsible for the Economic Development Canada once I left.
I would like to remind you that I left on January 15, 2002, and the letter to the then Minister of Public Works, who I believe was Mr. Don Boudria, was written by Secretary of State Claude Drouin to Don Boudria, not to me. So you're asking me something that I cannot answer because I wasn't there.
In the past, you've accused me of a lot of things, but this time, believe me, you're barking at the wrong dog.
:
Okay, I'm going to interject here, Mr. Gagliano, and quote from a memo of July 16, 2001. You were the minister at that time. This is a memo from Mario Arès to Linda LeBrun, and so on, regarding Economic Development Canada. It says:
I am writing to ask for your support, in raising the issue of the CED file with headquarters again.
More than a month ago, we informed the Minister's office of our accommodation strategy for CED, our client. On June 8,
—when you were the minister—
after a meeting with J. M. Bard,
—your executive assistant—
we were told to put the CED file on hold.
I'm trying to understand, Mr. Gagliano, your statement where you said you had no capacity to influence anything, you could only be informed, and we have documentation right here that says your executive assistant, who seems to have a lot more authority than you ever had, put things on hold.
What's going on here?
:
Thank you, Mr. Chairman. This will be very brief.
Mr. Gagliano, you repeatedly told us that you were not there when these decisions were made. That seems clear to me. Another minister, Mr. Boudria, succeeded you. When you left and he arrived, did you get in touch with him either before or after your departure to inform him about various files, and especially this one?
:
I would like to call the meeting back to order. This is the second hour of the meeting scheduled for today. I will not go over the formalities again; we all know why we're here.
The second witness appearing before us today is the Honourable Ralph Goodale, former Minister of Public Works and Government Services. Welcome to the committee, Mr. Goodale, and thank you for taking time from your schedule to be with us here today.
Without any further comments, I'm going to go right to our list.
First of all, I'm going to ask Mr. Goodale if he has any opening remarks, and then I'll go to our list and we'll follow the same procedure we did at the last meeting. We're going to have six individuals, eight minutes each.
Mr. Goodale, do you have any opening comments you would like to address to the committee?
:
Yes, Mr. Chairman, just briefly.
[Translation]
Thank you, Mr. Chairman.
I have a few comments regarding the study now before this committee, namely the rental of offices in Montreal for Canada Economic Development.
[English]
The specific property under review is, of course, located at Place Victoria, which has housed CEDQ offices for more than 30 years. When I arrived as Minister of Public Works and Government Services on May 26, 2002, this leasing transaction was essentially complete, awaiting only final ministerial authorization.
I no longer, of course, have access to the department's records, but the material presented to this committee would indicate that a process began in December 2000 to address CEDQ's accommodation requirements.
That process resulted in a recommendation to me, two ministers later, dated May 31, 2002, just five days after my appointment as Minister of Public Works. I accepted the department's recommendation exactly as it was presented to me.
The description of what went into that recommendation is best captured by the two former deputy ministers who appeared before your committee, Mr. Marshall and Mrs. Cochrane. As their comments show, the department was satisfied that the lease for CEDQ at Place Victoria provided good economic value to the crown because of four factors.
First, the amount of space required by CEDQ had been reduced from their original request. Second, apart from improvements with respect to access for disabled persons, physical fit-up costs and IT costs would be avoided. Third, there would be no moving expenses involved. Finally, and most importantly, the actual rent that had been negotiated was nearly 30% cheaper. It was $308 instead of $430.
For whatever reason, it is regrettable that this final cost information was not provided to the Auditor General in a timely manner to be taken into account in her examination.
The other factor that went into the department's recommendation to proceed at Place Victoria was their professional assessment that the new space leased at Place Bonaventure before CEDQ changed its specifications was useful space that could be and would be used economically to meet other federal requirements in Montreal.
The former deputy ministers have both indicated that the expectations about Place Bonaventure were not fulfilled as quickly as originally anticipated, but they were reasonable in the view of both those deputies at the time they were made in the summer of 2002.
Overall, the Department of Public Works and Government Services actually does better than the private sector in managing and minimizing excess space. I think the statistics on that have been put before the committee.
Nevertheless, the Auditor General has recommended, first, better coordination among departments when decision-making is a collective exercise; second, better information systems for financial analysis; third, a tougher enforcement approach on the part of Public Works; and finally, updated data for the Auditor General. I think all of that is very good advice.
Thank you.
:
We would have had a conversation, I'm sure, Mr. Hubbard. Now that is five or six years ago, and I honestly would not be able to recite for you the details of the conversation.
Typically, in my experience in Public Works, I asked, on files like this, two types of questions. First, have the rules been properly respected in terms of how the transaction is being handled? And second, is there good value for money? Those were two questions that were typically always asked by me in dealing with Public Works files.
:
The two deputies who appeared before the committee, Mr. Marshall and Mrs. Cochrane, went through the factors that influenced their assessment of the economic value of Place Victoria. There were several factors.
If you didn't have to move, that would save money. If you didn't have to fit up the space or bring in new IT systems, that would save money. If your space requirements were lower than originally anticipated, that would save money. But most important--the way I read the testimony given to this committee--information may not have been in the hands of the Auditor General in a timely way that the lease rate changed dramatically. It was originally contemplated to be $430, and after negotiations it turned out to be $308. That's about a 28% difference. It obviously led them to the conclusion that the Place Victoria space was good economic value.
The other side of the equation was the anticipation of how quickly the new space in Place Bonaventure could be leased to other government offices. That's where the expectations of the officials were not fulfilled.
:
You said that the decision to sign two leases for the same agency, at two different locations, was justified by the fact that the needs for office space had changed, that they were ultimately reduced and that the price had been changed. This is more or less what you said:
At the department, they gave me a recommendation because, in a certain way, the initial needs that had been envisaged for Canada Economic Development, in terms of office space, because we were expecting more employees, these initial needs no longer existed and moreover, the cost of rent, that had been stipulated in the tender, had been decreased.
Do you think that it is normal for a department or an agency to make a forecast for expansion based on 25 extra employees, namely the new positions that will be created, at the outset of the tendering process whereas, at the end of the same process, there is no longer any need for extra space?
Did this occur frequently while you held that position?
:
Is it not somewhat amateurish to be playing around with hypotheses of this kind so that ultimately you sign up for two different places without any prior certainty of renting that space? You might have presumed that you would subsequently rent space at Place Bonaventure, but you were not certain of that.
Therefore, the department took a chance and rented space in a second location. From the outset, we have tried to find out what exactly happened. My hypothesis is that the people working at Canada Economic Development in Place Victoria did not feel like moving. In the Department of Public Works, the regulations oblige the department to put out tenders, so that if you formulate the hypothesis whereby you need extra space, you can subsequently say that you no longer need that and you negotiate with Place Victoria.
That is exactly what happened. You went from $430 per square metre or square foot to $308 per square foot. After concluding the contract, you negotiated by mutual agreement, although Place Victoria had not won the competition. This is not a movie scenario, but I feel that they tried to do things in that way and that it worked for them.
Could anything like that have happened?
:
I'm really in no position to comment on the thought processes within CEDQ--what led them in a certain direction at one point, and then to change direction.
In the testimony from Mr. Drouin, he indicated that the new premises in Place Bonaventure were a concern to him because of the concrete nature of the building, the train track underneath, and the concern among employees about the move. He also wasn't anxious to absorb any of the incremental costs associated with the move. He wanted to keep that in the budget of his department to assist enterprise in Quebec.
On what prompted the department to change its mind, that would be a matter for CDEC to respond to. As Mr. Marshall explained, the answer from the Department of Public Works to CDEC would have been that the move must go forward into the new space unless the department could satisfy itself that the economics of the matter brought value to the crown. Having done an analysis in April-May 2002, they concluded that value to the crown could be provided and at the same time meet the concerns that had been raised by Mr. Drouin. It was the function of the officials in Public Works to do that economic assessment to see if they could accomplish both objectives.
Mr. Goodale, I want to run through a couple of details with you.
You mentioned in your opening remarks that you felt this process was fair. After explaining the circumstances to Mr. Gagliano, or after him obviously briefing himself on this, we have just learned that this was not a normal process. In fact, he said he could never recall a tender going out and the whole process being trashed and then a lease being signed subsequent to that.
Janice Cochrane, whom we heard testify before the committee, totally changed her position in two e-mails. In one e-mail she said:
The financial analysis indicated that the recommended solution is more economical than renewal through direct negotiations.
In this context we had nothing to justify submitting to you a request for approval to negotiate directly with the owner of 800 Place Victoria.
Subsequently, she actually advised that in fact you can negotiate directly. By the way, that was subsequent to Mr. Drouin's letter, which she claimed was simply asking for an inquiry, when it's a direct request to negotiate with 800 Place Victoria.
Then we have one of her employees, Mario Arès, who stated in an e-mail of May 3, 2002, that:
It seems clear enough that the insistence on staying at Place Victoria in this case serves interests other than the sound management of public funds. I cannot agree to cover, in an administrative manner, a decision that is difficult to justify financially, because it is costly (the client, CED, had agreed to move to Place Bonaventure, or as a last resort, we could have signed a lease with the second-lowest bidder [CED agreed], which would have been more beneficial to the Crown).
By the way, this is not the first time Mr. Arès had something very direct to say. On July 5, he said in an e-mail that he was very concerned that the department wouldn't release a hold they had on the whole process, as well—
He stated:
More than a month ago, we informed the Minister's office of our accommodation strategy for CED, our client. On June 8, after a meeting with J. M. Bard, we were told to put the CED file on hold. Since then, there have been no developments or questions, and we are still on hold.
Subsequently, we had Mr. Gladu saying, about Mr. Drouin's letter:
After being made aware of Mr. Drouin's letter, I met him at a regular meeting. I told him that, in my opinion, it was a mistake to have sent that letter, because this was an administrative matter and he simply should not have got involved.
So these were the kinds of things that were racking up during this whole process, yet subsequently, you signed for the lease.
So with all of these facts known, do you still think the process was fair? Do you think it was fair to the other two bidders in this process, who were given no consideration at all and were in fact ahead of Place Victoria? And do you not think you should have spoken to Janice Cochrane about this issue before you signed off, because in her testimony she said she had no conversations with you?
:
The first e-mails you were referring to, except the one from Mr. Arès, were from 2001. I would obviously have no knowledge or recollection of that period of time at all.
Regarding the one e-mail you referred to from Mr. Arès dated May 3, as I believe he explained to the committee—or, at least, that's what his testimony says—his view as of May 3, 2002, was based upon the assumption that the same square footage and the same lease rate were applicable, that is, the $430 per square metres and the larger space. What changed after that memo—and I think Mr. Arès explained this in his testimony—was that the size of the lease and the cost of the rent went down. That resulted in a situation where the department was, in effect, renewing an existing lease on terms that were more economical or advantageous and which clearly fell within the rules of Public Works and Treasury Board at that time.
:
Well, I think the one problem in terms of the economics of the transaction is that the anticipated lease-up of the Bonaventure space did not occur as rapidly as the professionals in the Department of Public Works had anticipated.
Generally speaking, their track record on these matters is a good one and in fact better than the private sector. As I think both Mr. Marshall and Mrs. Cochrane explained, the general vacancy rate in the private sector is in the neighbourhood of 5%, whereas the vacancy rate for space held by the Department of Public Works is more like 1.2%. So generally they do pretty well.
I think both Ms. Cochrane and Mr. Marshall indicated to the committee that contrary to their best economic analysis and professional advice in the summer of 2002, it took longer than they had expected to fill that extra space at Place Bonaventure.
At Place Victoria the deal was actually an advantageous one for the crown, because the space requirement was smaller, the rent was cheaper, there was no move, and there was no fit-up cost.
:
Again, Mr. Goodale, I appreciate the fact that you wanted to give me some information on Place Bonaventure, but I was asking you about the nature of the fairness of the process; the nature of the other two bidders that were paid no consideration on this; the optics of this with all of this disparity in communication with holds, etc.; and the fact that quite plainly, Mr. Gagliano, with five years experience in that position, said he had never seen anything like this.
So this wasn't common; to go through that process wasn't something that was regularly done, and we have the graphic here of the process. I have no idea of the millions of dollars it costs to have PWGSC actually walk through to make sure that a fair tender happens. But after the whole process happened, it was then shelved. That's the concern, and up until now it has not been addressed.
All that has happened is that opposition members have tried to mitigate the damages by saying the Auditor General was incorrect and in fact it was less. She stands by her words as early as 2007.
:
Based on the information that was available to her at the time she did her audit. That's the information that's included in the transcripts that I looked through in the last number of days.
Mr. Sweet, I also want to make one other point. On the issue of holds, I think you would have to acknowledge there was no hold on any process imposed by me. There's nothing in the record anywhere that suggests that.
Secondly, with respect to the process, at least for a portion of it, I'm told, looking at the record, there was a fairness monitor in place examining how things were unfolding. After the fact, while unhappy bidders are normally very quick to express their unhappiness if they don't think a process was conducted properly, in this case, to the best of my knowledge, no complaint was received.
:
Thank you, Mr. Chair, and thank you very much, Mr. Goodale, for appearing today.
I'm sure you can appreciate why we're continuing to pursue this. It's that nugget of a question that remains about why would a government knowingly waste so much money, and we have not yet found anyone who has said they made the decision and here's exactly why. So in that absence we're continuing to work at this. In the interest of fairness, I think it should be said that your reputation, particularly among parliamentarians, is one of the highest in the House. To me that's a pretty big standard. It's one thing to be popular with the public, but when you can earn the respect of colleagues.... And you were put in this position for that reason, in large part because there were problems and they wanted you to go in there.
Here's my concern. You're an experienced minister, you're an honest man, and you're looking at this and the thing is a go for umpteen million dollars. Your deputy is briefing you--and I'm keeping in mind that you're new--and here you're being told this whole package has come along, and a mere six weeks earlier the secretary of state sent a letter that Mr. Sweet has referred to. Let me also bring in that on March 21, the same meeting Mr. Sweet was referring to in response to a question from Mr. Rodriguez...all that ended with the decision to move. Who made the decision to move? Mr. Gladu? Initially Public Works took responsibility for that decision. Following a letter from Mr. Drouin, which you have read and heard about, Public Works began negotiations with owners of Place Victoria.
So you're an experienced minister, a veteran, and you get there and you find out this whole deal is ready to go, but a few weeks previous a rookie minister sent one letter and suddenly the whole deal is upside down. It would seem to me that a man like you would have a lot of questions of that deputy, both because you're new to the file and because alarm bells would be going off. How are you going to defend someday, sitting right where you are, having made this decision? Help me understand why you didn't just say to a new, young rookie minister, who wants to upset a multi-million dollar deal where tens, if not hundreds of thousands of dollars have been spent, not to mention the time to get the deal in place.... This new minister comes along and says he's not happy with everything and would like it all turned upside down.
It would seem to me, sir, that your reaction behind closed doors would be to turn to your colleague and ask if he were nuts, absolutely crazy. I'm surprised you would even give him the time of day, for the simple reason that if there's not something shifty going on here, there is something definitely wrong that this kind of decision can be taken. You refuse to say there's anything problematic, sir. You want to leave us with the impression, as does your colleague, that everything was just tickety-boo, and if we have any questions they're just a couple of little wrinkles and you can answer them. But when you add it all up, this still stinks.
:
I appreciate that, and I'm trying to stay clear of that demarcation.
There is an e-mail from Rachael Morneau—we've had that name before, if it's the same person, to be fair—and Carole Beal. This is April 2, 2002. It reads:
As per our conversation of last week, André Gladu of “DEC” [...]
--the deputy--
[...] has confirmed to me, on Thursday, March 28, his agreement to move to Place Bonaventure. He has advised me that this has been cleared up with Mr. Drouin, Secretary of State for DEC.
Our Minister's office, as I understand it, has not given us the OK to proceed. The offer from the lowest bidder expires today [...] .
And then they go on to put an extension in. So the minister's office, up until that point--your predecessor--was deeply engaged in this whole process, and this is another go.
Then we get the letter from Mr. Drouin out of the clear blue, and the best I ever heard him say was that staff were upset. It would seem to me if that is such a huge criterion, and I wish it was taken into account more often, you would have done it at the front end, not at the rear end. Certainly, people complaining six weeks after a multi-million dollar contract is signed, in the normal world, is not going to turn things upside down.
I am still having trouble understanding why you wouldn't ask more questions and be concerned--red alarms going off. This was not a normal process. A junior minister has upset a public tender process and you okayed it. You gave it the sanction of your signature.
:
There are three things, Mr. Christopherson.
First of all, in your opening sentence you talked about knowingly wasting money. I don't think there is anything in the record that shows that any waste of money, if there was some here, was deliberate or conscious or some kind of a premeditated scheme. In fact, in renegotiating the rent from $430 million down to $308 million, the real property division of Public Works made a very substantial saving. They also, as I understand it, applied their very best professional judgment to whether or not they could satisfy the request from the Secretary of State and at the same time successfully lease the Place Bonaventure space. They concluded that it was possible to do both.
:
Thank you, Mr. Goodale, for appearing before the committee today. You have gone a long way to answering whatever questions may have been there, although I'm not sure there were that many questions to begin with.
I'm going to ask a few questions just to establish the role you were playing at that time, for the sake of clarity.
I was wondering if you can tell us this. When you were public works minister, did you ever meet with or did you personally know anybody who was with WPBI property management, the owners of Place Bonaventure, when the lease at Place Victoria for CEDQ was up for renewal?
:
Then someone decided that maybe we could stay at Place Victoria and it came to your desk to sign off. I guess the arguments were that we could rent this other place to some other agency or some other group. So you have two leases. What you really did as the minister at the time was you extended the lease at Place Victoria at the request or concerns of the group. In terms of serving the regions of Quebec, it's an ideal place for anyone coming from the regions to be able to be right in downtown Montreal, almost in fact at the railway station.
So when you look at the costs, you seem to say to this committee today that maybe we really gained money as a result of the decision you and Madam Cochrane made, if you look at the extension of the lease of Place Victoria and the eventual leasing of the Place Bonaventure site.
Just before I finish, do you have any more information, Mr. Goodale, to give to this committee? I have trouble finding someone at fault, as Mr. Sweet says, someone to blame.
:
I have just one comment, Mr. Hubbard, and it really goes to your original point. I do not recall, in relation to this transaction or others at Public Works, any exercise of political push and pull, and certainly not on this file.
To the best of my recollection, Mr. Drouin never spoke to me about it. His letter was there, and I responded to the letter in due course. There was no follow-on comment from either Mr. Boudria or Mr. Gagliano. The landlords were then, and are today, completely unknown to me. I wouldn't think it's my business to know them, quite frankly. The negotiation is conducted by the professionals in the department, and I stayed completely out of that.
:
You stated in your opening statement that you accepted the recommendation exactly as presented. Later on, in answer to Mr. Hubbard's question, you said that one of the things you always ensured was, have the rules been respected? Now, the rules were not respected in this situation. We know that, so we want to know why.
Ms. Cochrane was here the other day. She said they saw this as two transactions, that Place Bonaventure was a transaction on its own, and the extension of the lease in Place Victoria was perceived to be a new transaction, a sole-source contract.
This is totally contrary to all the rules. So why would you, first of all, ask if all the rules had been followed, and then find out that the rules had not been followed and approve it?
:
This is how you're trying to tell me the Government of Canada does business. Now we know the Government of Canada does not do business this way: by squeezing the landlord down because you have some bids from the competitor, saying they're charging
x, so if you charge
x less a few bucks, you can stay. That is not how the government does business.
As Mr. Christopherson says, there are some serious motivations here. Claude Drouin can interject with a letter, as pointed out, turn the whole system upside down, and you call this following the rules. By your own statement you said, to my first question asking if the rules had been respected...the answer, of course, is that by virtue of a letter from your colleague, the secretary of state who sits in cabinet with you, all the rules were turned upside down. So how can you tell us the rules have been respected?
:
Thank you, Mr. Chairman.
Mr. Goodale, I don't want to waste any time.
First, when the decision was made that a reduced space requirement would work, when that decision was made, was that information handed to the winning bidder so that they could then adjust their bid? Yes or no.
:
I wasn't implying that you knew them, just knew of them.
Just for your knowledge then, the committee heard today from Mr. Gagliano that when he was the minister responsible for Canada Lands, I presume before your time, a building was sold, but he didn't know who bought it. I didn't think that sounded very logical at the time, and you've just clarified that.
Lastly, you've been a member of Parliament for quite a while. I believe you're a lawyer, and with that I have to presume, and I think the average person would, that you're fairly knowledgeable, or should be, and should be able to make a good logical decision.
I'll just create a scenario here for you. You and your wife get married and you rent a house, and after a while two or three little ones come along, and all of a sudden the place isn't big enough. So you contact a real estate agent and say, “I want you to get me two or three quotes on a place, a bigger house that will accommodate me and my family.” So the person does that, and he finds a place that not only is big enough to hold you and your family, but it's much cheaper than the one you're in. All of a sudden the person who owns the house you're in comes back, gets wind of this, and says, “Whoa, whoa, I know this one isn't big enough, but what if we bumped you in some rooms there and lowered the rent?” Do you think that would be something you would probably agree to in your personal life?
:
No, I think the time is up at one o'clock.
Mr. Goodale has indicated that he has another appointment at one o'clock, and I have another one at one o'clock. And several members have already left. So I'm going to adjourn now.
You can bring a motion to bring him back, Mr. Poilievre. That's possible.
Mr. Goodale, on behalf of the committee, I want to thank you very much for your appearance here today.
The meeting is adjourned.