Public Accounts Committee

1992-09-11

Newfoundland and Labrador — Committees

September 11, 1992

The Committee met at approximately 10:00 a.m. in

the Legislative Chamber of the Colonial Building.

MR. SPEAKER (Windsor): Order, please!

First of all, there are no media present so I can

dispense with my usual comments to them until and if they arrive.

I would like to first of all introduce the

Committee members who are present. To my right is Mr. Tom Murphy, MHA for St.

John's South, who is Vice-Chair; Mr. Danny Dumaresque, MHA for Eagle River; and

Mr. Garfield Warren, MHA for Torngat Mountains. The other members of the

committee are unable to be with us today for various reasons.

I would like to perhaps ask the witnesses if they

would identify themselves. Mr. Randell, being deputy minister, perhaps you would

like to introduce the people with you.

Mr. Randell.

MR. RANDELL: I would be pleased to, Mr.

Chairman.

Of course I am Clarence Randell, Deputy Minister of

Municipal and Provincial Affairs, at least at the present time. On my immediate

right is Mr. Bill Frost. Mr. Frost is the Assistant Deputy Minister responsible

for cultural and historic resources, formerly with the Department of Municipal

and Provincial Affairs but as you are aware that position, along with the

divisions, have now moved to the new Department of Tourism and Culture.

Next to Mr. Frost in Mr. Rick Hayward. Mr. Hayward

is Director of Financial Administration, again with the Department of Municipal

and Provincial Affairs, but also moving and taking his position with him to the

new Department of Tourism and Culture.

On my immediate left if Mr. Pearce Penney. Mr.

Penney is the director for the Newfoundland and Labrador Public Libraries Board.

Next to Mr. Penney is Mr. Frampton. Mr. Frampton is the financial administrator

with the Newfoundland and Labrador Public Libraries Board.

Mr. Penney will probably do most of the talking,

Mr. Chairman, because he is planning to retire in March and I told him he could

say whatever he wanted.

As you are aware, the Public Libraries Board

actually report through the minister of the department and, of course, is not a

functional division within the department so I would obviously rely very heavily

on these two gentlemen in particular to respond and outline what actions have

been taken.

MR. CHAIRMAN: Thank you very much, Mr. Randell.

Perhaps the Auditor General, Ms. Marshall, would

like to introduce the people with her.

MS. MARSHALL: Yes. On my immediate left is Mr.

Ed Sweeney, who is the audit principal responsible for the audit of the Public

Libraries Board. Next to him is Mr. Bill Barron, the audit manager responsible;

and next to him is Mr. John Casey who is the auditor for the Public Libraries

Board. Immediately in the background is Mr. Drover, who is responsible for

co-ordinating the Annual Report of the Auditor General.

MR. CHAIRMAN: Thank you very much. Perhaps the

Clerk would like to swear in - I understand there are only a couple of witnesses

who have not previously been sworn. Those who have previously sworn are

considered to be still under oath, I am told, by the Clerk.

SWEARING OF WITNESSES

John Casey

William Frost

Clarence Randell

MR. CHAIRMAN: Thank you very much.

Before we start, as you see there are microphones in

front of you. I would ask all witnesses to speak clearly into the microphones

for the purposes of the people of Hansard who have to transcribe this. We also

have to identify who is speaking. In most cases I will recognize the person

about to speak; but if I fail to, it is a good practice anyway to identify

yourself before you speak so that the people back in Confederation Building know

who is speaking. It makes it very difficult otherwise. In the House of Assembly

I think Jack sits there writing down names all day long of who is speaking so

they have a chronological order; but it would be very beneficial here if we

identify each other. I will attempt to do it as much as possible.

Now that we had the swearing in, let me say to

particularly the witnesses who are here for the first time that this is simply a

hearing to gather information; to hear your opinions on matters that are before

the Committee; to get your views on what happened, what should happen, what

could help to change something if something is deemed to be out of order. We are

simply here to gather information, and we will pass our report on to the House

of Assembly for their information and any action the House may deem to be

appropriate.

Any information that may be asked of witnesses, if you

do not have it available you are entirely free to provide it in writing at a

later date. We don't expect you to have all answers, if detailed answers are

required, at your fingertips today. So you're free to do that. If we ask a

question to a particular individual and you feel that somebody else with you is

better suited to answer that, by all means pass the question on.

We've a fairly informal atmosphere, although these are

serious matters and the Committee takes the issue seriously, as a committee of

the House of Assembly. But we try to operate in a reasonably informal manner. To

gain information is our major purpose.

Would the Auditor General like to make any opening

statements on this particular paragraph?

Ms. Marshall.

MS. ELIZABETH MARSHALL: Yes, thank you, Mr.

Chairman. The Provincial Public Libraries Board was established under the Public

Libraries Act with a mandate to establish, operate and maintain public libraries

in the Province. Our audit of the Board for the year's ended March 31 1989, and

March 31 1990, disclose three purchases which did not comply with the

requirements of the Public Tender Act.

Under the Public Tender Act, goods and services

estimated to cost in excess of $5,000 must be publicly tendered, except under

certain special circumstances as provided for by the Act. If these goods and

services are not publicly tendered, the Act requires that the Minister of Works,

Services and Transportation must be informed of the purchases, and the minister

in turn is required to table this information in the House of Assembly.

In the three cases noted we were informed there was no

public tender call; the Minister of Works, Services and Transportation was not

informed of these purchases; and the House of Assembly was not advised as

required under the Public Tender Act.

A second concern has now been raised with regards to

these purchases. During the course of our audit we were informed verbally - and

this was subsequently confirmed in writing by senior officials of the Public

Libraries Board - that these three purchases were made without public tender.

However, subsequent to the issuance of the Auditor General's report, we became

aware that one of these purchases had in fact been initially tendered, but no

tenders had been received.

In

summary, our primary concern on this matter relates

to non-compliance with the Public Tender Act.

Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you very much. As you pointed

out, one of the key issues that we're concerned with here is the compliance with

the Public Tender Act. There were also, in your report, numerous comments

relating to accounting procedures -

MS. MARSHALL: That's correct.

MR. CHAIRMAN: - and financial controls within the

Public Libraries Board. The Committee is aware that many of these items have

been addressed by the previous Public Accounts Committee and the Committee has

addressed that but there may well be some questions from the Committee on that

as well. I simply state that we are aware that it has already been visited by a

Public Accounts Committee, but subsequently reported on again by the Auditor

General's department. So nevertheless the points are still valid.

Mr. Randell, would you like to make any opening

comments on behalf of the witnesses?

MR. CLARENCE RANDELL: No, I don't think so, Mr.

Chairman. We've reviewed the statements from the Auditor General, and as the

Auditor General has indicated, in one instance in particular it was a situation

where there was a public tender called, and there were no tenders submitted.

I think the other glaring one is not actually a direct

purchase by the Provincial Public Libraries Board but rather by the St. John's

Board, which is a separate entity - granted, reporting up through in the

process. I think it has been brought to their attention. They've been made fully

aware of the fact that what they were doing was not according to Hoyle and that

matter has been resolved, I would trust. They assumed simply because of the fact

that they were purchasing a vehicle from their own funds which they had raised

locally that they were at perfect liberty to do whatever they wished. They were

probably reminded otherwise. I know Mr. Penney might want to elaborate, Mr.

Chairman, in more detail with regard to what happened.

MR. CHAIRMAN: Mr. Penney.

MR. PEARCE PENNEY: Mr. Chairman, addressing the

question of the tender, I want to make quite clear at the very outset that there

was no intention of us trying to hide anything in that respect. Three years had

elapsed and three years sometimes can erase certain things from your memory.

One of the things that we were not aware of at the

time was that we did go to public tender in actual fact for the three vehicles

and there were no people who quoted on them. We came upon that file which

previously we had not thought was in our files, and we regret that. But that was

one of the things and I think it was a question of trying to recall what had

happened two or three years previously and sometimes that is a little difficult.

On the question of the St. John's vehicle, I think I

have to say that the local library boards within our Province, and we have 101

local library boards, and St. John's is considered as one of these, and in our

regulations it indicates that any money raised by the local library board shall

be the property of the local library board and shall be used by the local

library board and does not form part of the general budget of the provincial

board and that is our regulations.

We are aware that these boards are advisory boards to

the provincial board particularly the St. John's Board, and therefore they do

come under the Public Tendering Act the same as the provincial board does. By

the same token, as one I think can appreciate, when people go out and sell

chocolate bars and all kinds of things to raise money, they suddenly get the

feeling that this is not government money, they do not dispute the fact that it

is not public money but they do dispute the fact that it is not government

money, and we have been told on a number of occasions that what we do with the

money that we raise is our business and we have had to battle with that, not

only with the St. John's Library Board, but with a number of other boards who

consider that there domain and they are going to do what they like with it.

The other factor in that particular vehicle, Mr.

Chairman, was, the person in the position as city librarian had just been

appointed only a few months prior to that, he is not a Newfoundlander and was

not probably fully familiar with the requirements under the Public Tendering

Act, and therefore he did not consult with us. The Board did not consult with

us, they proceeded to go their particular route, they did not go to public

tender, they went for quotations, so that is pretty much the situation. We have

advised them otherwise at this time and I can say, Mr. Chairman, as a sequel to

all of that now, in the last vehicle which they purchased just a short while

ago, they went through the Government Purchasing Agency, and so the message has

gotten through and now they are following that and I might say too, Mr.

Chairman, that in the recent purchase that we have made for vehicles, we have

also gone through the Government Purchasing Agency.

MR. CHAIRMAN: Thank you, Mr. Penney. In relation

to your first comments let me say that I do not think there is any suggestion

here at all that there was anybody deliberately trying to do (inaudible).

MR. PENNEY: Oh no.

MR. CHAIRMAN: I think what we are seeing here is

something that is not uncommon and that the Committee is finding from numerous

Crown Agencies and Crown Corporations, particularly quasi-voluntary boards and

agencies such as the library board. The Committee recognizes full well the

contribution that volunteers are making to this Board and the fact that there

are 100 voluntary boards all over the Province that you are trying to control;

it is a horrendous sort of organization to manage within a government public

service type structure and we are aware of that. I guess our real problem here

is the lack of awareness on the part of many of the agencies that they are

responsible to comply with the Public Tenders Act and other Acts, and in fact,

we have had cases where many of these agencies are not quite sure they need to

answer to this Committee. That is something which is of great concern to us and

that we shall be dealing with very, very shortly. But there are those who not

only question it, but have downright refused to respond to this Committee to

provide evidence, information and documentation otherwise. That is a matter that

we have to deal with, and in fact I might just digress for a moment, but I would

like to discuss with the Auditor General and others as it relates to some

legislation for this Committee to give us a little more, not so much clout I

suppose, but to clarify the position of the Committee and our role as a

Committee of the House of Assembly and our relationship with various Crown

Agencies and Crown Corporations so that we do not have these problems that we

are having now with a couple of the larger institutes and agencies with whom we

are trying to deal. This has no bearing on this particular issue other than to

say that I think we are aware that there is a lack of understanding of the

responsibilities here. We can get into, as we get into questioning, dealing with

the question of funds raised by local boards. I can understand full well the

feelings there. They're difficult to separate. We've had this in many other

areas as well, where there are local funds raised, where there are trusts or

bequests to institutions for example, that sort of thing.

The difficulty is in separating the two. If we are to

look at government funds and how they are being expended and ensure the

taxpayers that their funds are being expended properly in accordance with the

Financial Administration Act. It's very difficult to separate those funds from

locally raised funds when it comes to expenditures. You may put all of your

funds into things that are legitimate, and then you could be having great

parties with the locally raised funds. I'm not suggesting you are, but you can

appreciate the difficulty in separating. That's the problem and perhaps this

Committee can shed some light on that, and if these hearings can shed some light

on that, it will be worthwhile.

Thank you both for those opening remarks. Perhaps

we'll proceed with some questioning from members of the Committee.

MR. PENNEY: Mr. Chairman, could I just make one

more point that perhaps should be made?

MR. CHAIRMAN: Mr. Penney, by all means.

MR. PENNEY: With the locally raised funds, I just

want to make it quite clear that these funds do not come to us for

administration purposes. They are paid by the local board and so on. So we want

to make that quite clear.

MR. CHAIRMAN: Maybe what we need to examine as we

get into questions is what is the nature of funds that you distribute to the

local boards? If it's an allocation for a specific purpose, well then that's one

thing. As long as you were administering that, maybe that's acceptable, and the

local boards have a certain amount of autonomy. The other question to be

addressed though I think is really whether the general public that is supporting

these boards is of the opinion that there is some kind of control and proper

auditing and accounting within the local boards. I know if I donate to a cause I

assume that the cause is being properly administered. So maybe the objectives

are still valid.

Mr. Warren, would you like to begin questioning today?

MR. WARREN: Thank you very much, Mr. Chairman. I

don't know, Mr. Randell, if you fellows have a copy of this particular document.

I want to refer to pages in this particular document, like pages 48 through 51.

So as they will be specific questions -

MR. CHAIRMAN: Maybe in future, I would say to our

research assistant, the documents that we're provided with should be made

available to the witnesses. Because we have them all here nicely numbered. It

would be easier to refer....

MR. WARREN: Mr. Chairman, yes, I understand that

page 48, I guess it's document two, there were tenders called and advertised in

The Evening Telegram on Saturday, June 11, 1988. There were no tenders received.

Then, if you go to the quotation on page 52, it says that there was only one

dealer interested. I notice you were supplied documents here from the successful

dealer, Tom Woodford Limited. What other dealers were contacted? Could you

answer that question first?

MR. RANDELL: I think Mr. Frampton could probably

answer that question - if I may pass that question to him.

MR. CHAIRMAN: Mr. Frampton.

MR. MAXWELL FRAMPTON: Mr. Chairman, we were

purchasing these vehicles at a very awkward time of the year for acquiring this

type of vehicle. We were looking for three mini-vans, as they are called. The

Board instructed us to try and find three of those, preferably with the one

dealer, if possible, so that we could get a favourable price. So when we did not

received any tenders I went around to all the new car dealers around St. John's

to try and locate three vehicles with the one dealer. There was only one place

within the city where I could get three and comply with the instructions from

the Board. That was Tom Woodford Limited. But we did check out all the new car

dealers in St. John's.

MR. WARREN: Thank you very much, Mr. Frampton. I

understand from those invoices that there was at least one vehicle available on

the twenty-fourth, but there were four available four days later before the

others became available. Were the other companies given the same option? From

these invoices it would appear to me that the three vehicles weren't available

the time you went there. I see the invoices are dated differently and I am just

wondering if Mr. Woodford said: Okay, we can get you another two vehicles in the

next three or four days, or something like that, or were all companies asked to

have the vehicles available for you on June 24th?

MR. FRAMPTON: All the companies, Mr. Chairman,

were given the same option of making these vehicles available within a few days.

Now in the case of Tom Woodford they did have all the vehicles there on their

lot at the time I spoke with him, but they weren't pre-serviced or whatever it

is they call it when they check them out before they release them. The only sort

of response that I got from any of the other dealers was that they could

probably bring one vehicle in from Conception Bay and one from somewhere else.

It wasn't possible to get all three with one dealer at any other location. But

as I say, Woodford's in fact did have seven or eight vehicles there, but they

didn't have three that were ready to be released that same day or within a day

or two.

MR. WARREN: Thank you. So it is possible that

Hickman Motors could have gotten you three vehicles, probably one from

Spaniard's Bay and one from Grand Falls or wherever, within a matter of days?

MR. FRAMPTON: Nobody indicated they could get

three for us other than Woodford's. I don't recall the specific locations, but

the most we could get from any other one dealer was two vehicles.

MR. WARREN: So you could have gotten two from some

other dealer.

MR. FRAMPTON: Yes, with considerable delay.

MR. WARREN: How about price wise?

MR. FRAMPTON: Well when the vehicles were not

available the instructions from the Board said to try to get all three from the

same dealer, and when we could not get three from any other dealer we didn't get

down to discussion of price.

MR. WARREN: Thank you.

MR. CHAIRMAN: Thank you, Mr. Warren. Mr.

Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman. I would

just like to follow up on that line of questioning. You stated from there that

the board directed you to get these three vehicles preferably from one dealer to

try and save money, or try to economize. However you just indicated that you

didn't proceed with getting them from the other two because it was the Board

directing that you get three from one dealer. Now I don't want to interrogate,

but I just want to see if the first direction from the Board, as you indicated,

is the accurate one or the last one.

MR. FRAMPTON: I don't see any variation. What I

have said is the Board instructed us to get three with the one dealer. We called

tenders and nobody responded, so at that point we felt we had no obligation to

any particular dealer. I personally visited all the dealers. The largest number

of vehicles that I could get in St. John's from any other dealer was one. Tom

Woodford Limited was the only dealer who had all three that were already on the

lot and available. There were sort of vague promises that maybe we could bring

one in from here and bring one in from there, but faced with the certainty of

getting three from the one dealer right here in town as compared to the

possibility of pulling together three from various parts of the Province, I

thought that I was following the Board's direction in taking the three that were

available, particularly in view of the fact that we had already gone through

tender procedures and nobody else had indicated that they could supply these

vehicles.

MR. DUMARESQUE: Two things: The fact that you

would only go to the St. John's dealerships, because as I am aware in many cases

a vehicle is cheaper in Corner Brook, for instance, than it is in St. John's

because of the traffic freight charges coming across the Gulf and just coming up

the south coast there. I am concerned that you didn't seek out somebody like

Corner Brook Garage, or Pontiac-Buick, or one of them over in that area, or

maybe even one in Grand Falls for the same kind of request.

The other thing that I find glaring is why some

documentation didn't accompany this, why everything was verbal. Don't you think

that it would have been better to have taken the time to get a written

quotation?.... a letter in somebody's hands so that we could say: there's an

actual quotation there, so we could do some cost analysis and comparisons and

substantiate what indeed has been said.

Not that I doubt for a minute what you say; but

certainly the perception I would think is that you didn't try very hard to find

them and that maybe there wasn't the kind of thorough request from people for

the cost savings that your main objective was from the beginning.

MR. RANDELL: Mr. Chairman, if I could interject.

There was no suggestion that the initial invitation tender that went out was

confined to dealers in St. John's. It was published in the newspaper, certainly,

and clearly identified the nature and type of vehicles required.

MR. WARREN: In The Evening Telegram only.

MR. RANDELL: Pardon?

MR. WARREN: In The Evening Telegram only, not in a

paper on the west coast.

MR. RANDELL: I've bought The Evening Telegram on

the west coast, sir, many times.

MR. WARREN: Very good.

MR. CHAIRMAN: No, I think the point you're making

is that it was advertised publicly but....

MR. RANDELL: Yes, sir.

MR. CHAIRMAN: Mr. Warren's argument is whether or

not the distribution of The Evening Telegram is total. Government advertising

normally goes in....

MR. DUMARESQUE: The other important point is that

I would like to know why further documentation wasn't gathered, actual

quotations. If you're going over to Terra Nova Motors it would be so easy to

take a letter saying: we want three vehicles, what can you give us, for what

price? They would come back and say: I can get you two, I can get you one from

Grand Falls, I can get you one in three weeks, the bottom line is this. Then you

would be able to come back and certainly be able to have something to show

everybody that indeed there was the original objective of cost saving reached,

as well as the objective of getting three vehicles. Maybe if I can conclude from

that line of questioning on this particular issue, what was the urgency, and why

did you need three vehicles at the same time?

MR. FRAMPTON: Mr. Chairman, first of all I was

following the instructions of the Board to get three vehicles at one location.

Secondly, one of our vehicles had been destroyed or totalled, if you like, in an

accident, which did create urgency in one location. The other vehicles were

overdue for being replaced. We advertised in what we understood to be a

provincial paper and we had no response at all. So then it seemed that the

correct procedure was to try and get these vehicles as quickly as possible,

particularly in the case of the one that had been destroyed, and to get them on

the basis of the instructions from the provincial Board. We felt that by

advertising in the provincial paper, or what appeared to us to be a

province-wide paper, that we were giving all the dealers in the Province an

opportunity to bid.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman. I'd like

to refer to exhibit 63, concerning the purchase of another vehicle. In this

case, the vehicle was not tendered but: "...price quotations were secured." As

it shows in the quotations, Penny Mazda was given the contract and the response

was that from various consumer reports he had read concerning vehicle

performance it warranted that Penny Mazda would receive this particular vehicle,

even though it was over $2,000 higher than the lowest bid. Do you agree that

that is a reasonable criteria to apply to a selection of this nature?

MR. PENNEY: Mr. Chairman, we don't agree with

this. We're not going to put any argument to say that this was correct, because

it's not. We know it's not correct. I think as I indicated at the beginning, the

gentleman in question was told by his Board, The St. John's Library Board, to go

and purchase the best vehicle and in order to establish what he considered to be

the best vehicle he went to the consumer reports, which any good librarian would

do, to find out what products are given better ratings and he made that

decision. It was not the right way to go, there is no question about that, we do

not have any argument contrary to that, it is quite unacceptable to do that kind

of thing.

MR. CHAIRMAN: I suggest your good librarian should

have gone to the consumer reports before, when he was writing the

specifications-

MR. PENNEY: Yes, that is right -

MR. CHAIRMAN: - not afterward.

MR. PENNEY: - I agree with you that that was not

the correct thing to do and -

MR. DUMARESQUE: Mr. Chairman.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman. In recent

months we have heard various reports about cost and the need for funds within

the Public Libraries Board, and obviously what we are seeing from the examples

that are here, albeit in the few thousands of dollars, we have not got a

thorough analysis of the whole library system but we have seen in these

instances where the cost of the item has not been the paramount objective and I

am concerned that this is not a proper way of proceeding and I am just

wondering: what now has been done to see that this is not going to happen again,

and are all local library boards of the understanding that they cannot go

outside the Public Tendering Act?

MR. PENNEY: I think I have indicated what action

has been taken, since this has happened all capital purchases, and this is a

capital purchase, so the funding used for this would not have been used for an

operating situation, that the St. John's Library Board has gone to public tender

through the Government Purchasing Agency. We have gone through the Government

Purchasing Agency for our vehicles and we have gone to public tender for these

things, and we have set in motion a directive that any purchase less than $5,000

must have three quotations and the lowest quotation must be accepted unless

there is very good reason why it should not be, and we would have to have an

explanation for that.

All local library boards have been advised that they

come under the Public Tendering Act as a link with the provincial board in

reporting through that particular structure and all I can say is, short of being

on their doorstep which would be impossible, we trust that they will follow

this. Furthermore, I think that in most cases with our local library boards,

because they are small boards, they are not going for many large purchases.

Whether or not for instance I can say to the library board in Cartwright: if you

want to buy $300 worth of material, you had better find three suppliers who are

going to give you three quotations, Mr. Chairman, the practicality of it is

almost out.

We can say you must do this but we cannot be there to

see they enforce it and once it is done, the deed is done, you know, the horse

has already gone out of the barn, so it is a little difficult to monitor every

individual one, but we have given the instructions that wherever possible they

should do this. We have set in motion, and I am talking now from the provincial

point of view, the Government Purchasing Agency, which has just completed a

review on us, and we are getting to be a little paranoid now with so many

reviews coming on us, but in that particular one they have satisfied themselves

that the procedures we have put in place for the purchase of supplies is quite

adequate. That is their comment and we hope that is so. We are very conscious of

the fact, money being pretty tight, that we want our dollar to go as far as

possible. So we are trying, Mr. Chairman, to implement that and I think we have

implemented it to a large extent for purchases following the procedures and

complying with them.

MR. CHAIRMAN: Perhaps, if I might just ask the

Auditor General: are you aware of the study that's been done by the Government

Purchasing Agency and their acceptance of the procedures now in place, and do

you agree with that opinion?

MS. MARSHALL: No, I'm not aware of that study.

MR. CHAIRMAN: You haven't seen that.

MS. MARSHALL: No.

MR. CHAIRMAN: Okay. Mr. Dumaresque.

MR. DUMARESQUE: Just a final question, or a point

of information from Mr. Penney. How many vehicles would you have now in your

fleet and generally just what are they used for?

MR. PENNEY: We have nine vehicles for the whole

Province. They are used in our regional systems. We have six regions, including

Labrador, northern Newfoundland, plus the City of St. John's. So we have

vehicles in western, in Corner Brook; we have vehicles in the central region, in

Grand Falls; we have a vehicle in the Gander region, at Gander; we have a

vehicle in the Bonavista - Burin region, at Clarenville; and we have two

vehicles in the City of St. John's.

AN HON. MEMBER: And one in Harbour Grace.

MR. PENNEY: And one in Harbour Grace for the

Avalon region. Then we have one for administration. So these are the vehicles we

have. In the regions, they're used for the regional librarian, who is

responsible for supervising anywhere from eleven to twenty-two libraries. The

size of the regional systems vary from eleven libraries up to twenty-two. The

person using that vehicle is on the road quite a bit. These are the vehicles,

that's where they're used, and that's what they're used for.

MR. CHAIRMAN: Are these all mini-vans? You're

finished, Mr. Dumaresque?

MR. DUMARESQUE: Yes.

MR. CHAIRMAN: Thank you. Are these all mini-vans,

all of them?

MR. PENNEY: Practically all of them, I think,

aren't they?

AN HON. MEMBER: Except for a station wagon in

Corner Brook.

MR. PENNEY: Yes, we have one station wagon in

Corner Brook, which again is a Corner Brook contribution.

AN HON. MEMBER: A donated vehicle.

MR. PENNEY: Yes, a donated vehicle.

MR. CHAIRMAN: I assume mini-vans because you're

transporting books and that sort of thing.

MR. PENNEY: That's correct, and for visitation and

attendance of meetings. Because all of these library boards are suppose to meet

a minimum of four times a year. So, if you have twenty-two library boards that

are meeting four times a year, that's eighty-eight meetings. We don't expect our

regional librarian to be at all those meetings, but we do require the regional

librarian to attend at least one meeting of every local library board during a

fiscal year.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: Yes, thank you, Mr. Chairman. Perhaps

to you, Mr. Penney, or Mr. Frampton, whoever decides to respond. I don't want to

belabour the question put forward by Mr. Dumaresque, but I have some problems

with - you know, sometimes I guess it's understandable that Mr. Nimeroski.... is

that the right pronunciation?

AN HON. MEMBER: Nimeroski, yes.

MR. MURPHY: Yes. Mr. Nimeroski might want to

purchase a vehicle from a consumer report, I think that has some value. But I

refer you to page 61 where he advises Mr. Williams at Mazda that they were

successful. I have some difficulty when he says: " We request that the

exterior/interior colours of the unit be Sunrise red/grey." That automatically

sets something up in my mind.

However, passing over that, perhaps I can go back to

Mr. Frampton's response to the vans before I get into another area that I would

like to explore. Number one, Mr. Frampton, your direction from the Board

obviously to purchase three vans was one of... emergency? Is that what I'm

hearing?

MR. FRAMPTON: In the case of one of these

vehicles, sir, yes. A vehicle had been destroyed in an accident and there was a

great need in that region to have a vehicle right away.

MR. MURPHY: Yes. I'll pick up on something that

Mr. Dumaresque says and from some of my own past experience. Number one, I

would've thought that it might be more appropriate to have documentation - for

yourself, not necessarily for this gathering - or probably for the Auditor

General. You may have found that one supplier could provide one unit, there

might be a couple of used units on the lot, with a thought that they had the

best price down the road, that the order would take five weeks to complete or

whatever the case might be. I understand that you needed to expedite these units

rather quickly, but I think Mr. Randell might remember in his experiences over

the years that government, when we go out to tender, sometimes find ourselves in

emergency situations requiring vehicles because of accidents and other such

things, and when that tender goes out some of the local suppliers cannot provide

the number of vehicles that we included in the tender.

I would suggest that there is some dialogue and

correspondence between dealers and what have you, saying: Look, we can supply at

a price; however, there is six weeks delivery on four units and we can only

supply three presently; however there are a couple of units here that we can

give you as standby units in the interim. I think, in the wisdom of government

purchasing and the deputy, they make those kind of decisions in the long run. I

think Mr. Dumaresque's point again is well taken - where we see such a

tightening - and you, Mr. Penney, have expressed the problems associated with

dollars today and the things that you look at - I think these are areas where we

may have saved some money that could have gone to better use, and perhaps you

would disagree or agree with that.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Mr. Chairman, I do not disagree

entirely with that. I think the situation that we were in, as Mr. Frampton has

indicated, was that we needed one vehicle immediately; that there was a region

that had no vehicle.

The provincial board, at its meeting prior to when we

went out looking for this, suggested that since we have to have one vehicle

immediately we think you should go for all three vehicles right now, because you

may get a better price if you buy three vehicles. That is when we went to public

tender. We did not get a response from the public tender so the board suggested

that getting three from one dealer would probably give us a better deal.

That is when Mr. Frampton started to do the leg work

around town to see what was available, and the only one that was available was

Tom Woodford. Now we did not, rightly or wrongly, go back to the Board to say:

Well we cannot get them from the public tender and therefore what do you want us

to do, because our provincial board is made up of people all over the Province;

so if we had to bring our provincial board back for another meeting, any savings

that we would have made in one place we would have lost in another place,

because you are talking about perhaps $4,000 or $5,000 to bring all of our board

members back for another meeting. So we made a judgement based on the direction

that we were given by the Board to purchase the three vehicles, and that is

pretty much where it stands.

I do not think I can add any more to that other than

to say that happened, and in the most recent acquisition now we have rectified

that by saying we will go to public tender through the Government Purchasing

Agency for our vehicles and let them be the judge of the evaluation of the

tender and what their recommendation might be. So I think we have rectified it

here, Mr. Murphy, and we have rectified the situation that existed in the St.

John's Library Board when they went after their particular vehicle too, and they

have followed as well through the Government Purchasing Agency.

MR. MURPHY: I have no disagreement, Mr. Penney,

with your decision, and at the end of the day Tom Woodford might have been the

most reasonable dealer. The only thing I say to you is that Mr. Frampton, by his

own admission, said there was one vehicle available at another dealer. The

delivery date of the other two and the cost would have been certainly nice for

us to have here, and I am sure the Auditor General would like to have seen that

information also.

What is does is take that fog or smoke out of the air

and it clarifies it; so I am only being suggestive and I am glad to hear that

now you are on your way to streamlining your function. However in saying that I

want to ask you some questions.

I refer you to page 24, which is the Public Libraries

Board management letter for the years ending March 31, and this is from the

Auditor General's Department. It deals with some obvious headings, and I have

perused those headings and would concur that the Auditor General's Department in

their wisdom have asked for

and commented on some discrepancies, I guess, that

they feel are very obvious.

I take you up to page 45, the correspondence to Mr.

Hart of the Auditor General's department, signed by Mr. John Snow, Chairperson

of the Provincial Public Libraries Board. On page 45. He refers to the comments

which are attached to his correspondence. Perhaps just as an overview, without

going into great detail, Mr. Penney, you might want to comment. Your audit

opinion obviously deals with the adversities associated with the Libraries

Board. That's on page 42, your response to the Auditor General.

MR. PENNEY: That's just the....

MR. MURPHY: Yes, that's your explanation I guess

back to the Auditor General.

MR. PENNEY: Yes.

MR. MURPHY: Yes. You go on and talk about the

adversities, and you confirm that the situation will continue to be adverse. I

might comment on that later. I wonder perhaps, if you would for the Committee

explain 1(b), page 43, the system of internal controls and what have you. Are

these now in place? You say that things are going to be done. If you'd just walk

us through that and tell us - you've told the Auditor General that some things

have been completed and some things will be completed. Can you give us a

capsulization of your response?

MR. PENNEY: Some of these things are in place,

some things are in progress. I think that's a general statement that I'd like to

make. If we go through with the letter, the systems of internal control, the

sales receivable, receipts - and I've indicated here that all local library

boards would be advised to use prenumbered cash receipt books. We've asked them

to do that. Some of them have done it, some of them have not. That is not

something that we have made mandatory from the Provincial Board's point of view.

We have suggested to them that prenumbered cash receipts are very important to

the documentation for our reports.

I'm trying to think what 1(b), the recommendation on

cheques and money orders mailed to head office - I think we put in the

procedures for complying with that. The deposits of money on a more timely

basis, that is definitely in place, Mr. Chairman. As far as book orders for

staff, that has been taken out completely. We do not order any books for staff

anywhere in the Province at this time. That's been taken care of.

MR. MURPHY: Before you move on -

MR. PENNEY: Yes?

MR. MURPHY: - excuse me, Mr. Penney - are you

satisfied now, sir, under sales receivables and receipts, that you have a system

in place that an audit can be done - a correct audit can be done? I notice some

reluctance in area 1(

a) where the local libraries board - about the cash

receipts book.

MR. PENNEY: Yes.

MR. MURPHY: I would think that might cause some

problems, if you don't have those things in place, for the Auditor General's

department to do a clean audit if these procedures are not there.

MR. PENNEY: The local library boards' statements

are not audited by the Auditor General's people, so we get a financial statement

from them indicating a cash and expenditure thing. But we don't get copies of

anything that they have in their books. So if they are doing it, we don't see

it, because we don't do an audit on them. Except that the Auditor General's

staff do spot checks on certain libraries, and they have noted that in some

cases it is not - it may be in all cases that they have checked - that they have

not.

MR. MURPHY: Let me ask you this question, Mr.

Penney. With these local library boards, is there an audit conducted within that

area?

MR. PENNEY: No, not on the local board. Because

the local board's expenditures, the major expenditures are done by our office,

such as payroll and purchase of books. That is done through our office. The only

expenditures they have is the operating expenditures, and that can vary anywhere

from $300 to $400 a year up to $25,000 or $30,000 a year.

MR. MURPHY: Yes, okay, fine.

MR. PENNEY: The other thing that we have done, Mr.

Chairman, with the local libraries is that we have set up an imprest system for

them receiving funding through their regional headquarters and through us, so

that they have to send to the regional headquarters a copy of all of their

receipts where they have purchased anything before they are given another grant.

That is in place in all of our libraries.

MR. MURPHY: Okay. Perhaps you might comment on

Purchases, Payables and Payments, pages 43 and 44.

MR. PENNEY: Yes, the first one is the purchase

orders. We're not usually prepared at the regional level. All of the regional

staff, as I've indicated here, have been notified to correct that deficiency.

The forwarding of the invoices from the regions, not on a timely basis, that has

been done. Everything that the Auditor General has noted in the letter of

management that affected all of the regions and all of the local library boards,

they have been notified and asked to take whatever measures they can to correct

them. That has been done in all of our regions, every region we have. What has

been affecting the headquarters here in St. John's, we have either complied with

the suggestion or we are in the process of complying. I can say that, I think,

fairly clearly.

MR. MURPHY: Okay. Perhaps you might want to

comment on Payroll, page 44.

MR. PENNEY: Payroll? In 3(

a) we're talking about

the access of one person to the payroll, which is the accounts payable person, I

think. We run out of people when it comes to having one person doing one aspect

and then another person doing another part of it. We only have one accounts

payable person in the whole system. That person has access to the payroll on the

computer because, as we've indicated, he's the one in that system who can

correct any errors or be a troubleshooter. So we've tried our best to safeguard

any controls, but we do run out of people after a while.

MR. MURPHY: We all do.

MR. PENNEY: Yes, that's right. If that person does

not have access into it, then we see a problem there.

MR. MURPHY: Sure.

MR. PENNEY: On 3(b), and I'd have to see what (

b) is here, in the payroll, that has been noted, as I've said, that the ten day

period, that went back a long time. It went back I guess even before I came on

the scene. We have corrected that and no one is paid now in advance. We suddenly

selected a date and said: this week you're only going to be paid for eight days,

because we are correcting that. So now we have made that correction and

everybody is paid up to Wednesday and cash their cheque on Thursday. So we have

corrected that, Mr. Chairman.

On 3(c), we have asked the financial administrator

here - and he can speak for himself, I do not pretend to speak for him - to

initial these things, and I think that is done.

As far as the flex time is concerned, Mr. Chairman, I

guess it is a matter of

interpretation as to what is flex time and what is not

flex time. We do not consider that we have flex time. We consider that we have a

flexible scheduling of time, and that we have provided for to some of our staff

who come in, say at eight o'clock in the morning and leave at other times, or if

it is mutually agreed, according to our CUPE contract, if it is mutually agreed

between the employee and the employee's supervisor that the scheduling of the

hours of work can be changed, just as long as it does not mean more hours per

week and that it does not cost the board any extra money. That is the one thing

that we have been trying to make absolutely sure - that if somebody is going to

change their schedule, it does not mean that they will work less than

thirty-five hours a week - they must work thirty-five hours a week - and that

there is to be no overtime involved in that because the board is not about to

pay for the extra time.

I think I will ask Max to follow up on that.

MR. FRAMPTON: Mr. Chairman, we have a very small

staff and we are operating a fairly complex computer system. We have designated

our accounts payable clerk as the system administrator, and whenever we have

problems with the computer system he will attempt to rectify the situation

rather than pay money out to a consultant. We do not have a full-time computer

system administrator on staff. Consequently if our system goes down, sometimes

he will volunteer to stay after hours to work on the system and try to have it

up and going for the next morning so we can get our payrolls out on time and so

on.

Also, our payroll staff are very co-operative in that

they are very much aware of their deadlines, and they volunteer at times to work

through their lunch breaks and even to work after hours to make sure deadlines

are met. Consequently they accumulate time, as said here, in excess of the

required time per pay period.

We feel that we are very fortunate to have people like

that on staff who will not decline to work beyond their stated hours, and it is

always a case that they accumulate time in this manner and take that time off,

and rightly so, some time after. We do not advance extra hours to people and

say: You can work that in later. Whenever there is extra time involved it is

because our dedicated staff has volunteered to help us out in that manner. I

think anybody who works in our situation where you have to administer a system

for a full province with a very small staff, it is certainly a big advantage if

your staff is willing to co-operate with you and do what has to be done,

regardless of their regular hours.

We have explained that to our auditors and to anybody

else who is interested, but apparently the message has not gotten across. They

still continue to refer to it as flex time. We do not consider it flex time. We

feel that without that sort of help from our staff we would be in a sorry state.

MR. MURPHY: Mr. Frampton, I would be surprised if

you did not protect your staff the same as we all do. I am sure we feel our

staff are extremely dedicated, and I think if you ask Mr. Warren and Mr.

Dumaresque and the Chairman, Mr. Windsor, we would all have the same good things

to say.

Perhaps the Auditor General might like to comment

about that specific area.

MS. MARSHALL: Yes. Our concern was not focused on

whether we called it flex time or whatever. The concern we had was that there

would be proper procedures documented to control the number of hours worked and

that somebody other than the employee would be keeping track of their hours.

Another concern that we have is if someone did work

extra hours that it was necessary and that somebody other than the individual

record those hours and then accumulate them later on so they could take them

off.

So this is what we were looking at, just the

procedures and the documentation relating to the hours.

MR. MURPHY: Perhaps I'm a little confused. When I

see the word flex time it would seem - and Mr. Penney responded initially that

if you come in at 8:00 you go home a little early and if you come in at 9:00 you

go home a little later. But what Mr. Frampton has moved on into is the area of

employees working overtime, and instead of remuneration that overtime is taken

in time off, I presume at the rate of time and a half or straight time. I don't

know.

Perhaps then, Mr. Penney, rather than get into great

detail in here maybe I should just go over the -

MR. DUMARESQUE: Mr. Chairman, if I might

interject. Was that question answered as to whether in fact there is now a

procedure in place where somebody else actually documents the hours worked and

where the employee doesn't actually indicate he is going to work four tours

overtime and that kind of thing?

MR. PENNEY: I can say, Mr. Chairman, that people

who are working different additional hours now, have that initialled. The hours

are determined by the supervisor, and the supervisor initials the fact that this

is so, that these are the hours. Now the supervisor is doing that and I think

the question is whether or not the documentation is coming through to the head

office to the administration so that it is available to the Auditor General.

That is, I think, the crux of the thing.

MS. MARSHALL: Yes, and also that it is not the

employee himself or herself who is deciding that they are going to work flex

hours today and at the end of the day they are the only ones recording this

information. All of this overtime should be approved in advance and properly

accumulated by somebody other than the employee.

MR. FRAMPTON: Mr. Chairman, I would like to speak

to that. Actually there are two issues here. One is the hours worked on a

regular basis during a pay period, we do have provision for some people to work

all their time in say four and half days rather than five days, however that is

regularly scheduled and is not changed from week to week. That is considered to

be the regular

schedule for that person. Now with regard to these extra hours

what happens is if our computer system goes down close to closing time, one

person stays behind to try to rectify the situation without paying outside

people. That, of course, is approved. However, it would not make any sense to

have a supervisor stay back and just sit back and count the hours that this

person is working and certify that he did work those hours. As far as

documentation is concerned if one person stays back for an emergency situation

it would not make sense to me to have somebody else just to provide evidence

that this person actually worked those hours. This is the kind of situation

where extra hours are accumulated, emergency situations that take place outside

of regular hours.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Mr. Chairman, in addition to what Max

has said, and Max is speaking pretty much from the administrations point of view

here, there are some of the other departments, particularly the technical

services department I think where there would be additional hours. As a matter

of fact, if I may use an example, it was only this morning that I visited

technical services and had a request for additional hours to do some work and I

granted the hours with the understanding that they will work two hours for two

or three days next week after hours and that I will see to it that they are

signed and that documentation be made available. So we are doing things like

that.

But I think it is the documentation that was not

available to the Auditor General. I see John nodding his head here. I think that

is where the problem arises, and I hope that we have been able to rectify that,

and that it will be available at the next

audit.

MR. CHAIRMAN: Mr. Dumaresque, just to follow up,

before I get back to Mr. Murphy.

MR. DUMARESQUE: Yes, sorry about that, Mr.

Chairman. I just wanted to make sure then that this accountability - obviously,

accountability, whether it comes to seeking quotations or whether it comes to

working hours, it's all going to impact on the bottom line. So you're saying the

problem was that you did not have the information up to this point in time to

provide to the auditor for any overtime hours worked, that you couldn't give it

to the Auditor General?

MR. PENNEY: It's not overtime. I want to reiterate

that. We do not consider it overtime. If somebody decides to work a couple of

extra hours, they have the understanding - unless we call somebody back, and

then that's it.

What has been happening in the past is the

documentation in the other departments - our provincial reference, our technical

services, the City of St. John's, for instance all the regions out there - they

have not been forwarding the documentation to us, so that it becomes available

for the auditors. That information has not been coming to us. That I think is

one of the problems, and I can see where that is a problem. For us in

administration, we are documenting it, and we're initialling it, to my

understanding, at least.

MR. MURPHY: I think that might beg the question,

Mr. Penney: do you feel that the overtime hours applied to the Libraries Board

are rather small?

MR. PENNEY: Very. I would consider them very

small, personally, Mr. Murphy.

MR. MURPHY: They're not excessive. You're not

looking at 150 hours a year for an employee.

MR. PENNEY: No, no.

MR. MURPHY: It might be somewhere in the vicinity

of twenty, twenty-five, thirty hours a year.

MR. PENNEY: I wouldn't think there would be that

much.

MR. MURPHY: Not even that many.

MR. PENNEY: Not per employee, no.

MR. MURPHY: So it is the format of how it is done

that concerns the Auditor General, obviously.

MR. PENNEY: Yes, and I think it's the lack of

documentation. I will concede that it's a lack of documentation. But it is a

documentation that is there but has not been available to the Auditor General

because the supervisors have been keeping that documentation. When I checked

with them their comment and reaction to me was: I know that these people have

been working, I have sanctioned their time to work, and it has been so noted.

The documentation was not forwarded and that may be because we have not made it

such that they would be required to do it. That will change.

MR. MURPHY: Without causing any overtime, would it

be possible to submit to this Committee the number of hours of overtime? Would

that be any great ordeal? Could you submit that in writing to this Committee,

for the last fiscal year?

MR. PENNEY: We do not permit any overtime.

MR. MURPHY: No, the actual hours taken in the last

fiscal year, could you supply that to this Committee?

MR. PENNEY: We probably could. We certainly

couldn't do it from a payroll point of view because we don't pay overtime.

MR. MURPHY: No, I understand.

MR. PENNEY: These are additional hours that one

might work, but will take time off in lieu of.

MR. MURPHY: Wouldn't each employee -

MR. PENNEY: Yes.

MR. MURPHY: - in his personnel file, or in his

payroll account somewhere, these booked hours would show.

MR. PENNEY: The supervisor would have them, yes.

MR. MURPHY: Yes. So it's only to pull them off -

MR. PENNEY: That's right.

MR. MURPHY: - and send - could you send the

correspondence to the Chairperson? The total overtime hours worked by the Board?

That would give us a better indication when we compare percentage-wise of the

number of employees you have probably with some other departments that we will

be questioning in the future.

MR. CHAIRMAN: Mr. Dumaresque, you have a question?

MR. DUMARESQUE: Yes. Just one little point on that

again. Am I led to believe then that there is no cost to this once the time is

taken?

MR. PENNEY: That's correct, except the time off in

lieu of. If somebody works two hours today over their seven hours, they will

take two hours off some other day.

MR. DUMARESQUE: That's what I mean.

MR. PENNEY: Yes.

MR. DUMARESQUE: At the end of the day, if a fellow

or lady has twenty hours due and they take three days off, or two and a half, or

whatever it is, there's no cost.

MR. PENNEY: No. There's nobody brought in to do

their job.

MR. DUMARESQUE: Okay.

MR. MURPHY: Let me ask you one final question, Mr.

Penney, about that. Understanding that public libraries were closed down for a

short period of time, and you have an anticipated closure in November, I think,

would your employees use those hours in that closed down period?

MR. PENNEY: No sir. They are not permitted to use

any leave at that time, that has to be absolutely money saved, nobody gets paid

one penny and no pun intended, for that particular week, none whatsoever.

MR. MURPHY: Thank you. I just want to move on -

MR. DUMARESQUE: But they would not necessarily

have to would they? If some employee had four days coming to them, they would

not necessarily have to get any money coming to them for that four or five days?

MR. RANDELL: Mr. Chairman, it would be somewhat

ludicrous for them to say they are going to take it during the period in which

they were not going to get paid anyway.

AN HON. MEMBER: Yes. No, you cannot do that.

MR. MURPHY: What I am talking about is paid leave,

Mr. Randell.

MR. RANDELL: This is not paid leave, sir.

MR. CHAIRMAN: This is probably an appropriate time

to take a ten-minute break. Mr. Warren is a bit anxious as he has all kinds of

questions; I suspect the Auditor General has some comments she wants to make, so

we will come back in ten minutes.

Recess

MR. MURPHY: We do not want to extend our time,

just perhaps if Mr. Penney might conclude rather than getting into this in a

sense that we will use up all the time, and Mr. Warren I know is biting at the

bit over there and Mr. Dumaresque again to ask you some questions. Perhaps if we

could just quickly do it in a yes or no sense. If you look at C Financial

Accounting and Reporting (

a) the recommendation on the Petty Cash, the new

guidelines, are they in place, Sir?

MR. PENNEY: Yes.

MR. MURPHY: They are in place, okay. And the bank

reconciliations again would be -

MR. PENNEY: Yes. That is right up to date, sir.

Fixed Assets - we are working on the fixed assets from

all the local library boards. We know that there is going to be one or two years

of adjustments to be made because we have established certain values and it will

have to be determined whether the values that we have placed on these are

adequate and so we will await the report back from the Auditor General's

Department to determine whether or not what we are doing is adequate or what are

some of the shortfalls, but we now have a listing of every piece of fixed asset

that we have in the entire Province in our libraries, and have established a

system where each year we will ask for any additions and we will ask for any

disposal of equipment and furnishings during that year.

In the leased assets - I am just trying to see what we

were talking about in that. That again is how we are going to deal with that I

guess, as an asset. You know, things like photocopiers or equipment we have

leased from someone for say five years, sixty months, and how does that all come

into the picture under property guidelines and so on, so we are looking at that.

Compensation for employees - again we are back to the

overtime and all management employees have been advised of the latest ruling on

that from Treasury Board as to what and how they can go about it, if it is

necessary to have overtime, and of course we have told them that there is to be

no overtime, period, as there is no money for overtime.

As far as the twenty days annual leave for management

and for professional librarians, this is something that was in place, I guess,

is an historical relation or link, and it was put in place as I have indicated

here, I think, in the early days because of the competition with other libraries

and the public library could not very well attract competent and qualified

people because they were not giving the benefits that the others were giving.

That has been implemented, Mr. Chairman, and the board at one of its meetings

this year has approved that from here on, we cannot go back and sort of start

taking away, but from here on, any new employees who come into the public

library system, shall be governed according to the holiday

schedule of all other

employees in government and quasi-government departments.

Public tendering - I think we have covered that. The

bonding of employees - we are still looking at that. I have indicated here the

board is looking at it and the board is -

MR. WARREN: Excuse me, Mr. Chairman -

MR. CHAIRMAN: Mr. Warren.

MR. WARREN: - if I may interrupt. You say you

cover public tendering, I do have a couple of questions on that particular

issue; do you want me to ask them now or ask them after?

MR. CHAIRMAN: Right after.

MR. PENNEY: Okay. We have to go to public tender

for our insurance this year and we will be including a request for bonding in

that. I can say here though, that the last time we went to public tender for

insurance we asked our insurance agent for the bonding insurance and he refused

to give us a bonding unless we took a blanket which would cover just about

everybody in the public library service and that would be at horrendous cost to

us.

As far as the preparation in reviewed travel claims,

everybody who fills in one of these has been advised of the discrepancies that

the auditor's staff found when they were doing the review and asked them to be

sure to follow the proper procedures. The reporting requirements to Revenue

Canada - we are trying to get some particular rulings from certain people now as

to what should be included here and what should not be included as taxable. We

have had several conversations because people who are getting tuition and so on

are also very upset that it is being listed as a taxable thing and of course we

are not paying that any more now, it has been paid by the Public Service

Commission during the last two years, so the only thing we pay is a lump sum for

compensation for expenditures which we think proper and that is taxable. Am I

correct? Yes, that is taxable.

MR. MURPHY: I have one more question, Mr.

Chairman.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: Yes, thank you. I just wanted to get

your overview on that, Mr. Penney, and I think it will probably clear up a lot

of things in the mind of the Committee and I am sure the Auditor General's

Department might want to comment on your remarks.

Just one more question, and I will finish with this

one. In the purchase of books, I understand that you set up a system and it is

obviously very convenient, you have a supplier out of Montreal I understand who

supplies your library books and you have a supplier in Toronto who supplies your

library books associated with children. I am always a little bit leery I

suppose, not only as an MHA but being part of this Committee, we have a

responsibility here and people sometimes get the understanding that the business

is theirs automatically - to your knowledge do the other libraries across the

country, tender in other provinces?

MR. PENNEY: Do they tender -

MR. MURPHY: The other libraries across the

country, do they go our for tender on books?

MR. PENNEY: Oh, I get you. No -

MR. MURPHY: No?

MR. PENNEY: - they may tender on service because

it is one thing to buy books but it is another thing to determine what kind of

service you are going to be given because it is not a question of just buying a

book. If it was just a question of buying a book then it would be very simple

but what kind of service is that jobber or wholesaler going to give you when it

comes to keeping on record what books cannot be supplied at this time but may be

supplied three months down the road, what kind of discounts, what kind of turn

around time, all of that? We consider the service almost as important as the

price of the book.

AN HON. MEMBER: A broker.

MR. PENNEY: It is a broker, yes, it is a broker.

Now as far as we are concerned, and I still maintain this and I will until

someone proves me wrong in this, we do not have a broker for library materials

this side of Montreal. Regardless of what certain people may say, we do not have

a broker, we have lots of bookstores in the City of St. John's, they are not

brokers, they are not jobbers, they are strictly bookstores. The other curious

thing that always comes up on this is, it amazes me that the Public Libraries

Board has been the one that has been singled out in this for the last ten years

that I have been dealing with this, and I have never seen anything with respect

to Memorial University, to Cabot Institute, to the Fisheries College, to all the

school boards, who all buy their books the same way that we buy our books.

MR. MURPHY: So what you are saying in essence is

that all the other people in the Province buy their books from the same broker

in Montreal?

MR. PENNEY: Not from the same broker, but from a

broker.

MR. MURPHY: From a broker?

MR. PENNEY: That is right.

MR. MURPHY: If you needed 300 Macbeths to supply

throughout the Province, or whatever the case might be, would you automatically

issue a PO to this company in Montreal?

MR. PENNEY: We would issue one, but it would be

many other books as well.

MR. MURPHY: Okay.

MR. PENNEY: But we would issue a purchase order

for each individual title. Every individual title has its own purchase order

number and form.

MR. MURPHY: I see.

And you would not ask three or four - how many brokers

- there must be lots of book brokers throughout the country. You would not ask

anybody else to submit a price and to service that?

MR. PENNEY: No. We have not.

MR. MURPHY: So they, or that firm in Montreal, is

it fair to say that they feel within their minds that they have a monopoly on

the public libraries in Newfoundland?

MR. PENNEY: No, I do not think they think that for

a moment.

MR. MURPHY: Why wouldn't they?

MR. PENNEY: Because we could change any time. All

we need to do is get a -

MR. MURPHY: But you have not for ten years.

MR. PENNEY: No, we have not because we have been

extremely satisfied with this particular broker, and I would maintain that there

is no broker in the country who can compete with this person on the basis of

service.

MR. MURPHY: How do you substantiate that?

MR. PENNEY: Because of all the other comments and

complaints that I have heard from other people across the country, and I have

many contacts with them.

This person in Montreal is an extremely good jobber. I

am not saying he is the only good jobber, but I would put him up against anybody

else as far as service is concerned, and I am thinking of service here.

That is the only argument that I have on that, but I

do not dispute the fact that there is a possibility that one could request a

tender for service, and then that service would have to be very clearly

articulated in specifications as to what we expect from a jobber or a wholesaler

or a broker, whatever you wish to call them.

For instance we are purchasing materials also from a

certain bookstore on Duckworth Street, and we want to try that bookstore; but

that is a bookstore, regardless of what else we might think. It is strictly a

bookstore. We want to compare the service.

Now one of the things with dealing with somebody on

Duckworth Street, the one saving you do have is freight; but whether or not the

list price of a title on Duckworth Street and the list price of that same title

in Montreal or Toronto is the same, and whether or not the discounts given for

the same title is going to save you money or not, I have not done that to find

out; and while the report of the Government Purchasing Agency has said that the

Duckworth Street is 30 per cent discount

whereas the Montreal may be 25 per cent

in some cases and 30 per cent in others and 20 per cent in others, they have not

taken X number of titles and put them into the Duckworth Street situation, the

Montreal situation, and the Toronto situation and said: Here are the different

prices. You cannot really do a valid comparison, in my estimation, unless you

take the same titles and give them to the same three people. You cannot just

take different titles and say you are getting a better price.

We have sought the advice of Justice about going to

public tender and everything, and I think that the report of the Government

Purchasing Agency is sort of coming down also in line with our thinking that

well, maybe not go to public tender for the books; maybe not go for three

quotations for every title; but maybe you should be going for a public tender

for service. I can live with that kind of thing. But if we have to go, all I'm

saying is that I hope somebody says to somebody else that the Public Libraries

is expected to do this, and therefore we expect every other organization to do

the same thing.

MR. MURPHY: I can understand you being comfortable

with somebody, but however, I still feel within myself that that is not a good

business practise. I would argue the point that there are other people out there

- and they're brokers. They're not binders, they're not editors, they're not

printers, they're not publishers, they're only handling a manufactured book from

somebody else which they bring into their system and -

MR. PENNEY: At our request.

MR. MURPHY: Exactly. So I still would question -

if I got business from somebody for ten years, then I would feel within myself

that I'm probably going to get eleven and twelve years out of this. I would look

at it in a different light. I think if people feel that there's some degree of

competition, is the word I guess, then I'm not in a monopoly situation. I am not

saying that my point of view is right. I just apply it objectively to say that I

think that people are out there sometimes and they get complacent, is maybe the

word, and we're all very comfortable. Change sometimes is the hardest thing to

accept, but thank God we did or we'd still be trying to get Sir Richard Squires

out of this building.

We have accepted change, and anyway I have my own

thoughts on it. I appreciate your response. Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Murphy. Mr. Frost,

you wanted to respond to that.

MR. FROST: Yes, I'd just like to make one comment

to assuage Mr. Murphy's fears that a jobber who'd been used for eight or ten

years would become complacent and feel that his business would continue. I would

like to point out that Mr. Penney is part of a nation-wide network known as the

Canadian Libraries Association. Mr. Penney attends meetings with his colleagues

several times a year and it's this very type of thing that they discuss: who

uses what jobber, what are the problems, what are the good points of a

particular jobber, should we change, and so on. So there is a sort of a

safeguard there that keeps the Newfoundland Public Libraries Board fully current

as to what the situation is throughout the country with various jobbers.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: Thank you, Mr. Chairman. Mr. Frost,

that would indicate to me that everybody across the nation in this association

is buying from this Montreal jobber.

SOME HON. MEMBERS: No, no.

MR. MURPHY: I'm just saying that if we have all

these good meetings to get the most, or the best book for our buck - that's a

new phrase - the best book for our buck, then that's great, sobeit. If somebody

is selling me books for ten years, and there are twenty-two other jobbers out

there, and Alberta, Saskatchewan and Ontario are buying from different other

jobbers, then I see some problems in it. Perhaps I'm out in right field, not

left field, on this whole issue. On the surface, it looks to me, as a committee

member here, that I feel obligated to ask these questions. Because I think,

knowing the situation with the Libraries Board and how finite that dollar is,

and we've heard all kinds of things over the last year and what have you, that

any kind of dollars that we can save in the system might be enough that we could

have a fifty-two week operation.

So that's why I ask these questions. I'm only asking

them. Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Warren, you have been patiently

waiting to deal with some other issues.

MR. WARREN: Thank you very much, Mr. Chairman. I

guess after hearing all the comments this morning, maybe I should visit the

library and look for a book on confusion. Because I'm getting very confused as

we go along.

Mr. Chairman, I want to go back to Mr. Frampton's

comments concerning the purchase of the three vehicles from Tom Woodford. I

understand you advertised on June 11 in The Evening Telegram and no bids were

received. I gather from Mr. Frampton's comments that then you were instructed by

the Board to go out and look for vehicles, or to go shopping looking for three

vehicles. Is this so far correct?

MR. FRAMPTON: Mr. Chairman, if I might respond to

that.

MR. CHAIRMAN: Mr. Frampton.

MR. FRAMPTON: That is not exactly correct. Mr.

Penney pointed out that we had our initial instructions from the Board to try

and obtain three vehicles at the same location, and of course we used the

tendering process.

When that did not work we did not have additional

instructions from the Board. From that point on we used our own judgement, such

as it was. It may not have been the best way to go about it, but as Mr. Penney

pointed out, rather than go through the expense of calling the Board together

from all around the Province, once the tendering process did not work, from then

on it was our own judgement that we should contact dealers and try and find

these vehicles.

MR. WARREN: Yes, but on page 52, and I quote: We

were instructed by the Provincial Public Libraries Board to proceed with the

purchase of the car from Tom Woodford Limited.

This is where I am getting a little bit confused. At

the beginning the Public Libraries Board told you to go look for the vehicles,

but you are saying that after that you took it on yourself to continue, and at

the same time the quotation here from somebody says that the Public Libraries

Board - they must have met, or one person at the Libraries Board, or did the

Chairperson tell you? Who told you to buy from Tom Woodford?

MR. FRAMPTON: I am sorry, Mr. Chairman. We are

having a little difficulty here finding these things because we do not have the

same page numbering as you do.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Mr. Chairman, I think what we are

saying here is after we decided to go and find the supplier who could give us

the three vehicles.

MR. WARREN: Let's go back to the tendering first.

You went and did the tender on your own?

MR. PENNEY: Yes, that is right. We did the tender;

there were no bids. Then Mr. Frampton started to do some leg work to see where

three vehicles could be purchased.

MR. WARREN: Not under the instructions of the

Libraries Board?

MR. PENNEY: No, that part of it was not on

instruction. The instructions came from the Board to purchase three vehicles

from one dealer to get a better price, and in order to do that we decided to go

the public tender route. We did the public tender route to try to get the three

but we did not get them. So after that we began to go seeking the quotation and

finding out if indeed there were three suppliers or one supplier that would give

us three vehicles.

MR. WARREN: Okay, so then the board of directors

of the libraries then met and -

MR. PENNEY: The process after that was to contact

the Chairman of the Board, or the Chairman of the Finance Committee, to say that

we can get three vehicles at Woodford's.

MR. WARREN: But let me go back to what you said

earlier. You said it would be awful expensive to get all the board members

together, but here again you are saying you made a contact. So was there a board

meeting to discuss this?

MR. PENNEY: No, there was not. There was not a

Board meeting - it was a telephone call, Mr. Chairman, to say that this is what

we can do. We can get three vehicles from Woodford.

MR. WARREN: So without pointing fingers at anybody

on the particular Board, one member on this particular Board made a decision to

advise Mr. Frampton to go and buy?

MR. PENNEY: Well, that is correct. Well not

necessarily, but once we had informed them that this is the only thing we can

do, we were advised - well in the spirit of the recommendation from the board at

the beginning, that this would be the next logical step, to purchase the three

vehicles from Woodford because they had already said to get the three vehicles

from the one supplier. That was a directive right from the very beginning by the

board.

MR. WARREN: Where is that directive?

MR. PENNEY: That is in a board minute, and it is

not in here; but that was a directive from the board when we decided to go to

public tender.

MR. WARREN: So it is conceivable that all the

members of the Board do not know that Mr. Frampton was authorized by somebody on

that Board to purchase those vehicles? Is that conceivable?

MR. PENNEY: At that time, no, but was after.

MR. WARREN: It was after the fact?

MR. PENNEY: Yes, that is right.

MR. WARREN: Thank you, Mr. Chairman.

I want to go back to page 36. Again this is public

tendering, and further to Mr. Murphy's questioning I will not talk about the job

order as such; however, I notice that we did pay out $312,000 to this particular

company in Montreal.

We had public accounts here yesterday and there is a

lot of discussion with the Public Tendering Act. I gather that not very many of

us in this room understand the Public Tendering Act, including myself, and

probably including you people after today. It looks like you never had very much

contact with the minister or his officials when doing this. I gather that the

minister had not been advised the whole time that you were going ahead and

buying those books through this source.

MR. PENNEY: Mr. Chairman, I think this is a Public

Libraries Board responsibility, for the operation and administration of the

public library service. At no time do we advise the minister or the officials of

the day-to-day operations that we're undertaking. We advise our Board of all of

these decisions as to what we are doing. That is, as I've indicated before, to

purchase library materials, that is a normal procedure for libraries throughout

the country. It's not something that's peculiar to the public library service.

It is a system that is pretty standard practise.

MR. WARREN: Thank you, Mr. Penney. I'm not

concerned about the other nine provinces. We're the Public Accounts Committee of

Newfoundland and Labrador. I go back to you again. If you went to your board of

directors and asked them for some advice on the purchase of those cars or the

tendering of those cars, and here we are spending a quarter of a million dollars

or more on books, so you're not asking for any advice from your board of

directors at all on the purchase of those books?

MR. PENNEY: No. We have a policy on how library

materials are purchased. That policy has been approved by the Provincial Public

Libraries Board. The Public Libraries Board members do not get involved in the

day-to-day operations of the public library service. That is something they have

left to us as senior staff. We try to follow the practises.

When I referred to standard practise I wasn't

necessarily referring to the standard practises across the country. I was

referring to the standard practise within this Province of the purchase of

library materials for every library that is in the Province - university, school

and everybody else. That is a standard practise, that you establish pretty much

a jobber and you use that jobber for the purchase of your materials so that you

don't have to go to thousands of publishers and have thousands of invoices that

would require another handful of staff in your accounting office to keep up with

the paperwork. So that is the thing. I don't know whether that answers Mr.

Warren's question or not, but -

MR. WARREN: Thank you very much, Mr. Penney. One

final question. This $312,000. Would you know offhand the largest invoice?

MR. PENNEY: Invoices vary, because with the

purchase of library materials, it is not one particular time that we go in in

September and we order all our books for the year. Books are selected on a daily

basis, ordered on a weekly basis, and they come in at different times. Our

individual invoices range anywhere I would say from $10,000 to $12,000 at the

highest at one time for one invoice. Am I correct? For this particular thing.

MR. FRAMPTON: Mr. Chairman, some invoices,

particularly for the children's books, could be quite a bit higher than that,

depending on whether the order clerk is ordering for the whole Province or just

for one particular region.

MR. PENNEY: Okay. So it would vary, Mr. Warren,

yes.

MR. WARREN: So actually you've exceeded the limits

under the Public Tendering Act.

MR. PENNEY: No, not really.

MR. WARREN: Not really.

MR. PENNEY: No, because we're talking about

individual titles. So in that one invoice there could be 200 different purchase

order numbers.

MR. WARREN: Where does it say in the Public

Tendering Act that what you're just saying now is correct?

MR. PENNEY: According to the ruling of Justice

that we have had on two or three occasions, they consider each individual title

as an individual purchase order.

MR. WARREN: Maybe the Auditor General would like

to make a comment on what Mr. Penney is saying now because I find it most

conflicting.

MR. CHAIRMAN: Ms. Marshall.

MS. MARSHALL: Do you want me to comment on that

specific issue with regard (inaudible).

MR. WARREN: Yes, sure.

MS. MARSHALL: It is my opinion that the books and

sales of the service should have been tendered. I realize you have a legal

opinion on the matter, but I have never heard that before that you would look at

each one individually and consider them as an individual purchase and therefore

not have to publicly tender. If that has been done in the past, that has been

known as 'splitting of orders', to avoid the Public Tender Act.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Mr. Chairman, I was going to say that

we must have an individual order for every individual title because that is the

only way that we can determine how the books are going to be distributed,

because that title might be for ten different libraries and so that one

individual purchase order will have the bibliographic information that is

necessary to identify the book when it comes in, and so individual purchase

orders are based on individual titles and that is how we have been doing it.

MR. CHAIRMAN: If I might just intercede here, Mr.

Penney, that appears to me to be a simple matter of keeping records of what you

have ordered. I think what we are getting at here, and let me first of all

preface my remarks by saying that the question we are addressing to you now, we

will in due course address to Memorial University of Newfoundland and school

boards and anybody else. This committee is just becoming aware of the procedure

for ordering books in the Province, which may or may not be correct, we will

decide that in due course but simply you are here and we are asking you these

questions and we will ask others.

MR. PENNEY: Yes, I have no problem with that.

MR. CHAIRMAN: Perhaps what we are trying to get at

here now is, is it not possible for the Libraries Board to determine that there

are 500 books required containing twenty-five different titles? It is a simple

matter when they are received and distributed to the various branches, the

various regions, the various libraries whatever the case may be. Why is it not

possible to issue a tender call for these 500 books, specifying the various

titles? Why cannot a dozen jobbers bid on that purchase? Why must we be tied

into one jobber? That is what we are trying, I think, to get a handle on here.

MR. PENNEY: Mr. Chairman, I can see many

difficulties and I think the Government Purchasing Agency sees many difficulties

with that and that is why they have recommended that we go for a tender for

service, because we do not know at any one given time how many books we are

going to require, we would have to make a list of them that would have to go out

to tender and then we would have to wait for it to come in. The additional

delay, I think, would be almost unacceptable because there could be a tremendous

delay in getting that. If you are going to a jobber and if we specify that it is

a jobber, then we are talking about outside the Province for a jobber to do

this.

MR. CHAIRMAN: Perhaps.

MR. PENNEY: Perhaps.

MR. CHAIRMAN: Perhaps not. Perhaps there is a

local agent who has access to all of these books from whatever publishers. Maybe

not.

MR. PENNEY: Maybe not.

MR. CHAIRMAN: Maybe there are ten jobbers in

Montreal. What I think we are trying to determine here is, are we being best

served by having a jobber, and I will eventually get to the question of how the

jobber was selected. Why can we not, as has been recommended, request proposals

for two or three or four-year service or whatever is deemed to be appropriate? I

do not see it as being a major problem to list down the number of books that are

required.

Also, let me say that it escapes me, the urgency of

buying books for a library: this is so urgent that we cannot wait for two or

three days or a week or two or three weeks to go through a public tender

process. You may enlighten me on that, perhaps I am totally wrong, perhaps I do

not appreciate that aspect of it, that going through a tendering process would

delay it. There are many things that are purchased by various government

departments and agencies, where there is a list of items that are required and

people are invited to bid on it; the bids are submitted and the lowest bid is

accepted; I fail to see why that could not work in this case and perhaps you can

explain it.

MR. PENNEY: I think, Mr. Chairman, that one would

have to understand the whole process of purchasing books for libraries as

opposed to purchasing books for one's individual satisfaction and that is, that

from the time one makes a selection you have started the process that is going

to be completed once that book goes back on the shelf. That includes all of the

bibliographic information, such as the title, the author, the publisher, the

edition, the date. All of that must be there so that we can deal with it, plus

the locations and all the rest of that. That's one of the reasons why we do it

in that particular fashion.

The other thing, I think, as far as putting all of

that out then on a public tender, it could delay. The more delay you get the

greater the chance of it - because you're going to have a process of preparing

it, of sending it out, then coming in, evaluating it, and then determining who

is going to get what. I think that takes a fair amount of time, unless you have

the staff who can do that.

MR. CHAIRMAN: I appreciate your staff problem.

MR. PENNEY: I'm not saying it can't be done but I

can see a lot of difficulties -

MR. CHAIRMAN: So far what you've told me is

exactly what's happening in every government department.

MR. PENNEY: Yes.

MR. CHAIRMAN: You haven't yet convinced me that it

could not apply to this. I'm waiting for you to show me something that is so

different about books, that it's different from office materials or anything

else that every government department has.

MR. PENNEY: I think that the whole process of the

book being catalogued and processed throughout the system is different -

MR. CHAIRMAN: That can happen after the books are

received.

MR. PENNEY: Pardon?

MR. CHAIRMAN: That can happen after the books are

received. Items are purchased by many departments for many divisions and branch

offices, bought in bulk, and when they come in to whoever's responsible for

purchasing for that department, are then distributed throughout the Province to

those offices that require five here, six there, and twenty-four there.

I don't see how books are any different. That's simply

a matter of taking your books - if you need five in the Harbour Grace library,

when you get them then you send the five that Harbour Grace has requested. It's

a simple procedure. Of all libraries or boards or regional boards, however it

comes through, coming to one central person who is responsible for compiling a

list of all of the requests, all of the requirements for various books, ordering

them through public tender, when they're received, distributing them back. Now I

realise that takes some time and some effort. Tell me why it can't be done.

MR. PENNEY: It's also, Mr. Chairman, that it's not

quite that simple as having them come in and distribute them. There's a whole

process that they have to go through before they are distributed. The person who

receives and unpacks them is only the first step. Then they go to various other

steps before they are finally sent out. So it's not quite that simple.

MR. CHAIRMAN: What does that have to do with where

they're purchased and how they're purchased? Whether they're purchased from a

jobber, or whether they're done by a tender, that a jobber would get the tender

and then submit - once a jobber gets the tender, then that jobber is going to

send the same number of books to the same person and they will be handled

afterward. That is your problem of what you do with them afterward.

MR. PENNEY: That's right, and what we've tried -

MR. CHAIRMAN: I'm concerned about the purchasing.

MR. PENNEY: Yes. Well, we -

MR. RANDELL: Mr. Chairman, if I could interject.

MR. CHAIRMAN: Mr. Randell.

MR. RANDELL: I suspect that we're going to go

around in circles on this. There is a missing link here somewhere, because I'm

trying to reach for it as much as you are. Could I suggest, Mr. Chairman, that

we go back as a board and as a department and define that process, and define

what problems if any exist there, and submit that to the Committee in detail as

a report?

MR. CHAIRMAN: By all means. We're quite receptive

to giving you any time you need. We can have another meeting if we choose to do

that.

MR. RANDELL: Yes, there's something missing here,

sir, I agree.

MR. CHAIRMAN: I guess I just fail - I'm looking at

the other members of the Committee - we've all failed to see how this is any

different than any other department.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: If there is a difference we'd be

happy to recognize it. I realise that it might be easier, may be streamlined.

After seventeen years in government, there are many things that I would like to

see streamlined. The Public Tender Act is not well-known for streamlining

things. It is one of the most cumbersome pieces of legislation we have, but it

protects the public purse. I've been branded with it too. I, as a minister, took

eight weeks to get a vehicle purchased for me through the public tender system.

I was told the type of vehicle I would drive. Okay? I fail to see how the Public

Libraries Board or any other agency of government should be treated any

differently.

MR. PENNEY: We don't dispute that.

MR. CHAIRMAN: As a minister, I put my request to

my former deputy who went to our Director of Administration and said: the

minister wants this book or a briefcase or whatever, go get it - through the

Public Tender Act, in accordance with the guidelines. I don't see the

difference. I appreciate all of the problems with the Libraries Board, and

voluntarism, and the fact that you're spread out and you're understaffed. These

are areas that I'd like to get into.

Mr. Warren, are you finished with your questions? I

interrupted you.

MR. WARREN: No, go ahead, sir.

MR. CHAIRMAN: Okay? I wanted to - and Mr.

Randell's suggestion is a valid one. Perhaps we should let you have a look at

that and get back to us in more detail. Do you want to respond to this before we

go?

MR. FRAMPTON: Mr. Chairman, I would like to point

out some of the differences in purchasing books. It's not nearly as simple as

purchasing a photocopier or paper, or something like that. The start of the

process is when we receive book lists containing titles which publishers are

proposing to publish. It is not clearly established how many copies they are

going to publish; we indicate an interest, as certainly all other potential

customers do, and this helps the publisher determine just how many copies of

each title they are going to publish. Once we have indicated that interest there

is a fairly short time frame for the publishing and the supply of these books,

and if you do not purchase your opportunity is lost.

Now you have to keep in mind that we purchase many

different types of books, fiction and non-fiction and so on, but you do not

really have a time frame when you can shop around and purchase with this one or

that one or the other one, once you have indicated your interest in purchasing

so many copies of a certain title, then the deadline is imposed, not by us but

by the supply and it is quite different from purchasing photocopier paper as I

say or pencils or pens or whatever.

The volume that the publisher will publish is based on

the indication of interest from the customers and as I said, you have a fairly

short time frame to go to somebody and say yes, we would like to get x number of

copies of the various titles. If you shop around that window of time is going to

expire and you are not going to get the books that you want and once that

opportunity is lost you cannot get them in two months time or six months time or

whatever. I do not know if that helps to clarify the situation.

MR. CHAIRMAN: Not a great deal, Mr. Frampton.

There may be certain publications where some sort of flexibility of that nature

may be required. But if Sidney Sheldon publishes the Doomsday Conspiracy and the

Library Board decides we need 300 copies for this Province, I fail to see why we

cannot go to tender for 300 copies of the Doomsday Conspiracy, or that there is

any difficulty in having them purchased by a central agency, the Provincial

Board, and then having them catalogued and distributed or whatever you have to

do with them later on. I see nothing in that that causes me to think that we

cannot go through the public tender process or that it is more effective and

efficient from a tax dollar point of view, to go through a jobber. It appears to

me that we have decided this guy is a jobber and he will sell us every book that

we are going to buy over the next ten years. That gives me great concern. I

would love to have that contract.

AN HON. MEMBER: I would love to be Nick.

MR. FRAMPTON: But Mr. Chairman -

MR. CHAIRMAN: It would be almost the same as

saying Tom Woodford has given us good service and we will buy all of our

vehicles from him for the next ten years without going to public tender and I do

not mean to confuse two issues here, but I think the point is valid.

MR. FRAMPTON: The number of copies that a

publisher will publish, Mr. Chairman, is determined by the amount of interest

from the potential customer -

MR. CHAIRMAN: I doubt very much that

Newfoundland's consumption of anything will impact on the publisher.

MR. FRAMPTON: Also, there are quite a few titles

and quite a few types of books that are not carried by all jobbers, and if we

indicate to a particular jobber that we are interested in 500 copies of a

particular title, that does help determine how many will be published and when

the jobber indicates that to the publisher, that is a sort of a commitment on

the part of the jobber to obtain 500 copies from the publisher for us, and that

could very well be the only jobber from whom we could get that particular title.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: But Mr. Frampton, we have not gotten

off the tracks for ten years. We have stayed with this supplier and -

MR. FRAMPTON: (Inaudible).

MR. MURPHY: - I respect your answer but it seems

to come from assumption. Obviously, from Mr. Penney's response and your

response, we have stayed with Mr. Nicholas Hoare Ltd, how do you pronounce the

last name -

AN HON. MEMBER: Nicholas Hoare.

MR. MURPHY: Hoare. Well, I was a little afraid to

pronounce that word. I was looking for a 'W' and I could not find it. However,

Nicholas seems to be quite comfortable with the Province and rightfully so. I

take what Mr. Frampton is saying with sincerity and I think I know where he is

coming from, he is saying: we know what we are getting from this particular

firm. Mr. Frost talked about your association with fellow public libraries

around the country and all these things coming together as a decision. But we

haven't moved. I've always wanted to ask the question: have we asked any other

jobber? Mr. Frampton, you're alluding to the publishers; Mr Penney said: we

can't possibly deal with publishers. You would try and cut out the middleman if

you could, but I understand your explanation. I totally agree with you that you

cannot deal with publishers. It would be horrendous running around with purchase

orders for 100 books and what have you to a publisher.

The more I look at it the more I feel that this

particular company must be very comfortable with the Newfoundland Libraries

Board. I agree with the Chair, because in the Public Tendering Act we have a 15

per cent local preference clause, and I think, that's still there. Perhaps there

are books - hundreds of books - that could be supplied from Duckworth Street. If

we're not going to investigate that - I'm not saying we should run out on every

purchase - but once in a while, to give us a comparison, to give the Auditor

General some feel for the fact that we're getting the best book for our buck,

then I sense something here that has been very comfortably going on, and you're

satisfied. Obviously Mr. Hoare is satisfied and everybody is satisfied, but I'm

not satisfied, quite candidly.

I would like to see another direction. However, that's

only my opinion. I take your explanation and I understand where you're coming

from. Being out there involved in some of this kind of situation you do get

molded into a way. Where did this company come from? That's the obvious thing,

Mr. Penney. Where did we start our relationship with Mr. Hoare and company?

MR. PENNEY: Mr. Chairman, we began that when

Nicholas Hoare made a presentation to us on the kind of service that he would

provide. We had been with other vendors who could not match the service that he

had offered us. He, at that time, was the better. Because we get offers from

vendors all the time, coming and saying: why don't you use me? We ask for their

proposal, what kind of things they've done. None of them to date have been able

to match Nicholas Hoare, none of them whatsoever.

So we have kept him. Now we have reduced the amount of

money that we spent with Nicholas Hoare originally. Much more. We probably are

down to about half what we started to spend with him, because he was originally

the only one that we were using for a couple of years. We have since been giving

a service to our other vendor in Toronto who deals primarily with children's

books, and we are giving a certain amount of our dollars to Duckworth Street. We

are giving a certain number of our dollars to Breakwater, to Cuff, to all of

them. We are going for bestsellers with another book store here in the City.

So we've split up our dollars fairly well. So we are

reducing from time to time with Nicholas Hoare. Nicholas Hoare is concerned that

the competition is very great for the jobbers. We're not the only one who deal

with Nicholas Hoare. People in Nova Scotia, in New Brunswick, in Prince Edward

Island, they all deal with Nicholas Hoare as they do with others. So any

reduction in that is a threat to him, whether it comes from the Province or not.

Mr. Chairman, I agree with Clarence that we could be

here for hours. Because this is a long-standing concern for us. I would be quite

prepared to prepare the sort of things that we see associated with going to

public tender. I have to reiterate that I do not see any problem with us going

to public tender for service, which other libraries do. Other libraries do that.

MR. CHAIRMAN: I'll be very frank with you. The

service is best chosen by inviting proposals and having the freedom to consider

if Mr. Hoare is the best one.

MR. PENNEY: Yes.

MR. CHAIRMAN: That doesn't concern me as much as

the other aspect of it. In view of the time, I'd like to move on. We will await

your response on that. The Committee will then decide whether or not we wish to

get back together and revisit this question face-to-face.

If I might, I just want to ask you a couple of

questions, basically arising from the report of the previous hearings of the

Public Accounts Committee a year or so ago. This report was tabled in the House

several months ago. I don't know if you have copies of it. The Committee of that

time I think came down to the crux of the matters we were concerned about, and

that the Auditor General was concerned about.

They made a number of recommendations. First of all,

that the Board request Treasury Board to review the operation in order to

ascertain whether the resources are adequate to enable them to comply with the

Auditor General's recommendations. I think from what we're hearing here again

this morning you're constantly saying: we don't have enough people to deal with

that. Has Treasury Board done that review, or have you requested Treasury Board

to do that review?

MR. PENNEY: It has been requested, Mr. Chairman.

We received this report on June 10, and a request went to Organization

Management in Treasury Board, asking if they would, and quoting where we were

coming from here, that they would undertake a review of our operation to

determine whether or not we had the resources to carry out the recommendations

put forward by the Auditor General's staff. So that has been done. We have not

had any response on that.

Number two follows out of that, of course.

MR. CHAIRMAN: Two follows out of that.

MR. PENNEY: And number -

MR. CHAIRMAN: The third one I'm very interested

in, because it goes back to what we were just talking about.

MR. PENNEY: Number three? Yes.

MR. CHAIRMAN: This computerised program.

MR. PENNEY: That's right. Number three, the

computerisation program that we are talking about here, is for the total system.

We were not talking about computerisation necessarily, just for the business

office, but that is in place, Mr. Chairman. I suppose there'll always be

enhancements to that particular system, but the system now, I think, is handling

what we want it to handle.

MR. CHAIRMAN: Is there a computerized system for

inventory control? Do you have every book title on computer? When it goes out of

a library is the computer registering that?

MR. PENNEY: That is what we're doing now, Mr.

Chairman.

MR. CHAIRMAN: That's what you're hoping to do.

MR. PENNEY: That's phase two. We have completed

phase one, which means that all our cataloguing now is on that computer. The

City of St. John's, which paid for over half the cost of that computer system

last year, they will have a circulation system up and going in a month's time.

The second phase will give us the acquisitions of library materials on our

computer system. At that time that will give us a greater control of what is

ordered, what is in, and the costing and so on.

So that is phase two, as well as the public access

catalogue. Phase two with the City of St. John's, and then linking the regions

with that system so that they will not have as much paperwork to do any more,

and that they will be making selection and placing orders directly from their

office through the computer.

MR. CHAIRMAN: That's right. I was going to say, it

would certainly seem to me that would facilitate the compilation of books that

are required, the ordering of books, the tendering of books, and the

distribution and cataloguing thereafter.

MR. PENNEY: There is no question that will

facilitate the placing of the orders, and if we have to get a print-out, it's

very easy then to get a print-out of everything that these people have selected.

That makes it much more practical to do that.

As far as the accounting principles, I will say we're

still trying to do whatever we have to do, and if it's not done we will still

continue to try and do it, Mr. Chairman.

MR. CHAIRMAN: Thanks. I was going to ask the

Auditor General to respond to that, and I will in a moment in asking her for her

summation. I am going to quickly ask Committee members if they have any final

questions that they want to address before we clue up. I assume we'll try to

clue up now before lunch. Unless, anybody wants more questions, we can carry on.

Mr. Dumaresque.

MR. DUMARESQUE: Yes, thank you, Mr. Chairman. What

I've found from this - and I guess this touches on the last recommendation of

good accounting principles - from all the areas that we've touched here this

morning, where it comes from book supplies, office management, tendering for

computers or vehicles, accountability is very remiss. I can't believe the lack

of accountability that there is out there for the public purse. We have seen all

kinds of examples where dollars have been lost by virtue of different acts. I

think it's clearly unacceptable, the lack of accountability that is now

presently being shown by the Board.

I don't know how many times this has been brought up.

Obviously, we're only dealing with it now as this particular Committee. I would

hope that in a year or so when we come back to look at this again that there are

some clear improvements. Maybe the report that you forward us will deal with it

more specifically. But we are seeing some real glaring examples of lack of

accountability in my view, and that impacts on cost effectiveness as the bottom

line, and therefore the ability of the Board to run the libraries of the

Province, which is a great issue of the day. I wanted to make that statement,

and I know others have alluded to the same thing, but that in my view is clearly

unacceptable.

I would like to clue up by asking a quick question on

the item of the computer equipment that is there in the public tendering, and

particularly why there is no supporting documentation on the purchase of the

computers. The supporting documentation that I am talking about is specifically:

what recommendation did the consultant make and what basis was there for the

selection, and why there was another submission from Harvey's on October 10th

when no other supplier had an opportunity to do so, or certainly didn't avail of

any opportunity if indeed they were given one?

MR. PENNEY: Mr. Chairman.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Perhaps I should first of all comment

on the accountability aspect that has just been raised. I don't necessarily

consider that we have been unaccountable for what we have done. We have been

very accountable for it. I would say that from the point of view of the service

being provided by the Public Libraries for the amount of dollars that we have

gotten that we will stack up with anybody in this country. I say that without

any reservations whatsoever.

So that being said, the other thing is that I think we

have said pretty much all we can say on the computerization. Looking back in

hindsight we should have gone to the other two or three vendors for that. That

was something that we did not do, and I guess we are guilty as charged in that

respect. Why we did it?... I think at the time we were looking at it as an

enhancement when in actual fact it wasn't an enhancement, it was sort of almost

putting in a new system. We asked them to bid on the four options, (a), (b),

(c), (d). They all came in with (a), (b), (c), (d). The one that we chose was

Harvey's because what Harvey had proposed, as opposed to what Computerland at

the least cost had proposed, could not do what we wanted it to do despite the

fact they had said it could. That was because our consultant had indicated that

the equipment being suggested was not adequate to do the job we wanted.

Now what we should have done and what we didn't do was

to go back to the others and say: Okay, we want you now to give us another quote

on the enhancements to option (

d) that we have decided to take. Now we didn't do

that. It was a decision we made, and a decision may be right or wrong. Certainly

it didn't comply with the Public Tendering Act. That is all I can say about

that. It is a decision we made. When you look at the costing of the four it was

$14,832 originally for Harvey's for option (d); it was $30,225 for Unified

Systems; it was $9,863 for Computerland, and it was $15,992 for Paragon. And so

we went with the option (d), but we did ask for certain enhancements and the

total cost then to us was $17,000 with Harvey's.

So as I said that is the decision we made and we

should have really gone and asked the others. There is no question about that.

MR. DUMARESQUE: If I might, Mr. Chairman -

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: On page 71 the last remark that

the consultant makes is: "When the quotations have been received, we will meet,

review the results and assist you as required in reaching a decision." Did that,

in fact, happen? And why isn't there some documentation?

MR. PENNEY: There was no documentation on that,

Mr. Chairman. We did not record the documentation. That was the preference of

the consultant that he felt that Harvey's quotation was the one that would meet

our requirements most adequately. We accepted that as the suggestion was made

and proceeded to do it.

MR. CHAIRMAN: Mr. Warren, any final questions?

MR. WARREN: No.

MR. CHAIRMAN: Mr. Murphy?

MR. MURPHY: No, thank you, Mr. Chairman.

MR. CHAIRMAN: I ask the Auditor General if she

wishes to make any final comments.

MS. MARSHALL: Mr. Chairman, I have several

comments. I took note of them as the testimony was ongoing this morning, so they

may appear a little bit disjointed, but I would like to comment on several

items.

Earlier this morning there was some discussion as to

whether I believe the tender should have been advertised in one paper or several

papers, and I would just like to point out, for the benefit of everyone here,

that the public tender regulations do provide some guidance on where the tender

should be publicly advertised. It says that the government funded body shall

publish a call for tenders in at least one daily newspaper published and in

general circulation in the Province. Then it goes on to say: In such other

printed media as the government funded body may deem it appropriate to ensure

adequate notice. So there is guidance there on that issue.

With regard to the comments of the previous Auditor

General on the three vehicles that were purchased and the fact that when the

Public Libraries Board tendered and did not get any response. I would suggest

that in the future, although they have indicated they are now doing these

purchases through the Government Purchasing Agency, that they re-tender and

consider sending out invitations to tender to various dealerships who usually do

business with government. I think then you might get more of a response than

previously.

I would also like to comment on a matter that was

raised by several members of the Public Accounts Committee with regard to the

lack of documentation and also the visiting of the dealerships to determine who

had three vehicles that the Public Libraries Board could acquire. Of course a

very important part of the audit process is looking for adequate documentation,

and of course there was no adequate documentation with regard to the visitation

to the dealerships, or exactly what specifications were given to these

dealerships in a verbal manner. We would prefer to see them in writing so we

could look at them and review them.

Just as a general comment with regard to implementing

the Public Tender Act, I understand that the Government Purchasing Agency has an

individual on staff who can go around to various organizations and provide

information sessions on how to comply with the Public Tender Act. So if the

Public Libraries Board is interested in that, they may wish to contact the

Government Purchasing Agency.

I was very interested in Mr. Penney's remarks on the

audit comments which I went through with him this morning. I would just like to

say, for the benefit of the Public Accounts Committee, that we are presently

auditing the Public Libraries Board for the year ended 31 March 1991 and that

audit is expected to be completed around the end of this month. I would

anticipate that the Public Libraries Board will receive their management letter

and financial statements sometime before the middle of October hopefully.

I am also hoping that we will be able to shortly

commence the audit of the Public Libraries Board for 31 March 1992 and that will

sort of bring us up-to-date on a more current basis with regard to the audit. I

think it is very important for us to have very current information rather than

always be looking at sort of historical data.

I also wanted to elaborate on the acquisition of the

books through the jobber outside of the Province. I think it is really important

for people to realize that under the Public Tender Act you really do not have an

alternative as to whether you tender or not. Whether they tender for the books

or tender for the services, goods and services have to be acquired according to

the Public Tender Act. While there is provision there for some exceptions, like

items of an emergency nature, there is no provision for these types of goods or

services not to be tendered, so I think it is incumbent upon the Public

Libraries Board to talk to the Government Purchasing Agency and devise a way

whereby they can tender, either for the goods or for the service.

The last item on which I wanted to comment was the

acquisition of the computer services and the computer system - just to clarify

that what we were looking for was a request for proposals. Documented requests

for proposals with specifications should have been drawn up; should have been

publicly advertised, and then of course if the Public Libraries Board wanted to

send it to certain suppliers that was fine.

We would have liked to have known who exactly received

this request for proposals, and also we would have liked to have seen a

documented evaluation that was completed by the consultant in determining that a

certain company was awarded the job. So we would have liked to have seen that in

writing.

Basically those are my comments, Mr. Chairman.

Thank you very much.

MR. CHAIRMAN: Thank you very much. With that,

unless there is any further discussion, we will recess.

I want to thank the witnesses for being here today;

for giving us the benefit of their advice on matters that the Committee has

discussed, and for your frankness with us. We look forward to your further

submissions as it relates to the issue of tendering for books in the future,

which I am sure this Committee has some interest in and would like to pursue

further. The rest of us will be back after lunch to take another round at

another issue.

On motion, minutes of September 10 meeting adopted as

circulated.

The meeting was adjourned until 2:30 p.m.

Document details

Collection	Newfoundland and Labrador — Committees
Citation	1992-09-11
Type	committee
Volume / chapter	committees_standingcommittees_publicaccounts_ga41session4_1992-09-11_pac-morning_.htm
Language	en
Format	html
Source	PROVINCIAL
Identifier	2f499b1d443c1d4df8eddb191f9c695f4eff94b6

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