Public Accounts Committee — Department of Education we have Mr — 27 October 1992

1992-10-27

Newfoundland and Labrador — Committees

October 27, 1992

(Afternoon) PUBLIC ACCOUNTS COMMITTEE

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

Building.

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

The cameraman is taking some silent footage in

accordance with procedures of the House of Assembly. We follow the same rules

here as we do in the House of Assembly.

I would like to introduce the members of the

Committee: To my immediate right, Mr. Tom Murphy, the Vice-Chair, the Member for

St. John's South; Mr. Danny Dumaresque, the Member for Eagle River; Mr. Alvin

Hewlett, the Member for Green Bay; Mr. Bill Ramsay, the Member for LaPoile; and

Mr. Art Reid, the Member for Carbonear, who is the newly-appointed member of the

Committee, sharing his duties with us today for the first time. It is not your

first time on the Public Accounts Committee though, Mr. Reid, is it?

MR. REID: No.

MR. CHAIRMAN: No, you were on before. I thought

you were. Anyway, we welcome you back and are pleased to have you here.

First of all, I will ask the witnesses to identify

themselves. I will start with the Auditor General, if she would identify the

staff that she has with her this afternoon.

MS. ELIZABETH MARSHALL: Thank you, Mr.

Chairman.

To my immediate right is Mr. Bill Drover, Audit

Principal with the Office of the Auditor General; to my immediate left is Mr.

George White, who is an Audit Manager with the Office; and to his left is Mr.

Jim Mallard, a Senior Auditor with our Office.

MR. CHAIRMAN: Thank you very much.

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

will be?

MR. BRIAN SHORTALL: Yes.

MR. CHAIRMAN: Mr. Shortall, would you like to

identify the people who are with you this afternoon?

MR. SHORTALL: Yes, I will, Sir.

On my immediate left, Dr. Mary Mulcahy, the

Chairman of the Roman Catholic School Board for St. John's; sitting next to Dr.

Mulcahy is Mr. Roger Lester, Assistant Superintendent in charge of finance,

otherwise known as the business manager for our organization; next to Mr. Lester

is Mr. Pat Royle, the Divisional Head of the Property and Services Division of

the School Board; and next to Mr. Royle is Mr. Brian Farewell, the Divisional

Head of the Purchasing Office of the School Board.

MR. CHAIRMAN: Thank you very much.

From the Department of Education we have Mr. Bob

Smart, the Assistant Deputy Minister. I think you have somebody else coming -we

have two names here - but perhaps not.

MR. SMART: We have people observing.

MR. CHAIRMAN: Anyway, I welcome you, Mr. Smart.

It is nice to have you here with us this afternoon as well.

I would like to ask the Clerk if she would now

swear in the witnesses.

While she is doing that, let me say that testimony

is given under oath. We are simply taking evidence; we are not sitting in

judgment here today, it is simply to hear your testimony and we report to the

House of Assembly.

Whereas these proceedings are fairly formal in that regard,

we try to conduct them in a relaxed atmosphere. So if you wish to remove your

coat or help yourself to a coffee during the proceedings, that is fine. We will

have a coffee break later.

The Clerk, if you would.

Swearing of Witnesses

Mr. James Mallard

Mr. Brian Shortall

Mr. Roger Lester

Mr. Patrick Royle

Mr. Brian Farewell

MR. CHAIRMAN: Thank you very much.

For the benefit of the new witnesses from the Board

and other members, the Auditor General and her staff have been sworn in

previously and are deemed to be still under oath; that is why they were not

asked to be sworn in again this afternoon.

The topic here this afternoon: there are a number of

comments made by the Auditor General in the report to the House of Assembly

dealing with financial management, purchasing procedures and items of that

nature, and the Committee, I am sure, looks forward to discussing these items

with the Board members.

First of all, I ask the Auditor General if she would

like to make, by way of an opening statement, some comments to introduce this

particular topic to us.

Ms. Marshall.

MS MARSHALL: Thank you, Mr. Chairman.

During 1991, the Office of the Auditor General carried

out an audit of the Roman Catholic School Board. At that time, the School Board

had thirty-nine schools serving over 19,000 students. Our audit was designed to

review the areas of Financial Management, Fixed Assets and Purchasing at the

school board. This review was designed to assess whether the financial

management system was adequate to provide the information to management and the

Board for decision-making and control over the Board's revenues and

expenditures, and to ensure compliance with The Schools Act and related

regulations. The policies and procedures were adequate to ensure proper control

over fixed assets, and the purchasing system was adequate to ensure monitoring

and control of the purchase function and compliance with statutory requirements.

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

In the area of Financial Management we found many

aspects of financial management at the school board inadequate, and these are

included in the annual report. A strong system of financial management is

necessary to ensure compliance with the provisions of various legislation

applicable to the Board, to ensure compliance with the policies and procedures

required by the Minister of Education in accordance with the provisions of The

Schools Act and to ensure adequate accountability over public money.

In the area of Fixed Assets we found that many of the

standard controls, such as reconciling asset counts to the records or the

tagging of assets, are not in effect. The recording of additions and disposals

of assets was inconsistent and incomplete.

In the area of purchasing, many of our concerns with

the purchasing system at the school board related to a failure to follow

procedures as required by The Public Tender Act. We have serious concerns as to

whether there are adequate controls in place to ensure that the school board

purchases are made in compliance with the required policies and procedures of

the Board and The Public Tender Act and regulations.

MR. CHAIRMAN: Thank you very much.

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

statement?

MR. SHORTALL: Yes I would, Sir. Our school board

was pleased to have the opportunity to receive the report from the Auditor

General's Department, as it provided us with an opportunity to determine areas

of weakness in our organization and to take the appropriate action to correct

these deficiencies. We are very receptive to the recommendations from the

Auditor General, and we will be able to demonstrate this afternoon that they are

already improving our financial management and that we have taken policy and

procedural measures to follow up on the balance of the recommendations as well.

One of the priorities which our school board has

established has been to ensure that it makes the most efficient and most

effective use of its resources, and we feel the Auditor General's Report is

assisting us in this regard.

MR. CHAIRMAN: Thank you very much.

I guess this sort of highlights the mandate of the

Committee, which is to follow up on the Auditor General's report to see what

action has been taken, to recommend any further action that might be required

and, I guess, to find out why action has not been taken. So certainly, it is

welcome to hear that some action has been taken.

Moving along now, I guess, to members of the

Committee. Who would like to begin this afternoon?

Mr. Murphy, the Vice-Chair.

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

I would like to welcome members from the school board.

I expect you all have a copy of the document of information that the Committee

has in front of it. As I reference, I reference pages and what have you.

If you have a look at the comments of the Auditor

General's Department initially, in 'Conclusions', under the heading of Financial

Management on page 2 - I will just do a little

preamble. I have a few specific

questions, and I am sure you will bear with me. Well down in the first paragraph

it says: "The budgeting and reporting process, as well as financial statement

presentation, could all be improved." Now, I suppose we could say that of 99.9

per cent of school boards and businesses throughout the Province. But we, as a

Committee, of course, struck in the House of Assembly, have the responsibility

of asking you people to explain some of that expenditure when you consider that

in excess of $66 million of taxpayers' money, or approximately $66 million of

taxpayers' money, has moved from the Department of Education to the school

board.

I refer you to page 4, which discusses some of the

discrepancies that the Auditor General addressed. The one about which I would

like to ask you, or some of your cohorts or people, Mr. Shortall, might be: I

find it a little bit - whatever! - when we talk about no financial management

policies and procedures manual that the Board would use. I refer you to your

response on page 24. Your response was: "Many policies and procedures are from

time to time approved by the Board, which, in fact, set the policy direction of

the organization. These policies and procedures are contained in the minutes of

the appropriate meetings." Are you saying to the Auditor General that with

respect to a financial issue, of whatever magnitude, that would come up, the

decision is made at a meeting of the Board and there is nothing to reference

from a manual or a procedural manual?

MR. SHORTALL: Mr. Murphy, by way of procedure, if

it suits you and the Committee, the business manager and myself could probably

field most of the questions for you, because several of your questions are more

in the area of his particular expertise.

As the Auditor General points out, we did not have a

"procedures manual" that we could point to. The various procedures were found in

policies adopted by committees, memoranda circulated internally in the

organization. We are now in the process of putting together, and, in fact, we

will be submitting to the school board's executive committee at the executive

meeting in November, detailed financial procedures and a policy manual which

will eventually be published and will address that particular recommendation. So

it is not that these procedures did not exist, it is merely that they were not

collated into a published document.

MR. MURPHY: And/or in a formal sense, as such. The

reason that the question comes from the information provided to the Committee

is: when you respond to the Auditor General and say that these policies and

procedures are contained in the minutes of appropriate meetings, well, that is

the information that we have as Committee members; and the reason that it even

highlights it a little further, is the next item, that board minutes are not

properly signed. So it leads us to believe that there are financial decisions

made with taxpayers' money at board meetings, and then nobody is signing the

minutes. That, to me, would be a very obvious discrepancy, I would suggest to

you. And this is your response, of course, to the Auditor General.

Then, you go on, page 24,

section 1.3, the second

paragraph: "We understand the importance of having minutes appropriately

approved and signed by the Chairman and Secretary and have taken steps to ensure

this is done, in the future, at the appropriate meeting." I would imagine what

you are saying to the Auditor General is, now that you have that controlled,

plus you have undertaken to get somebody from MUN - I would assume that is

looked after now - that you do have a policies and procedures manual in place

that is a set of guidelines for your board, as such, in all areas of spending.

MR. SHORTALL: Yes we do. These, as I indicated,

will be reported to the executive of the school board at its November meeting

and it was part of a project carried out by a co-operative student from the

Business School at Memorial whom we had retained at the school board.

The issue of board minutes: I would like to point out

that it is not that none of the school board minutes were ever signed, it was

merely that at the end of the meeting, or when the minutes were approved at the

given board meetings, sometimes the business, the weigh of the business or the

schedules of the individuals involved made it that the chairperson or the

secretary did not actually attest or sign their signature, and they were done

afterwards, two or three weeks later, three or four meetings at a time. We

realize that is not the appropriate manner and we have taken internal steps to

ensure that as soon as the minutes are, indeed, approved by the school board,

they are now signed in the public meeting.

MR. MURPHY: Before I pass my questioning back to

the Chair, let me ask you the obvious question: Are you now satisfied that you

have a manual in place associated with your financial policies and procedures,

and has there been a board meeting to accept that document?

MR. SHORTALL: I am satisfied that we have a draft

manual in place which we are now following, and that will be submitted to the

school board executive committee during the November meeting. I can't predict

the outcome of that particular meeting, but I would assume that it would be

ratified by the school board in due course.

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

Chairman.

MR. CHAIRMAN: Thank you, Mr. Murphy.

Mr. Reid.

MR. REID: I just want to put a general question to

you, Brian. From reading the documents presented to us by the Auditor General

and our research people, and from listening to you and reading some of your

letters and your reply to the Auditor General's report, I am getting the

impression that, yes, you are trying your best to abide by some of the

recommendations made by the Auditor General, and I compliment you on that. But

the problem I have with it, and the question I have is - and I hope my friends

from Education will sit up and pay attention to this one: How did you manage for

so long to get away with not abiding by good financial practices? Why is it only

now, with some of these basic requirements that are in a number of acts, that

you are coming to realize this is something you should have been doing over the

past number of years?

MR. SHORTALL: I suppose, Mr. Reid, it is really a

question from an individual person's perspective. Every year, we have had

audited statements, approved by an auditing company, which have been submitted

to the Minister of Education for approval, and for his information. At our

annual general meetings every year, an annual budget is reported, and the

progress of a given year. Board meetings are a matter of a public record, and we

felt that our controls were fairly adequate. However, in deference to the

Auditor General, the department has indicated areas in which they would like for

us to tighten up our procedures and we are doing our utmost to comply with that.

MR. REID: I am not being critical, Brian. Well, I

am being critical, because I think someone has to be critical, here, of the

Department of Education. And the question that continuously comes back to my

mind when I am reading this is, Where has the Department of Education been?

Before the Auditor General did the audit, where was the Department of Education

with regard to advising: Use the school board on what you should be doing and

what you shouldn't be doing? I read a couple of letters there from a minister,

but other than that, there was very little in this to show that the Department

of Education was advising your board, as well as other boards, the proper

methods of financial administration as it related to certain pieces of

legislation. And I am not sure I can sit back and accept the fact that it took

the Auditor General to come up with these discrepancies - and I am saying

discrepancies, because I am thinking about the tendering act and different

things, and I know you have explanations for this. But I just can't, for the

life of me, understand what the Department of Education and the people in

financial administration in the department were doing to be allowing, not only

your board, but a number of boards in the Province, to be doing this for years

and years and years; it became common practice to do what you did, and

basically, what you are being told you should not be doing right now, by the

Auditor General. I think there should have been somebody, before the Auditor

General, who should have stepped in and said to you and to all the other boards

in the Province: This is not right. This is the wrong financial practice - you

should be using a different one. I don't know if you have any comment to make

about that.

MR. SHORTALL: I don't really have a comment on it,

Mr. Reid. I certainly accept the comment that you have made, in your opinion. I

guess we can only respond to reports and evaluations that are provided us and

this is what we are trying to do at this point in time. But I wouldn't want you

or your colleagues on the Committee to get the impression that the school board

was operating totally on its own, accountable to nobody, because there were the

normal reports both to the public and to the minister and the Catholic Education

Committee and so forth, over the year.

MR. CHAIRMAN: Mr. Reid.

MR. REID: Just a final remark, and I think we have

to find it as a committee. I think it would be very interesting to ask the

Department of Education people to come back here and put the question to them,

you know, what have they been doing? And what are they doing with regard to the

financial administration of boards around the Province and the advice that they

are providing to boards? Because my personal feeling is that a certain amount of

responsibility has to rest here on the shoulders of the Department of Education.

And I don't think the Auditor General should be the only one to take the

responsibility of going in and having to audit your books and come back and make

recommendations to you.

One last question. Because I am a teacher myself, I am

interested in one very specific question. Servicing of the debt this year, Mr.

Shortall - in 1991, it is quoted here as saying that over $78 per student would

be used to service the debt. What are we up to in 1992? Have you any idea?

MR. SHORTALL: Perhaps, Mr. Lester, may be able to

give you a better guesstimate that I can at this time.

MR. LESTER: Yes, at this time, due to the decrease

in the interest rates, our actual debt servicing cost decreased for the current

year as compared to the $1.5 million that was estimated for 1991. It was

actually down around between $700,000 and $800,000 for the year. I am not sure

what that would work out to, per student basis.

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

MR. LESTER: Sure.

MR. REID: Mr. Chairman, I am going to leave it

there. I opened my statement with that for a reason. I think we should come back

to it later on. But I am going to leave my questions and let somebody else pick

up. I want to ask a number of direct questions later on this afternoon, if you

don't mind.

MR. CHAIRMAN: Mr. Reid, you will certainly get

another opportunity. Mr. Hewlett, would you like to take up from here?

MR. HEWLETT: Yes, thank-you, Mr. Chairman. To the

school board: If, for instance, a board decided that it needed to purchase

twenty widgets or whatever and a decision was made to do so, and the

administration of the school board decided to go and purchase those particular

items at a given shop or wherever without resorting to public tender or

quotations, etc. What sort of mechanism is in place to ensure that you meet the

requirements in The Public Tender Act or other such statutory requirements? I

mean, apart from an occasional spot audit by the Auditor General, what sorts of

checks and balances are on your board which is quasi-independent under our

denominational school system to see that on a daily basis or on an ongoing basis

you do meet the requirements of The Public Tender Act? Is there a big brother

watching, so to speak?

MR. SHORTALL: I guess there is always a big

brother in all of our lives, Mr. Hewlett. But I will refer to my business

manager to explain that to you because it falls under the purview of his

responsibilities with our school boards specifically.

MR. CHAIRMAN: Mr. Lester.

MR. LESTER: Thank you. What happens is,

internally, we have a process set up whereby nothing through the Board now gets

purchased without the issuance of a purchase order. We have, as well, requested

of anybody who supplies the Board with goods or services that he not supply them

without the purchase order, that leading to the internal process whereby a

purchase order goes through our Purchasing Department and they then ensure that

the appropriate purchasing policies and procedures, in accordance with The

Public Tender Act, are being adhered to.

MR. HEWLETT: Okay. With regard to that particular

process, is there, apart from your Purchasing Department - and I am not saying

they wouldn't behave properly, and so on. But is there an arm's length or a

superseding body, apart from an occasional spot audit, that would ensure that

the Purchasing Department is following the policies as presumably laid down by

the school board, itself?

MR. CHAIRMAN: Mr. Lester.

MR. LESTER: Yes, well, currently, internally

again, there is, I guess, no external watchdog on it. But internally,

requisitions that exceed the public tendering $5,000 limit are circulated to

other senior staff to be approved, and again ensure that The Public Tender Act

has been, in fact, adhered to.

MR. HEWLETT: So it is essentially a sort of peer

groups' - group need, for want of a better phrase, at the management level?

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

MR. HEWLETT: One further question, Mr. Chairman.

Some years ago when I worked in the Premier's Office - I indicate this was some

years ago. Working on the staff there, one is often called upon, I guess, to

take an ombudsman-type role. I was approached by a contractor - as I indicated,

this was some years ago - indicating that he had bid, I think, on a school

building, some $3 million or $4 million, and that came in as the lowest bid.

But, in his opinion, because he was of a religion other than the school board

concerned, and I cannot even remember which school board it was, they were going

with other than the lowest tender. This struck me as somewhat strange, but not

being into financial administration at all, I referred it to the Department of

Education or Public Works, one of them, and asked them to check into it. They

did, and, in due course, out of my causing an enquiry to be made, more than

anything else, the lowest bidder did receive the tender. I presume people drew

back from original intentions. That is all I can presume. I was just pleased

that justice had taken its course.

But could such a thing happen today under your current

rules and regulations? As I said, that was several years ago. I was surprised

that someone would have to come to me as a political aid and make a complaint

that someone other than the lowest bidder was being given a multimillion dollar

contract. And if I hadn't interceded, if the tenderer wasn't willing to take the

school board to court or cause some other fuss, then presumably, someone other

than the lowest bidder would have gotten the bid. I can't remember which board

in particular it was now. But that was the circumstance I did run into. Is it

possible that could occur in this day and age, do you think?

MR. SHORTALL: I would say it is not possible for

it to occur in the jurisdiction of the Roman Catholic School Board for St.

John's, Mr. Hewlett. We try our best to adhere to The Public Tender Act. We have

received quite an education in that piece of legislation over the past couple of

years, particularly, and we will be doing it moreso. Right now, we award to the

lowest tender generally in the idea of that value of a contract for building

construction or whatever. The tenders would be received according to the

requirements. They would be opened in public. The bids would be reviewed by a

professional consultant who would make a recommendation to the school board as

to the action and the course that we should follow, and religious denomination

or persuasion of the principals of a given company is simply not a consideration

in our awarding tenders.

MR. HEWLETT: Thank you, Mr. Shortall. So what you

are saying, basically, is that the rules and/or procedures involved now would

essentially, especially in large contracts, assure compliance with at least the

spirit, if not the letter, of The Public Tender Act?

MR. SHORTALL: Sir, in all matters, not only would

we comply with The Public Tender Act, but I assure you that, as I said, the

religious persuasions of those with whom we do business does not become a

criteria for where we place our business, how much or when.

MR. HEWLETT: Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Hewlett.

Mr. Ramsay, would you like to continue?

MR. RAMSAY: Yes, I would, this being, I suppose,

according to the Auditor General at our second last hearing in Stephenville, the

second school board that we have done, a kind of examination of it. And it

brings to light, I suppose, in running such a large organization as the Roman

Catholic School Board for the city, that there are bound to be a number of

situations and things that fall by the wayside. I am just wondering now, do you

feel that all matters have been addressed? I note in some of your correspondence

here that the response is to the Audit General's report, but I also am looking

at it from a standpoint of wondering if everything has been done to the

satisfaction of yourselves? You note that there is a draft Policy and Procedures

Manual that you are using as opposed to one that has been ratified by the Board.

I note also some things there where decisions were

made by your Finance Committee without any prior board approval having been

evident. As to whether or not there was such approval is not clear. It may have

been granted, I suppose, that the Finance Committee make these kinds of

recommendations and/or authorize these certain expenditures, but there was no

evidence of that.

I just wonder if these kinds of things have been

reconciled now, and if you feel that you have reached a point where, given

further scrutiny in the future, you would give yourself an A rating in this?

Because, anything to do with education, I guess, we get into letters and

percentages. Students would want to look at it from that standpoint. Anyway, Mr.

Shortall.

MR. SHORTALL: We have entered into a process

whereby we are reporting to the finance committee of the school board our

progress on implementing and following up each and every recommendation of the

Auditor General. We are satisfied with the progress we have made to date. We

have some recommendations that we have yet to follow up on. One, in particular,

has to do with the matter of the fixed assets. That is one in which we are

currently investigating ways and means of responding to that particular thing.

It is under investigation - or under study, I should say, would be a more

appropriate term.

Your reference, Mr. Ramsay, to the role of the finance

committee - what we have done with that is we have reviewed the terms of the

finance committee carefully with the committee and with the executive committee

who essentially oversee that committee's work and also with the staff

consultants involved, to ensure that matters are being followed according to

Hoyle. So I guess what I am saying to you is that we are following up as best we

can, and I am generally satisfied that our organization has taken a turn for the

better since we have received these particular recommendations.

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

then?

MR. SHORTALL: I would not be presumptuous.

MR. RAMSAY: Okay. With reference to a comment made

by my colleague, Mr. Reid, as to where the responsibility lay for this kind of

thing, when a situation arises - I just wanted to get into that question that he

raised, as far as the area of responsibility goes. You have, I suppose, three

parties involved: you have the administration of your school board, you have

your board, itself, and you have the Department of Education. So, in your

estimation, Mr. Shortall, where does the responsibility lie? Is it all three, or

does it lie at your feet, at the Superintendent's desk, or does it lie with the

Board?

MR. SHORTALL: My response, Sir, is that it lies,

in varying degrees, with all three, depending upon the role and the outlook of

the particular body. From an administrative viewpoint, it is my responsibility

and Mr. Lester's to ensure that proper procedures are taken and the organization

is administered efficiently. We are accountable to the school board. The school

board, through its public meetings, as well as by its reception of an audit on

an annual basis from our financial consultants, would obviously oversee not only

that the policies were in place but that we were adhering to them as best we

could. The Department of Education - we would obviously be accountable to that

as well. So it would be shared, I would think.

MR. RAMSAY: What I'm getting at is - just to go a

little further into that - responsibility for, say, compliance with The Public

Tender Act. If, in fact - and we got into this in our last school board, when we

had a school board there, the Appalachia, I think it was, out in Corner Brook.

If a situation arises where The Public Tender Act is not being followed

according to Hoyle, as you mentioned, or according to the legislation as set

down, I would think that you received some advice from the Department of

Education. But also, as administrators, you are given rules and regulations to

follow or legislation which you have to follow. So, with Appalachia, just as a

reference to what they came across, they didn't realize they were going about it

in the wrong way, and when brought to their attention, they rectified it

immediately. In a certain instance, they pointed out that through their lack of

awareness, this was the case.

Now, if you look at the fuel oil contract that is

referenced in here, as one case in point: I suppose it was a matter of

interpretation, because the Episcopal Corporation was not a body that had to

adhere to The Public Tender Act, not being a public - or under any

responsibility to operate under The Public Tender Act. That was one case where I

suppose it was a matter of

interpretation at the time.

I just wonder, with regard to The Public Tender Act

and how it is followed, just what was the situation that allowed that not to be

followed at that point in time when these particular things - not only that,

there were a couple of others, I understand.

MR. SHORTALL: Yes, there were several others. I

think, with respect to the fuel oil, your comments are very much to the point,

also the time of the year and the height of the heating season. We felt some

urgency to avail of the supply at a more reasonable cost and we did eventually

go to tender on that. I think there is a fair amount of documentation in this

particular matter here.

There are some other references concerning the

issuance of certain purchase orders where, in retrospect, we agree that things

did not proceed as they should have done. We have taken internal measures to

ensure that does not happen again. We are satisfied that in the cases where

orders were given to purchase things like carpet or whatever without going to

The Public Tender Act, per se, it was done because of the extenuating

circumstances of the construction project that was at hand, given the fact that

school was due to open within a week or ten days of that particular time.

So we are satisfied from that point of view. However,

we recognize that there was not 100 per cent compliance in those regards and we

have addressed it internally again, as the documentation indicates. We feel that

we have controls in place inside the organization now to ensure that it doesn't

happen again. In fact, we have even gone to the point of advising our personnel

that should they place orders without going through our proper procedures, they

will be responsible for the cost and may face greater discipline as a result.

MR. RAMSAY: The final thing I wonder about is

exceptions to The Public Tender Act, which, in turn, are filed with the

Department of Works, Services and Transportation. In these particular cases, was

that part of the procedure followed or not - I am not exactly sure in looking at

the document - in registering said purchase as an exception with the department

in the proper order?

MR. SHORTALL: To be honest with you, it was not

done then, it is being done now.

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

Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Ramsay.

Mr. Dumaresque, would you like to proceed?

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

like to ask the school board, in line with your opening statement on the most

efficient and effective use of public funds, do you have any flexibility with

your budget, the budget that you get from government? And now that the school

tax is not there but you get a direct grant in lieu of the school tax, do you

have any kind of flexibility with that budget?

MR. SHORTALL: Yes, we have flexibility. Mr. Lester

may want to comment on that a little further, but we certainly have flexibility

within the headings for which the money is provided to us; there are some limits

to the amount of flexibility, obviously, that we could employ, but there is some

flexibility for us. Our hands are not completely tied.

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

some -

MR. SHORTALL: In other words, I could not take

capital funds and use them for operating expenses and that type of thing.

MR. DUMARESQUE: No, but could you take some

operating funds and use them for another operating expense?

MR. SHORTALL: I would think so, Mr. Lester, that

we could do that at this point in time?

MR. CHAIRMAN: Mr. Lester.

MR. LESTER: We have the flexibility whereby we set

our own budget based on the revenues which we receive prior to this year, both

from the Provincial Government and the school tax - now 100 per cent from the

Provincial Government - the restrictions being that some of the funds are

designated to the board for specific reasons, being library resource materials,

teachers' salaries being an obvious one. We cannot redistribute those funds, but

the rest of our revenue which we do get is considered, I guess, somewhat

discretionary in the fact that we can allocate it between administration,

instructional materials and supplies, and maintenance.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: I am particularly interested in

the student assistant issue. Have you had any shortfall in the hours that you

have to apply to the student assistants? And what is the dollar figure we are

talking about that you don't have this year, that you had last year, as it

relates to meeting the needs of the most challenged children in your schools?

MR. CHAIRMAN: Mr. Shortall.

MR. SHORTALL: Mr. Dumaresque, since that

particular item was not raised, per se, in the report, I don't have those

particular figures with me at the moment; however, our school board received

this year an increase in its hours for student assistants. Having said that, we

could certainly do with more. There are a lot of needs out there that are not

yet being addressed and we are appreciative of the extra assistance we received.

The exact increase, I have an idea of the hours. Mr.

Lester may be able to put it in dollars and cents for you better than I could -

but it is a guess.

MR. LESTER: As Mr. Shortall said, I am not really

sure of the exact amount. I know that there was an increase this year, but the

exact dollar figure I couldn't tell you right off.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Is it fair to say, as another

school board on the West Coast told us, that they can take some money from some

of your discretionary items to apply to student assistants if, in fact, your

board deems that a priority exists in that area?

MR. SHORTALL: Well, there was a memorandum

circulated by the deputy minister, or the assistant deputy minister - I forget

which one - which authorized boards to take those particular measures if they

saw necessary.

MR. DUMARESQUE: Yes, because we were in to the

school board in Western Newfoundland and found that there was a $40,000

shortfall as far as meeting the needs of the disabled students in that

particular area was concerned, and, in fact, $20,000 was an operating surplus

and certainly, as I note, even from your statements, you have indicated there in

certain parts where savings can be had by the board. We found that still these

children are in school and that even $20,000 or $30,000 couldn't be re-allocated

to this particular aspect of education. Obviously, I find that reprehensible.

Can you assure us, maybe through the school board,

that that kind of situation would not arise in your situation here in St.

John's?

MR. SHORTALL: There are many needs which confront

a school district, Sir, both from the purchase of instructional material to the

acquisition of educational personnel, student assistants, what have you. These

measures are proposed and reported to a budget which is passed by the school

board on an annual basis.

We are satisfied, as an organization, that our budget

is properly allocated to our needs. Obviously, some people would prefer that

larger sums of money were apportioned to different headings, but, you know, that

is a matter of opinion and part of the decision-making process. But we feel that

to the degree possible, we have a fair balance of allocating our funds to the

various needs which we have.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Okay. I have just a couple of

other questions, Mr. Chairman, on a different issue, and that is the public

tendering process. You indicated earlier that in the last couple of years you

got a great education on The Public Tender Act. It has been in place for quite a

number of years, not the last two years. Why did the education on this

particular act only occur after the Auditor General's report indicated that it

should?

MR. SHORTALL: Perhaps I am guilty of making a

capricious comment. Speaking personally, I, myself, have received a great

education on The Public Tender Act, since this is only my third year as

superintendent of the school board. With respect to the organization, our

purchasing officer, Mr. Farewell, as well as the business manager, both Roger

Lester and his predecessor, Mr. Miles Furlong, would certainly have been aware

of the requirements of The Public Tender Act for educational bodies and would

have been doing their best to follow it, Sir. We have memoranda and internal

procedures to outline that. Obviously, they weren't up to the level that they

now are, and this is one of the benefits we have received from this study.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Another item on the public

tendering process as it relates to school books: We have found, certainly, in

other school boards and, indeed, the Public Libraries Board, vast amounts of

money are being spent on instructional material and textbooks without going to

the public tendering process? What is your school board doing as it relates to

books?

MR. SHORTALL: Student textbooks, as I assume you

are referring to, we would be purchasing through the School Supplies Division at

the Department of Education, Sir.

MR. DUMARESQUE: I notice that you have textbooks

allocation there on your budget,

schedule 11, page 76, $69,000 for 1990-1991,

and you have $155,000 for library resource material. Is that publicly tendered

or is it just done on a line item?

MR. LESTER: That funding you are looking at there,

Mr. Chairman, is, part of what was referred to as the textbook allocation

program whereby we. I guess, saved some funding through the non-replacement of

our K to 8 textbooks and received a grant from government in lieu of that

replacement; that is what that actually is there. Our textbooks that we normally

get are all purchased - or, for the most part, purchased through the book

supplies division of government and would not go to tender, from our

perspective. We play, I guess, the intermediary part here, in reselling the

textbooks to the children.

MR. DUMARESQUE: So it is clear, then, that you

don't have to go outside and you don't buy books other than through the

Department of Education which goes through the public tendering process.

MR. SHORTALL: You may find, Sir, that in many of

our libraries for example, books would be purchased from suppliers other than

the Department of Education, but across the board, if you like, in terms of

student learning books and so forth, that kids would have to purchase to go home

and do their homework in high school sort of thing, these would all come from

school supplies; however, you would find textbooks, encyclopedia, dictionaries,

etc., purchased from sources other than the Department of Education. You will

find that happens.

MR. DUMARESQUE: Right, fine. Well, that is what I

am wondering about. Would they amount to more than $5,000?

MR. SHORTALL: Oh yes. You will find that

essentially in the libraries grant, that in sum total, we would be spending many

thousands of dollars in that regard.

MR. DUMARESQUE: And none of that would go through

to public tendering?

MR. SHORTALL: If the amounts ordered exceeded the

$5,000 limit, yes, they would.

MR. DUMARESQUE: If the amounts ordered, how do you

- like at the beginning of the year, would you come together and say we are

going to need ten encyclopedia, fifty Robinson Crusoe or whatever, you know,

would you do that at the beginning of the year and then issue a tender for it or

would you -

MR. SHORTALL: Perhaps I should ask our director of

purchasing or our business manager who can probably give you a more direct

answer than I could to that one.

MR. CHAIRMAN: Mr. Lester.

MR. LESTER: Our budgets are spread out to our

thirty-nine schools. In that light, what each individual school may get for

textbooks would be relatively small in comparison to the overall budgets

allocated to resource material. They, in turn, do their own requisitioning to us

for small amounts and spread the expenditure of that fund over the year. So, in

light of that, there is no collective, I guess, collation of information and

material required for the year at the beginning of the year to tender. They

normally buy things as they come up. They want a particular - as I said,

probably an encyclopedia. That is a school-based decision. It is not one that we

make centrally and then determine that we need ten of those things and tender

them. They do them individually.

Where we know that materials are going to be used

across the district, we do try our best to go to tender by collecting requests

from the schools and get an accumulation of the information, tender it, and then

distribute it to the schools afterwards.

MR. DUMARESQUE: I can conclude, then, that you

don't have the same mind-set as the Public Libraries Board which is of the

opinion that because you might only need ten Robinson Crusoes across the

district, and then have ten Charles Dickens' across the district, they treat

both of them as two separate orders, and because they are not over $5,000, they

don't have to go to public tender, even though combined, they may be up to

$300,000. You are not, obviously, treating it on the same level as that.

MR. LESTER: No, we treat it on a school-by-school

basis. As I said, where we know that there is an accumulation of the same

product or like products going to various schools and they will be all buying

that particular item, we will tender it.

MR. DUMARESQUE: Okay. One final thing that I

noted, Mr. Chairman, that I would like to - just a point of interest, I guess -

get an answer on. On the same page, 176,

schedule 1, under Miscellaneous

Revenue, I notice $202,345 as revenue from interest on investments. Which is up

almost $100,000 from the year previous. First of all, what would the school

board have as an investment to return on, and why would we see such a jump in -

what stock do you have?

SOME HON. MEMBERS: Hear, hear!

MR. SHORTALL: I will defer to Mr. Lester to give

you the specific information, Sir. I wish we did.

MR. LESTER: So do I. The interest that you see

there is interest that has accumulated on our various bank accounts over the

year. You will also see an expenditure side and expenditure for interest which

are basically netted together. But this is the side here where the bank takes

all our accounts, including our deposits for teachers' salaries and all those

items as they come in, for a couple of days. We earn interest on the

accumulation of those accounts and they re-deposit it to us. There are no

investments as such. It is strictly cash-on-hand deposit.

MR. DUMARESQUE: Okay. Thank you.

MR. CHAIRMAN: Okay, Mr. Dumaresque. Maybe I will

get into a couple of questions myself. Following along with the public tendering

process, the comment is made here on page 9 of the document: 'Tender bids not

adequately controlled.' Can I assume that was one of the items that has been

brought to your attention that you are now dealing with that simply relates to

tenders coming in and deposited in a sealed depository and opened in the proper

methods? Have those matters been dealt with now?

MR. SHORTALL: Yes, they have. The only item there

that we technically did not have in place was a locked tender box. They were

kept in a secure place previously but since the receipt of the Auditor General's

recommendations, we now have a tender box and matters are done according to the

specifications.

MR. CHAIRMAN: Let us get into some of the items

that have been referred to here by the Auditor General. Purchase order 50588: an

expenditure of $8,500 approximately, for various items did not go to tender and

the matter is not reported to the minister as required. There is an invoice on

page 103 relating to that, if you would like to look back at those. Purchase

Order 50588: Industrial Arts materials as per the attached list for the Holy

Spirit School in Manuels. I see a whole list of requisitions, and a whole list

of invoices from Canadian Tire. Somebody simply went off to Canadian Tire and

bought $8,500 worth of what I would describe as odds and sods for an industrial

arts program. And it was all done basically on the same day. Why would this not

have gone to tender, first of all? And secondly, if there was a good reason for

it, why was it not reported to the minister?

Mr. Shortall.

MR. SHORTALL: I would draw your attention to the

date, that it was approaching the month of August. A lot of material had to be

purchased for that particular industrial arts room. The majority of it, as you

can see, are very small quantities for, as you described, quite an assortment of

odds and ends that you would put into a room. It was in that manner, it was for

those reasons that time was not taken to go through the tender process. Even

though the material requisition is dated July 5, you will notice that the

purchases were not made until August 13. There was an internal delay in the

office with respect to the processing of these particular materials at the time,

and in their rush to get the industrial arts shop on stream for early in

September when the processing was done in August, they were purchased directly.

I would agree, now, that if it had been today, we would have had a proper report

in to the Auditor General or, rather, to the minister, and in that regard the

matter, of course, would have been tendered according to the recommendations

that we have been given.

MR. CHAIRMAN: Well, I just say, the requisition

was back in July, you actually got them in August. School opened in September.

How come there was an urgency all of a sudden? How come, all of a sudden, we

discovered that we needed all of this stuff for an industrial arts program?

Surely, we knew prior to that - and if not, if it was a pressing emergency, did

we invite three quotations on these items or simply give somebody a blank cheque

to go to Canadian Tire and pick up what they needed? - which is what it appears

to be. Some of it wasn't picked up until October 13, I see by page 133. So, you

know, we have to question the urgency and the rationale for this, and, I mean,

declare violation, it appears, of The Public Tender Act here.

MR. SHORTALL: I will ask our Director of

Purchasing, Mr. Farewell. He will probably give you more specific information,

Mr. Windsor, in that regard.

MR. CHAIRMAN: Mr. Farewell.

MR. FAREWELL: That particular requisition dated

July 5, 1990 was actually forwarded to the Purchasing Department in August

month. That was the date that the industrial arts teacher made out the

requisition, and, indeed, it did not make its way down to Purchasing until

August. The individual met with me when I got back from holidays. He, himself,

went out and sought three different quotations from two other suppliers because

of the wide diversified number of items that were there and the availability of

products, and the opening of school, at which time it would be very difficult to

secure proper specifications for that number of items, and that was why it went

in the manner it did. But the actual requisition did not make its way to

Purchasing until actually early in August.

MR. CHAIRMAN: Nevertheless, the requisition was

for $8,500. That, obviously, is outside the guidelines of the $5,000 limit for

purchasing. Why did we not know the 5th of July that this needed to go to

tender? Surely, a two-month period with an urgency placed to it, red flag, we

could have gone through a process. These are not unusual items, they are

off-the-shelf items. Every one of them are available at Canadian Tire, Neil

Soper Hardware, Stokes Hardware, and I don't want to be commercialized here, but

any number of other places, you could get these same items. These are not

specialty items that have to be ordered, for which there is a long delivery

time. It would certainly appear that there was adequate time, if one wished, to

call a tender on this and have it supplied through a proper process. And if not,

where is the documentation for the three bids that you say were requested? We

don't have that. I assume, if it were available we would have had it.

MR. FAREWELL: The three individual quotations were

obtained by Mr. Alexander. I think, as Mr. Shortall said, if hindsight be known,

we would probably really find what an emergency situation was concerning that

particular order. The order was initiated by an industrial arts teacher. It did

not make its way through the proper administrators of the school board until

August month. Again, on hindsight, I am sure, if we had to do it over again, we

would have held up the industrial arts class and properly called for tenders on

these particular items, but that is the procedure that was deemed to be

necessary at the time.

MR. CHAIRMAN: Let's have a look at the next item.

Purchase Order 51388 on page 146 is of particular interest to me - 51386, 51387,

51388, 51389 and 51390. These were all issued on the same date to the same

supplier for carpeting supplied to the same school. The total sum of it is

something in the magnitude of $27,000, I believe it is. Would you like to

explain why we have five purchase orders issued on the same date?

MR. SHORTALL: I think the basis of the explanation

comes down from the nature of the work that was being done at the school at that

particular time. You will note that it was very close to the opening of the

school year. Holy Trinity School was under construction, or under renovation.

Decisions were being made almost on a room-by-room basis as to whether flooring

should be replaced or left as was, and decisions were taken by individuals in

the field. They did it on a room-by-room basis and didn't give adequate

consideration to the overall cost of the total job, as you correctly point out.

The firm in question was working on the site at the

time, having been awarded a tender which was put out to the market in July and

having come in as the low bidder on that particular thing. That particular firm

was in the school. I think, in the haste of those responsible to ensure that the

building was open, and making decisions on a room-by-room basis, as opposed to a

total project basis, decisions were taken in that particular order.

Quite rightly, we have - we indicated ourselves, you

will note, that the purchase order date and the date on the requisition are

quite different. The work was clearly done before the purchase order was issued.

This was noted by our business office almost immediately as soon as the paper

work began to flow through. We investigated it at that time. We had rather

lengthy meetings of our executive committee and the property and services

committee of our board - these would be the committees of school board trustees

who oversee these particular programs - as early as September. We were concerned

about it at that time, but I can say that the decisions were taken in the field

in an effort to get the building open and they were taken on a room-by-room

basis. As I have indicated, Mr. Windsor, it is something that we have since

taken some significant measures to ensure would not be repeated.

MR. CHAIRMAN: Well, I guess there is some comfort

in knowing that measures have been taken, but surely, we knew at that point in

time, and I might suggest that the reason there were five purchase orders were

to have each of them less than $5,000. It appears to be a deliberate attempt to

circumvent the provisions of The Public Tender Act.

The Auditor General pointed out that an accounting of

business to that same contractor, as listed on page 142, for a three-month

period total, is something in the order of $56,000. That is hardly casual work,

hardly something that would go through direct purchase order. It is all clearly

something that should have been planned. Either there is a tremendous weakness

in the planning here or there is a tremendous weakness in the desire to comply

with The Public Tender Act. Fifty-six thousand dollars worth of work over a

three-month period to one contractor, without tender, all issued by individual

purchase order with no evidence of any other documentation that other quotes

were invited, certainly causes this Committee to be very concerned.

MR. SHORTALL: As Superintendent, I certainly share

your concern and I think our school board shares your concern, as well. We have,

as I said, had our own internal review of this, taken at considerable length. It

is a situation that we feel, hopefully, or we can tell you, will not recur. It

might be that I could ask the divisional head of that area to give, perhaps,

some further explanations as to the rationale for those particular decisions.

The firm or the supplier in mind has been a consistent

low bidder in contracts or in tenders over the years in this particular area.

However, I can only say that we share your concern. We followed it up as best we

could internally. We were satisfied that no wrongdoing was intended. And we do

agree with you that the procedures were not followed to the letter and we have

taken steps to ensure that in the future they will be. From where I sit and from

where our finance committee sits, and the executive committee of our school

board, we feel that the decisions taken were done out of a desire to get the

building ready as soon as possible for school opening and not intentionally to

subvert the requirements of any legislation. However, I would tend to agree with

your concern, Mr. Windsor.

MR. CHAIRMAN: It sounds like a good time to take a

ten-minute coffee break. We will recess for ten minutes.

Recess

MR. CHAIRMAN: We will call the meeting back to

order. The first thing I will do is apologize for the coffee. It has a close

resemblance to tar. The Chairman of the Board has asked for some Tim Horton's

coffee next trip, so maybe we will have some for tomorrow.

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

MR. CHAIRMAN: Mr. Murphy, you indicated you would

like to follow on this same line of questioning.

MR. MURPHY: Well, I had some questions about

carpet procurement and what have you, and I guess Mr. Shortall has basically

answered them. But I find that for sure, if there is one business - there are a

lot of people out there selling and supplying carpet, and to see just one firm

having in excess of $80,000 worth of business makes one wonder, Mr. Shortall,

and I guess that is a fair comment. But let me go back to - how many schools

does your school board control?

MR. SHORTALL: At the time of this report,

thirty-nine.

MR. MURPHY: Thirty-nine schools. I asked this

question out on the West Coast. Thirty-nine schools. Now, I would imagine, and I

am picking upon my colleague, Mr. Ramsay - and I don't know about grading the

board: It would seem rather reasonable to get an enrolment from each school

early in the year, understanding that the enrolment is how the school board

captures most of its money. And the Auditor General commented, I might add, when

we were involved with the school board on the West Coast, on enrolment. I find

it a little difficult that there is not a system in place. And I find the

Department of Education - understanding that enrolment figures must be verified

because that is where your budget comes from. You know, if the board had an

enrolment invoice, I suppose, for want of another word, to the Department of

Education that was less than the students, you know, it wouldn't make much

sense. Now, when the Auditor General tells this Committee of the House that

operating grants are reviewed, disclosed, that the enrolment figures were not

being verified by the school board - and the school board's response is rather

evasive. It says some things, but it does not zero in and say look, every month,

or every semester, at the first of the year, at Christmas and what have you, we

ask each principal - I find this a little difficult.

MR. SHORTALL: We found it a little difficult, as

well, Mr. Murphy. Each month, every school, under the signature of the

principal, submits a monthly return to our office outlining the number of pupils

with a variety of demographic information on a class-by-class basis in each and

every school, and that is also done on an annual basis; and in that sense, we

are verifying them. I may not be sending anybody out from my office to do an

actual count, but I am taking a verification under the signature of my principal

every month at my central office for verification purposes. We also have to

track all of our dropouts and account for them, balancing the kids who have

dropped out with the new entries, and justify a number and report that regularly

to the Department of Education, as well. There is, in addition to that, a fairly

formal method of verification. There are a variety of other checks. For example,

the Canadian Test Of Basic Skills is regularly administered to students at

various grade levels. The Canadian Cognitive Test of Student Abilities is

administered to all of our Grade IV pupils, for instance, the public examination

results and the like. All of these things would be reviewed by senior staff and

while they are being reviewed there is an opportunity to ensure that the test

scores relate to the number of students who are actually taking them. So there

is an informal and a formal monthly reporting in place. But there is not so much

- I don't send somebody out and say: I want you to make a surprise visit to this

particular school and go into that particular class and count heads.

MR. MURPHY: I wouldn't expect you to do that. But

you are satisfied at this particular time - and another thing that would occur

to me is that there would be some kind of ledger that would indicate numbers

from each school and what have you.

MR. SHORTALL: There is a daily register, Sir, that

every teacher has to complete on a daily basis, and that forms the basis of a

monthly report. So attendance is taken each day.

MR. MURPHY: If a physical audit were done - and

the school year is not that old right now, it is just over a month or a

month-and-a-half old - if an audit were done tomorrow, from your viewpoint,

would the enrolment figures be dead on, a little high, or a little low?

MR. SHORTALL: If you are asking whether I could

produce the bodies that I have on paper, I think I could.

MR. MURPHY: I wouldn't have to go anywhere. I will

just leave it alone, but that the Auditor General would go in and, through their

process of auditing, find discrepancies, that they would have problems with

verifying enrolment, I find it a little difficult to understand - because we are

counting people, not pencils, of course.

Let me move on. I have a couple of more questions, Mr.

Chairman. If you look at Item 8, on page 6, Mr. Shortall, down at the bottom:

Just briefly, why would the school board get into consultants?

MR. SHORTALL: The school board would use

consultants, possibly, in analyzing the heat efficiency of our buildings, for

example; it would use consultants in supervising construction projects, major

physical extensions to buildings; we would make use of consultants to assist in

the

interpretation of complicated tender, such as for an information management

system and so forth. These are some examples of where we would use them.

Possibly, our financial consultant - we would engage financial consultants to

assist us in ensuring that our office procedures were satisfactory and so on.

MR. MURPHY: Yes. I notice that the Auditor General

suggested to the board that they might want to follow guidelines similar to the

ones that are laid down by government in the employ and/or the contracting of

consultants. I also want to refer you to page 28 in your response, Item 1.8,

where you say that - and I look at the last sentence - "A policy regarding this

item is, and has been, under the examination of one of the Board's committees

for some time." That would seem to be, to me, a touch evasive in saying, Look,

we will worry about this, kind of -

MR. SHORTALL: No, Sir, the policy in question was

adopted by our school board on April 29, 1992, and is in place now, and it is

being followed.

MR. MURPHY: And is that similar to the government

guidelines?

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

that particular policy.

MR. MURPHY: Okay, fine. Now, I am a great believer

in volume purchasing. I suppose, looking at it from an ecumenical standpoint,

there are school boards out there dealing with different denominational

education, that is the way our system is, and maybe the way it will stay - and

maybe it will change as time goes on. Who is to know?

However, I would think that if you buy half a carload

of consumer goods, you know, you pay a certain price for it. If you buy a

carload you pay a different price for it. And this takes me back to such things

as fuel consumption. I often wonder why the RC School Board and the Amalgamated

School Board can't get together at some time before the school year and

collectively tender 226 schools on the Avalon, or whatever the case might be.

Because we don't need to discuss how difficult it is to find all the dollars we

need for education and health. Now, I am not only talking about fuel, I am

talking about a lot of other consumables. Has this ever been addressed? Because

it would make sense to me that both boards or all boards would save a fair

amount of dollars, if you went out there - it might cause the industry some

anxiety knowing that one oil company was going to supply all the schools, but if

that were at two cents a litre less, it would also make a lot of sense from a

standpoint of dollars.

MR. SHORTALL: Mr. Murphy, there is an ongoing

liaison between my office and that of Mr. Lee, the Superintendent of the Avalon

Consolidated Board. We regularly liaise on a four to six-week basis.

Such items of that nature, of co-operation both in

purchasing and in programming areas, form the bulk of the agenda items. There is

also an ongoing liaison between the chairperson and table officers of the RC

Board in St. John's, with the Avalon Consolidated Board, and again, these kinds

of topics form the basis of a lot of discussion.

I will ask Mr. Lester to give you some information on

some joint purchasing and some means of co-operation that we have already

engaged upon in that regard, if you would be interested.

MR. MURPHY: Yes.

MR. CHAIRMAN: Mr. Lester.

MR. LESTER: Yes, as a matter of fact, the fuel oil

that is noted here, we discussed going to tender on that very item, itself,

except for the Avalon having had a contract in place at that time.

We do talk back and forth, and our board now is, I

guess, co-operating with the Government Purchasing Agency and going out on bulk

tenders for things such as paper and sundry supplies that are used in schools

all over the Island, so we are moving more and more towards that group.

MR. MURPHY: So, what you are saying, Mr. Lester,

in effect, is that you are doing that presently and you are hoping it will

intensify. Do you see a dollar-saving there with it?

MR. LESTER: In a lot of cases, yes, we do see some

dollar-savings. There are other situation where there are not; but, for the most

part, we have seen benefit from group tenders.

MR. MURPHY: So the endeavour is worthwhile, is

what you are saying?

MR. LESTER: Yes, I believe it is.

MR. MURPHY: Just one other question before I pass

it on to another colleague.

Earlier in the year we heard some - and this is a

great concern to me because of my background - about the safety and maintenance

of schools from a student's standpoint. Are you now satisfied that the

compliance that you were asked for by city and/or any other agency, whether it

be government or city, that everything is okay and that the fire hazards and

safety hazards are out of the way?

MR. SHORTALL: We are satisfied that our buildings

are life safe and do not pose any hazards to our children in this regard;

however, I would point out that in terms of 100 percent compliance with the

building codes in 1992, we have instances where we are not able to make that

compliance. We are moving toward it as our budgets permit, but we are not there.

I specifically refer to what I call 'big ticket items'

- the extension of sprinkler systems and so forth that will take some time for

us - lockers - these things will take time for us to get there; but in terms of

exits, fire warning detection devices and so forth, we are satisfied.

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

Chairman.

MR. CHAIRMAN: Thank you, Mr. Murphy.

Mr. Reid?

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

(inaudible).

MR. CHAIRMAN: Mr. Reid, do you want to get closer

to your microphone there and give us a little volume, if you will.

MR. REID: Sorry about that, Jack.

I am fascinated here with your cheque numbers as it

relates to the Baker Flooring Company. You start off at 126 and you end up with

cheque number 504,573. Was there some change in accounting in that process

there?

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

MR. LESTER: Yes, there was. We implemented a new

financial system and I think what you have there is a combination of cheque

numbers that came off the old system and then created on the new one.

MR. REID: Quite a difference.

MR. LESTER: Yes there is.

MR. REID: The other thing I wanted to ask, and I

am going to ask this of Mr. Shortall: Mr. Shortall, apparently, you don't deal

with anyone other than the Baker Flooring Company to do work on floor covering

and floor repair in your schools, with your Board?

MR. SHORTALL: My understanding, Mr. Reid, is that

we do and we have received quotes from other companies. I would ask Mr.

Farewell, perhaps, if he could give you some specific examples, but as far as I

understand, there is no policy restricting our purchases to Baker Flooring.

MR. CHAIRMAN: Mr. Farewell?

MR. FAREWELL: Regarding any tenders that exceeded

$5,000 in flooring, we have gone to public tender on flooring requirements.

Actually, the policy, our in-house policy, would also cover from $1,000 to

$5,000. We have secured three written quotations for that dollar value, while

less than a public tendering is a school board policy in purchasing.

MR. REID: You do have a habit then, Sir, of paying

a number of contracts within the one cheque, I assume, because if we look back

to the seventh day of the seventh month in 1991, there is a cheque issued to

Baker Flooring for $380, which was cheque No. 171, and that cheque also

includes: $98,63, $2,100, $1,400, $1,500, $500, $1,100 and so on, up to and

including $4,067, and if you add up, that totals ten contracts for ten different

schools, paid for by one cheque, No. 171, and you get over $13,000 worth of

work.

Now, the question I would have for you, Sir, would be

- someone would have to sign that cheque, someone would have to see that cheque

and I can't, for the life of me, understand why someone wouldn't say: Well, my

God, if we are paying Baker $13,000, isn't that a little over the public

tendering figure of $5,000 and should that not have been tendered? I don't know

if you understand what I am saying, I think you are looking at the same book as

I am, page 142. In a number of cases there, you have a habit of issuing one

cheque to cover a number of contracts.

Now, my friend, I was in municipal politics for years,

and I used to have to abide by the $5,000 ceiling, as well, and always, when the

Treasurer of the Town of Carbonear wrote a cheque, I made sure that the cheque

was for less than $5,000, even though, on a number of occasions, I issued

contracts for less than $5,000. And I am surprised that something as simple as

that would not be picked up by somebody in your financial department; I just

make that comment. I am not satisfied, by the way, and I suppose what I could do

is ask you to give me a breakdown on those other people who bid on some of these

jobs, but I am not going to ask you to do that because I have problems with

another one back here that I want to talk to you about.

Holy Trinity, for example, the very first one was

$4,973. How many contracts came in for that particular job or whatever? But

anyway, I really don't need an answer, because I am not pleased with this at

all. Let's go back one page to 141. We have a letter here from Atlantic Roofing

Co., outlining seven different jobs, and it sort of caught my eye when I read

it, because if you look at the wording it says: "We are submitting for your

review and consideration the following alternatives to the work specified." So,

I am assuming that there had been work proposed by contract or whatever, and you

went back, or someone went back to Atlantic Roofing and said, Well, we need some

changes or we can't afford to pay this amount money, and please have another

look at it and come back with another price.

Well, there are seven contracts there; I don't have

the information pertaining to, from 1 to 6, but I do have a little bit of

information pertaining to Beaconsfield Junior High, which on - and if you notice

the dates, July 31, 1991, Beaconsfield Junior High, the price from Atlantic

Roofing was $143,193. Now, turn the page back again to 139, and you will find, I

believe, if I am not mistaken, the same contract - don't forget now, in July, it

was quoted $143,000 - the same contract was quoted, stipulated price contract on

August 31, for $193,752. Now, that confused me enough, but then I went back and

looked at page 134 and 135, and I find that the same contract is now reduced to

$127,700. Mr. Shortall, do you know anything about that at all, that you could

explain this to me?

MR. SHORTALL: I will ask Mr. Royle to give you

some information on that because he has the information that you require.

MR. CHAIRMAN: Mr. Royle.

MR. ROYLE: Yes, Sir. During that summer period,

the Board approved approximately a quarter of a million dollars to go towards

roof replacement throughout our system. The school board went to tender on

several projects - those are the ones that are listed there - and the bids came

in over budget. We cancelled some projects and awarded others. We spoke with the

low bidder, Atlantic Roofing, regarding the Beaconsfield Junior High School

project and advised them we were over budget. They made the recommendation that

they would come back with another product to do the roofing system. Also, we, as

a board, tried to downsize the project. Instead of doing four levels, we decided

to do just one level. That would reduce the low bid directly, there. Also, they

submitted a letter here to alter the specification and use another product which

we found very compatible and, in light of the situation at the school, where we

did have some very serious leaks creating a lot of interior problems in the

building, we went back to our Property and Services Committee of the Board and a

decision was made to proceed with the change in building material at the lower

price.

MR. CHAIRMAN: Mr. Reid.

MR. REID: You do realize that what you did there

was the cardinal sin in contracting? I hope you do. Maybe you should speak to

some of the local contractors that bid on government work through Works,

Services and Transportation, because I know, in the past year there have been a

few dicey ones up there in Transportation, Mr. Chairman, that had to be

rectified through intervention and so on. Because of the fact that you deleted

sections 2, 3, and 4 of your contract, in Appendix A on Page 139, then

immediately, a re-tendering process should have begun. Under the Public

Tendering Act, it had to begin. You couldn't change the contract at your wishes

and whims without going back to all the contractors who had bid, regardless of

what the price was. You were saying to me that you didn't do - which ones did

you complete on Page 141? Did you do Roncalli?

MR. ROYLE: No.

MR. REID: St. Thomas?

MR. ROYLE: Yes.

MR. REID: And Mary Queen of the World?

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

MR. REID: St. Pius?

MR. ROYLE: No.

MR. REID: St. Pius X?

MR. ROYLE: Elementary, yes.

MR. REID: Areas one and two?

MR. ROYLE: Just area one.

MR. REID: And you did Beaconsfield?

MR. ROYLE: Yes, we did Beaconsfield.

MR. REID: Let me ask you this question: Did

Atlantic Roofing get all the contracts?

MR. ROYLE: No, Avalon Roofing did St. Thomas of

Villanova, and Mary Queen of the World was done by a contractor from Placentia -

the name escapes me right now.

MR. REID: Were the prices lower than those of

Atlantic Roofing?

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

projects.

MR. REID: I am not being - well, I shouldn't say I

am not being critical, ladies and gentlemen, I do this for a reason. I suppose,

as an elected representative of the people, and for the fact that somebody up

above me there somewhere had enough faith in putting me on the Public Accounts

Committee, I have to ask these questions. And I hope and pray that the end

result of this today is going to be that not only you, as a group, but every

other group that comes before us takes the idea of spending public money - and I

shouldn't say, more seriously, but maybe that is the right word to say. For me

to sit here and look at you educated people - and I am not blaming you in the

least, because this has been going on and is going on all over the Province, and

it is not your fault, it is something that you have been conditioned into and

have been allowed to do, and being board members, I suppose, and being changed

so often in your positions, you are not abreast of things like, for example, our

friends who have been in the Department of Education and some of our friends who

have been in the Auditor General's office for so long, so I am not being

critical. I am making points to you that I hope Brian Shortall, the

Superintendent, will certainly take into consideration, and hopefully, with some

of the rules and regulations that this government and previous governments have

set down as it relates to financial administration in the Province, are abided

by.

The last one I have for you is about the tender for

the supply and installation of both software and hardware for a complete student

and financial administration system at central board office. I am not sure of

this, and I stand to be corrected, but I don't believe that tender went in the

paper for very long. It was for a very short period of time. Am I correct? Do

you know what I mean?

MR. SHORTALL: I defer to Mr. Lester to give you

the specific information, Mr. Reid.

MR. LESTER: No, it is my understanding it was in

the paper for our regular period of time and the tender was open for two weeks.

We did, in fact, put an extension and notify the people who had picked up bids

on that tender.

MR. REID: The Auditor General says here: The

school board staff were unable to provide us with a tender evaluation and

unsuccessful tender bids for the purchase of the information management system.

MR. CHAIRMAN: If I could just interrupt, Mr. Reid.

A question on the length of time. According to pages 50 and 51, it appears,

according to the requisition to The Evening Telegram, it was for Saturday,

September 22, and the same thing on the next page.

AN HON. MEMBER: It was for one day.

MR. CHAIRMAN: For one day - is that correct? - the

dates on page 50 there, requisition No. 51678, one insertion Saturday, September

MR. RAMSAY: And it closed on Friday, October 5,

according to the ads.

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

Shortall?

MR. SHORTALL: Yes.

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

MR. CHAIRMAN: And the Globe and Mail, the

following one was (inaudible) I think, the same thing.

MR. RAMSAY: It was in The Globe?

AN HON. MEMBER: Yes.

MR. REID: Well, if you go back and look at your -

I can't imagine being a contractor in the business of providing such a system

and having to go through the tender documents to accede to your wishes for a

system, and only have that amount of time to be able to fulfil the requirements.

I am not accusing you of anything here but I am just absolutely flabbergasted

when I read twenty-five, thirty pages of requirements, and an ad being in the

paper for one day. It sort of surprised me to think that there was anyone out

there, other than someone who probably - notice I said probably - knew that the

contract was coming out.

I am not sure if that happened or not. I don't mean to

say that, but I find that particular incident - if I am reading this right. I

could be completely wrong. But if I am reading this right, that particular

contract certainly wasn't given under the act with the proper amount of time

advertised. I am surprised that someone didn't - maybe someone did and we don't

know about it - that someone didn't come in and kick up about it.

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

to that?

MR. SHORTALL: Yes I would, Mr. Windsor. A number

of weeks were provided from the placement of the advertisement and when the

tenders were opened. In fact, an extension was provided at the request of some

of the companies. A number of companies did respond to that in addition to the

successful bidder. I believe we had - seven or five?

MR. LESTER: Five, I believe.

MR. SHORTALL: Five bids which did come in, and

these bids were fairly extensive. The specifications were prepared in

consultation with our own internal advisors, as well as officials at the

Department of Education, because it is a major investment on behalf of our

school district and a major step forward. So we felt that we were going to the

open market in an up-front valid manner. We didn't receive - at the first

indication that the time frames were a little short, we arranged for an

extension.

MR. CHAIRMAN: Let me just ask, along -

MR. REID: Yes, go ahead.

MR. CHAIRMAN: Who developed those specifications?

Were you able to do those? They are fairly extensive. Did you do those

internally? Do you have personnel who are that knowledgeable in these types of

computer programs that could have generated that degree of detailed

specification for you, or did you have a consultant do that for you? What would

the case be?

MR. SHORTALL: It was a mixture of both, Mr.

Windsor. I'll ask Mr. Lester to give you the specific information on it.

MR. LESTER: Yes, we have some in-house expertise.

As well, some of our principals are well-versed in this particular area, and

they were involved in the development of the package. They were involved, as

well as our central office people, in reviewing the end result.

MR. CHAIRMAN: There is very detailed - is this a

specific package now? Would this be a package that most software suppliers would

have on the shelf, basically, or would it have to be written specifically for

this?

MR. LESTER: No, it was an off-the-shelf program,

but there are not a lot of suppliers in Canada who have that system.

MR. MURPHY: If I might, Mr. Chairman, just to pick

up on that. When you look at the amount - and my colleague, Mr. Reid, makes a

good point. There are a lot of people out there supplying that particular type

of equipment. It would seem to me that these specs would eliminate an awful lot

of people out there. Just off the top of your head, Mr. Lester, of the reputable

companies that are in the software business now, and in association with the

computers that you required, how many would be able to respond to that

particular set of specs?

MR. LESTER: Off the top of my head, I wouldn't be

able to say for sure, but from what information I have there are probably

half-a-dozen or so in Eastern Canada. As I said, that is strictly off the top of

my head. I am not sure.

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

MR. CHAIRMAN: And you have had five bids.

MR. LESTER: Yes.

MR. CHAIRMAN: Mr. Reid.

MR. REID: The other thing that bothers me,

gentlemen, is the fact that the Auditor - I am saying the Auditor General says

this. I am not assuming it is true, but the Auditor General says that after you

requested the other tenders on that particular - the unsuccessful tender bids,

they weren't available. They were, for some reason, lost. Have you found them

since, by any chance?

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

MR. REID: Did you know that? Did you know that the

Auditor General -

MR. SHORTALL: We had quite a search when the

Auditor requested it. We were able to find the analysis of the tender as

documented by our purchasing officer and the secretaries at the time, with the

prices from the various bids, but a cardboard box containing the actual

documentation was unfortunately lost.

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

MR. CHAIRMAN: Thank you, Mr. Reid.

Mr. Hewlett.

MR. HEWLETT: Thank you, Mr. Chairman. A question

maybe to the Auditor General at first. Page 7 of the document indicates that

there appears to be some confusion as to the role of the school board's auditor,

especially with regard to, I guess, what might generally be referred to as

compliance auditing. I ask the Auditor General if she has an opinion as to who

should give a directive, if a directive, as such, is needed, that the auditor

for the school board is responsible for auditing the school board's accounts

both as regards the dollars and cents, and also in compliance with the various

acts of the Legislature governing the school system in our Province. Is that a

decision or function of government to decide that the auditor is to have a

compliance function? Is it your opinion that the auditor should have a

compliance function but government does not yet require that function? Where

does that lie?

MS. MARSHALL: Under the legislation, there is some

compliance auditing required to make sure that the school board is complying

with the legislation. I would see it as being the role of the school board to

determine what additional compliance work needs to be done. When they engage

their auditor they would say: Well, you know, we require you to do the regular

test audit but we also require you to do some additional compliance auditing, in

accordance with the legislation.

MR. HEWLETT: Okay, thank you. I still have a

problem relating to the question I asked in the first round. If a board, either

rightly or wrongly, does not decide to have its auditor do extensive compliance

auditing or whatnot, who in the system, apart from the occasional spot check,

like that of your own organization - there appears to be sort of a breakdown in

the accountability of expenditure of public funds here. Who, along the line, is

ultimately responsible if you are not involved in a given instance, with

ensuring that the organization - be it a school board in this particular case -

is actually requiring of its auditor that it do certain compliance functions? If

you hadn't come upon this yourself, and you mightn't review this particular

board or a given board for several years, who in the system is supposed to keep

tabs on this and remind a board if it is negligent in that regard?

MS. MARSHALL: That is clearly the responsibility

of the Department of Education. They receive the financial information and the

audited financial statements from the school boards and they should be going

through this material, making sure that all the compliance auditing has been

carried out and that there is an unqualified opinion on the financial

statements, etc. So it rests with the Department of Education and they should be

doing this on an annual basis when they receive the financial information from

the school boards.

MR. HEWLETT: To your knowledge, is the Department

of Education rigorously applying this particular test in all school boards in

the Province?

MS. MARSHALL: No. Based on our review of the

school boards that we have audited to date, we have come to the conclusion that

the Department of Education needs to increase its monitoring of the school

boards.

MR. HEWLETT: I see. This can be done, then, given

the existing denominational education system, without interference in

established denominational rights as regards education and so on. It can be done

in the regular process of the Department of Education following up its monies as

given to the boards.

MS. MARSHALL: Yes, I see it as a regular part of

an internal audit process. I think the Department of Education should have some

sort of internal audit function which would be continually monitoring the school

boards - not just reviewing their financial information but also visiting with

the school boards and doing a certain degree of monitoring and overseeing of the

activities.

MR. HEWLETT: Does the department, to your

knowledge right now, have some of that function in action, or needs more, or has

none?

MS. MARSHALL: At the present time there is no

formal internal audit function at the Department of Education.

MR. HEWLETT: Thank you, Mr. Chairman. Just as an

observation, I mean, Education is one of the largest expenditures -

AN HON. MEMBER: Second largest, I think.

MR. HEWLETT: - in our entire governmental system.

Humongous amounts of money are expended. I find it somewhat passing strange that

a department responsible for such a large expenditure of money would not be

keeping tabs itself and is relying on the occasional spot audit of the Auditor

General and the meetings of this particular Committee to keep tabs on what is,

as you say, the second largest expenditure in the entire government. I pass, Mr.

Chairman.

MR. CHAIRMAN: Thank you, Mr. Hewlett.

Mr. Ramsay.

MR. RAMSAY: Thank you. I just want to go into a

little detail on the flooring contracts surrounding the numerous purchase orders

for flooring that are less than $5,000. Looking through what we have available

here, I notice on one, a note referring to other suppliers. The document on page

150 - I think, 'Genuine - late and high' is noted, and 'Victorian - no quote'.

That is the only reference I see on any of these

documents, although probably there are other internal documents that may have

referred to other quotations. The reference on page 150 is the only reference I

see to that particular issue of other contractors having been contacted about

these particular contracts. I would just like to get a comment on that as to

what other contractors may or may not have been contacted with regard to this.

Because you did note that the contractor was on site at this particular job,

although there are a number of jobs, as I note here, in a variety of schools. So

I just wonder if you could explain a little bit about that and what was actually

done to get any other contractor's opinions as to what their bid would be, or

what have you.

MR. SHORTALL: I will defer it, if it is okay with

you, Mr. Ramsay, to Mr. Royle or Mr. Farewell in that regard, because they were

closer to that than I was at the time.

MR. ROYLE: This is the Holy Trinity Elementary

project which was a retro-fit project. We converted the school from a high

school setting to a primary school setting. In July of that year, monies were

approved for this project and we went for quotations for some flooring work to

Baker Flooring, Genuine Flooring, and Victorian Flooring. A purchase order was

requested on August 23 - No. 51386, I believe. As Mr. Shortall explained

earlier, due to it being late in the year, Baker was authorized to proceed with

that work. That was kindergarten classrooms and music rooms, I believe.

This particular requisition you are referring to, page

150, was for additional work at this school, and in the staff room and kitchen

area, which wasn't initially anticipated to be done. We were hoping to get along

with the flooring that existed in that area at the time. So a decision was made

at the school to go ahead with this. We contacted Baker who was on site. He gave

us his quote - the price that is shown there. These other two contractors were

also advised. I should note that these two contractors could meet our

specifications. Sometimes we have a lot of difficulty getting flooring

contractors who can actually meet our spec. We asked for a quote right away

because of the lateness in the season, and school opening within ten days, I

guess. Looking at the requisition here it appears Genuine did put a quote in. It

was high. The dollar value is not written here. We would have that back at the

office. But they also submitted the quote late. Victorian Carpets didn't want to

quote. So we proceeded to go with Baker Flooring.

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

up.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: From experience I note that there are

probably at least fifty different types of carpet - jute back, hemp back,

cushion back, and all kinds of traffic carpets. Nowhere in any of these

documents - you mentioned, Mr. Royle, your specs - do I see anything indicating

a certain type of carpet, a certain type of conformity.

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

MR. MURPHY: Do you?

MR. ROYLE: Yes, very much so. The quotation sheet

would have the specification provided if it were faxed out to the contractor or,

in fact, it were given over the phone. The requisition there didn't really give

a spec, it just provided 'Supply and install carpet'. Let's assume that is per

specification.

MR. MURPHY: Yes, one would again have to assume

where it says 'supply and installation'. You know, I would have suspected carpet

as per specs or colour etc., but I don't see that anywhere.

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

MR. MURPHY: Yes.

MR. CHAIRMAN: Mr. Ramsay.

MR. RAMSAY: Okay, I just want to - I have no

problem giving, Mr. Murphy time to make up for his recent visit.

AN HON. MEMBER: (Inaudible).

MR. RAMSAY: I suppose, yes. Anyway, it is a

running battle, isn't it Danny?

On looking at page 142, 143, 144 and 145 - and there

were references made to it - on total, the number of jobs that are here, I

suppose, well, we are talking about, if you break it down by invoice, you are

talking about a total of probably sixty invoices, I guess - I am just guessing

now, I haven't counted them - sixty different invoices to a dollar value of

$90,000 approximately according to the totals on the pages, and quite a

substantial amount of work for a small business, such as the business that

performed this work. Not one of the invoices is over the $5,000 amount,

although, as mentioned by my colleague, plenty of the expenditures were paid for

with a cheque which would, in fact, exceed $5,000 for a number of different

amounts of work.

On looking at that, if I were a person who had no

knowledge whatsoever of the carpet business - well, I do know the carpet

business fairly well having been involved in it for some time in the past. But

just on a first glance, I would look at it and be suspicious. It would bring the

red flags up. It would certainly make me - if I were someone who was prone, in

the profession I was involved in, to investigate something, I would certainly

investigate it, because it would make one think that there was something out of

kilter, something illegal or otherwise.

Again, it is my position on this Committee to look at

this information and say, you know, what would the public think if they knew

that within this area, in this city, there was $100,000 worth of government

work, basically, through the school board, being done, using taxpayers' money

without public tender on any of these jobs that have been done. Now, I went over

and got the phone book and I decided that I would look at carpet; now again, of

course, you are talking about a spec, and possibly a limited number of carpet

dealers or contractors who can live up to the spec, although, I don't know,

there has been no assessment done. But on looking in here, I have counted in

excess of twenty-five carpet suppliers, and as for flooring suppliers and

contractors there are another twenty-five, so, in the order of about fifty

businesses that possibly all could have supplied to this particular $100,000

worth of work, who never had the opportunity to do so. Possibly three or four

may have had by virtue of a phone call or a fax to a specific preferred

contractor who had done work in the past. And looking at that and thinking, if I

were the one who was doing this, how much scrutiny I would think, that I would

be under, I mean, it would just scare me as to the consequence of having allowed

that to go on.

Where I mentioned about the idea of it possibly

looking illegal or otherwise, you know, I think it is one where a judgement call

would have to be made, on looking at it, to investigate - if, in fact, I were in

that situation - to investigate it and see if there was a cosy relationship

between said contractor and whoever is in charge of making decisions on the

purchasing. Regardless of the rationale that one comes up with, if I, as a

contractor, was able to develop a good working relationship with a school board

and they were willing to give me $100,000 worth of business without blinking an

eye, and with just going and calling a couple of other contractors who normally

provided this kind of work, I would certainly try to maintain that relationship.

As we know, in the past, government officials at the

Provincial Government level, and even at the Federal Government level, have been

investigated for this kind of thing going on through government purchasing

agencies, departments, what have you, because this kind of documentation would

make someone put up the red flag and say: There is something wrong here. And it

is scary to think that it can be brushed aside, just saying: Well, we did it

then - we are not going to do it anymore. I think it has to be checked into

further and I would ask for a comment from the school board with relation to

that.

To get into a little bit of the specifics, I have

something further on the purchase orders and when they were issued, following,

but if I could get a comment on just what - would it bring the flags up in the

administration as well?

MR. SHORTALL: When it was brought to my personal

attention, it certainly brought the flags up, of concern, and I share the

comments you made as to other people in our organization. This was the subject

of some discussion at both the property and service committee, as well as the

finance committee of our school board, and we satisfied ourselves to the degree

that what appears to be - we feel that it was done perhaps more of a comment on

the absence of completely adequate planning, and I think that if some of these

particular jobs had been more properly planned over a longer period of time, we

would have had a better handle on the overall needs and then would have gone to

tendering, but what we were into, as we explained with Holy Trinity, was

short-term planning which lends itself to these kinds of inappropriate

activities. But we are very concerned about it. I share your reservation, and I

assure you that we gave serious consideration to the matter at the time and we

have taken steps to ensure that it does not recur.

MR. RAMSAY: Further to that, just the one

reference to, when this was happening, the number of purchase orders that I

noted from you and something was talked about the dates. On September 4, there

was a purchase order issued, on page 146, for $3,750; the requisition was made

on 23 August, the same year. So the purchase order was supplied after the

requisition was made. Is that the correct procedure?

MR. SHORTALL: It is a totally incorrect and

unacceptable procedure. It did occur and the reason for the delay is that the

business manager and the purchasing people recognized what was happening and

that some consideration was given to it after the fact. It should not have

happened, and the individual responsible has been taken to task about it and we

will be doing our best to ensure that it doesn't happen in the future, Sir.

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

Now, with reference to the discussion we had a little

earlier about these situations and how work had been done at a school or schools

because the contractor was on the site and the other quotations were had by

phone or fax or whatever, and it was decided to proceed; but subsequent to that

you mentioned something about executive committee meetings or something, to

discuss the matter, or the board dealt with it, or was it just the

administration who dealt with it, because of the problems associated with it?

MR. SHORTALL: Later that month, in September,

there were some concerns, not only in the area of purchasing but in some other

budgetary matters, that that particular job seemed to have gone over budget and

so forth. There were concerns raised and the matter was reported to the

appropriate school board committees and eventually there was a joint meeting of

both the property and service committees, as well as the finance committee, to

thoroughly investigate the matter. And the executive was satisfied that while

what had happened was not acceptable to them, and they didn't want to see it

continue, that there had been no wrongdoing, as such.

MR. RAMSAY: Finally, I just want to comment that

it would appear, and I just say, it appears from the information - we are here

to gather information - it would appear from the information that there was, as

another member of the Committee said, an attempt, in certain cases here, to

selectively place an amount less than $5,000 on invoices for rooms done in the

same school. It just seems too coincidental, and I think, if that is the case,

then basically, I guess, there is nothing can be done about it; but it really is

a difficult situation to pass any other comment on, other than just to state the

fact. That is the way it looks. Anyway, thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Reid, you indicated that you

wanted one moment.

MR. REID: Yes, I am sorry, Mr. Chairman, but I got

thrown off. I just wanted to read something into the record, and this is found

on Page 28.

MR. CHAIRMAN: Page 28?

MR. REID: Page 48, I am sorry.

MR. CHAIRMAN: Page 48? Thank you.

MR. REID: It is the Roman Catholic School Board

for St. John's, and it is the minutes of a meeting of March 28, 1990. The point

I want to make to you, Mr. Chairman, is the fact of the date, if you will just

bear with me:

"A special timed presentation with respect to the

possible investment by the School Board in some technology which would assist

the District with office" - and so on. "The specific proposal presented was the

Brunswick Data Package which had been selected for chosen study after several

years of investigation."

Then, it goes on, in the next paragraph, Mr. Chairman,

to talk about the advantages of that particular system. Then, October 5, 1990,

remember I said: School board meeting of March 28, 1990, and then October 5,

1990 an ad went in the paper for such a system, and ultimately, who was the

successful tender? - the Brunswick system.

It is apparent to me, Mr. Chairman, that the board had

already made up its mind on March 28 that it was going to be the Brunswick

system, and still went to tender.

MR. CHAIRMAN: Mr. Shortall, would you like to

respond to that?

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

This kind of technology is complex and quite involved,

as you might be aware. To my understanding, we were the first school district in

this Province that is moving to put all of our schools on an on-line system of

information. The package contained not only a financial administration package,

which was central to the system, but a pupil information package as well.

As the minutes indicate, there had been a committee in

place for a number of years attempting to investigate commercial packages which

would appear to have filled our needs.

The reference to the Brunswick proposal being

submitted at the March 28, 1990 meeting simply is a report from a study group

which had spent some time in New Brunswick, visiting school districts in that

province, which were using this particular system.

The decision taken by the board at that time was to

proceed with the steps necessary to achieve that kind of innovation in our own

school district. Those steps which would be necessary would have been: Number

one, the development of the specific specifications; number two, the tendering,

and eventually, the actual purchase and installation. As I pointed out, when

these specifications were being prepared there was considerable discussion with

our own people in the field, as well as with our advisors at the Department of

Education. Indeed, we had meetings with the Deputy Minister of Education and the

Assistant Deputy Minister of the day in the spring of that particular year, to

ensure that the department was aware of the substantial investment we were

considering in this type of technology. We received their assistance in devising

the specifications and, in fact, Mr. Lester was invited to represent part of our

school board on a provincial committee which is currently studying this kind of

technology in the school system.

MR. REID: I have no problems with that, Mr.

Chairman. I believe I started this morning or this afternoon by saying that

there are two hands in this mess, if you want to call it a mess, and one of them

is the Department of Education. And I don't have any hesitation - our two

colleagues, our two friends, are gone this afternoon and I was sort of hoping

they were going to stay around. I think the department has to be brought to task

on some of this stuff, too, because it is just as much the department's fault,

as far as I am concerned, to allow a board to break the public tendering

process, and that is basically what this points to. If a government allows an

agency like a school board to break the public tendering process, as far as I am

concerned, the government itself should be brought to task.

MR. CHAIRMAN: Thank you, Mr. Reid.

We are rapidly running out of time, so I am not going

to move on to other members of the Committee to ask questions. We will have to

come back tomorrow. We have to leave at 4:30 because this building's doors lock

electronically at 4:45 and unless we want to be enshrined in the archives, we do

have to leave.

I want to make one comment - just sort of a light

comment. On Page 81 and 82, you will see a listing of the invoices from

Brunswick Data, taking us from December 1990 through to 1992. Two-thirds of the

way down on Page 81, you will see invoice No. 91105 in the amount of $845.30

paid by cheque No. 139267 on 31 May. On Page 92, halfway down, you will see

invoice 91105 in the amount of $845.30 paid by cheque No. 66, ten months later.

Your computer system couldn't be that good.

MR. SHORTALL: I ask Mr. Lester if he could give

you some light on that particular matter. I am sorry, I can't!

MR. WINDSOR: With that comment, I leave Mr. Lester

to think about that overnight and perhaps research to see if, indeed, that

invoice was paid twice by two different cheques ten months apart, as it

certainly indicates.

We will adjourn until 10:00 tomorrow morning, Mr.

Porter, and we will continue with the questioning at that time.

Thank you all very much.

Document details

Collection	Newfoundland and Labrador — Committees
Citation	1992-10-27
Type	committee
Volume / chapter	committees_standingcommittees_publicaccounts_ga41session4_1992-10-27_pac-afternoon_.htm
Language	en
Format	html
Source	PROVINCIAL
Identifier	94c0e9aca1e7758140c29e727b5e156c27625064

Source file is stored in the law ingest library (html).