Government Services Committee — Department of Business, Tourism, Culture and Rural Development — 6 May 2015

2015-05-06

Newfoundland and Labrador — Committees

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May 6,

GOVERNMENT

SERVICES COMMITTEE

The

Committee met at 9:00 a.m. in the Assembly Chamber.

CHAIR (Forsey):

Good morning everyone.

First of all what we will do is we will introduce our Committee right

here on the right. Before we

introduce the minister and his staff, we have to elect a Vice-Chair again this

morning.

Christopher we will start with you just with the introductions.

MR. MITCHELMORE:

Christopher Mitchelmore,

MHA, The Straits White Bay North.

MR. SIMMS:

Randy Simms, Researcher, the

Opposition Office.

MR. MURPHY:

George Murphy, MHA for St.

John's East.

MR. MORGAN:

Ivan Morgan, Researcher, NDP

caucus.

MR. CROCKER:

Steve Crocker, MHA, Trinity

Bay de Verde.

MR. CROSS:

Eli Cross, MHA, Bonavista

North.

MR. DINN:

John Dinn, MHA, Kilbride.

MR. K. PARSONS:

Kevin Parsons, MHA for the

beautiful District of Cape St. Francis.

CHAIR:

Okay, thank you.

We need

a Vice-Chair for the Government Services Committee.

Could we have a motion or a nomination for Vice-Chair please?

MR. K. PARSONS:

I nominate Steve Crocker.

CHAIR:

Kevin Parsons nominated

Steve Crocker as Vice-Chair.

Can we

vote on that?

All

those in favour, 'aye.'

SOME HON. MEMBERS:

Aye.

CHAIR:

Vice-Chair, congratulations

Steve.

MR. CROCKER:

Thank you so much.

CHAIR:

It probably should not take

too long this morning. We normally

put aside three hours for Estimates.

We probably will not use that this morning.

In the meantime, we will alternate back and forth, ten minutes each for

the Liberals and the NDP.

We will

start with the minister to introduce his staff.

You have a couple of minutes if you need a couple of minutes to address

the crowd. If not, that is quite

fine. We can carry on with

questioning.

MR. KENT:

Thank you, Mr. Chair.

Good

morning everybody. We will do

introductions first. Of course, my name

is Steve Kent. I am the Acting

Minister Responsible for the Government Purchasing Agency.

MR. PUDDESTER:

I am Leigh Puddester. I am the

Deputy Minister for Procurement Reform.

MS HEARN:

Good morning, I am Patricia Hearn, Chief Operating Officer for the Government

Purchasing Agency.

MR. CURTIS:

Good morning, I am Ken Curtis, the Departmental Controller with the Government

Purchasing Agency.

MR. CARD:

Jason Card, Director of Communications, Service NL.

MR. LEGGE:

Dwayne Legge, Executive Assistant to Minister Kent.

MR. KENT:

Thank you, Mr. Chair.

I will

make a few brief opening comments and then we will get into the questions, which

is the main reason why we are here.

It has

been a really interesting day so far, though, Mr. Chair, I have to say.

I wake up and the NDP is governing Alberta.

So congratulations to my hon. colleagues across the House.

I spent the next part of the morning working the drive through at

McDonald's with Paul Lane.

Now I

come into work and I am sitting across from my former deputy mayor and the

current mayor of my city. So, it

has been a strange day so far. Then

at lunchtime, George Murphy and I are getting a haircut together in the lobby of

West Block. So, it has been a

bizarre day already, and I fear it is only going to get worse, Mr. Chair.

MR. MURPHY:

(Inaudible).

It seems like Budget cuts are affecting everything these days.

MR. KENT:

Yes, indeed.

I am

the Acting Minister responsible for the Government Purchasing Agency, so I am

pleased to appear before you to discuss the Estimates figures for the agency.

I am fairly new to this role, as I think members are aware.

I am filling in for one of our ministers who are on leave at the moment.

I have

had a number of meetings related to the agency.

I am happy to answer whatever questions I can.

In the meantime, I am also very happy to defer to my colleagues here from

the agency who are more than happy to answer any questions in more detail than I

am able to provide.

I want

to thank you all for joining us. I

want to thank our staff for help in preparing for today's session.

As everybody is aware, the Government Purchasing Agency is the central

procurement unit of the Government of Newfoundland and Labrador.

It is responsible for managing the procurement process for goods and

services on behalf of all government departments.

The agency processes and oversees in excess of 19,000 procurement

transactions annually, including 500 public tenders which, in total, are valued

at approximately $250 million.

The

agency advertises bidding opportunities related to goods and services, as well

as posting tender notices for construction and related services.

The agency not only conducts government purchasing under the authority of

the Government Purchasing Agency Act, but also oversees the Public Tender Act,

which is the primary legislation that governs procurement within the Province's

public sector.

addition to these regular duties of the agency, we have also been actively

working on developing a new public procurement act.

Through this process, the provincial government is following through on

its commitment to the wise use of public funds, which in turn ensures the

maximum value is achieved for the people of the Province.

There is still work ongoing to finalize that procurement framework which

is inclusive of the act, regulations, and policies.

This work could include ongoing consultations with key stakeholders into

the future.

Our

government is being very thorough in its approach.

It is taking some time. When

we bring a new act to the floor of the House of Assembly it will be the right

legislation to meet the Province's needs.

I want

to make the most of our time this morning, Mr. Chair, so I will not give a big

speech. I am happy to take

questions from members of the Estimates Committee.

CHAIR:

Okay, thank you minister.

forgot myself. I am Clayton Forsey,

Member for Exploits and Chair of the Government Services Committee.

The

minister has already got a day's work done and it is only 9:00 o'clock in the

day. It feels like 5:00 o'clock to

him probably.

Anyway,

we will begin the questioning and we will start with you, Chris.

MR. MITCHELMORE:

Okay, line 1.1.01

MR. KENT:

It is a good place to start.

MR. MITCHELMORE:

01, Salaries, the budget last year was $2.24 million and the revised Estimates

show $1.5 million in Salaries.

Could the minister explain the $700,000-plus drop?

Were positions eliminated?

Were there vacancies? How many

people are working for Government Purchasing Agency, if we could get a breakdown

on that?

MR. KENT:

Sure, thank you for the

question.

course the Salaries line includes permanent employees, temporary employees,

overtime, and other related salary costs as well.

The drop balance that the hon. member refers to of $733,200 in the

Salaries line resulted from a couple of factors.

First

of all there was a vacant deputy minister and executive secretary positon for

most of the year. Mr. Puddester, in

addition to serving as the Deputy Minister Responsible for the Government

Purchasing Agency, is also the Deputy Minister of Service Newfoundland and

Labrador. We pay him very well

there so he cannot receive two salaries of course.

That

explains part of the drop balance.

As well, there are four vacant positions recently designated for strategic

procurement. There are also vacant

positions within general operations and there has been some staff turnover

during the year.

The

vacant deputy minister and executive secretary position results in about just

over $141,000 of savings. The other

positions I just mentioned that have been vacant either for the full year or

part of the year, that total is close to $592,000.

MR. MITCHELMORE:

Okay.

Since the Estimates this year go back to the same value as what was

budgeted, the $700,000-plus increase, does the department plan on filling the DM

and the executive secretary position?

Or will those continue to remain under the leadership of the Service NL

Deputy Minister?

MR. KENT:

At this point in time our

intention is to have the current deputy minister continue.

We have no immediate plans to add an additional deputy minister at this

point in time.

MR. MITCHELMORE:

Why are the salary figures

at $2,247,600? Shouldn't they be

revised down at least to $141,000 if that position is not going to be filled?

MR. KENT:

Part of the challenge which

faces all government departments and agencies is that there continues to be

salary increases that need to be factored in as well.

That would explain some of that amount.

Leigh,

I do not know if you want to add anything else.

MR. PUDDESTER:

I guess the key thing is that although there are as the minister said at this

point no plans on filling that position, there is a contingency built in there

that in the event there is a change in organizational structure, that there are

sufficient salary dollars there to cover that off.

Obviously, if the position is not filled, that will be a savings that

will result.

MR. MITCHELMORE:

Okay, so for Budget

2015-2016, currently, how many permanent employees are there?

How many temporary employees?

How many vacancies?

MR. PUDDESTER:

The Government Purchasing Agency has a staff complement of thirty-two permanent

positions. There are also eight

temporary positions within the agency.

Right now, three of those temporary positions are vacant and fourteen of

the permanent positions are vacant.

MR. MITCHELMORE:

Under the Operating Accounts

of Salaries, the Employee Benefits, you have budgeted $1,500.

There was none utilized and you are adding, still, the $1,500 in Employee

Benefits. Would these be employee

benefits at the executive level because the deputy minister position is not

filled, so it is not being used?

MR. KENT:

The Employee Benefits line

provides for workers' compensation costs that are incurred as a result of staff

being injured while at work. It

also includes some miscellaneous registration fees for any training courses or

seminars.

We hope

no one is injured on the job. It is

always our goal to not have any injuries in the workplace.

There is potential that there will be some usage of that budget line for

registration fees for professional development for staff.

MR. MITCHELMORE:

Just to clarify then, if

this is for workers' compensation fees and none were submitted last year, what

is going on with the mandatory fees for workers' compensation?

MR. KENT:

The mandatory fees would not

be in that budget line. What this

line provides for is any workers' compensation costs that are incurred if

somebody is injured on the job. It

does not relate to the mandatory employment-related costs.

MR. MITCHELMORE:

The transportation costs

last year, there was $23,000 spent out of a $70,900 budget.

Can you explain a breakdown of why maybe almost $50,000 was not utilized?

Were there things that were planned in terms of consultation around

procurement that did not take place?

MR. KENT:

The Transportation and

Communications line includes a number of items.

It includes travel by employees of the agency, postage costs,

telecommunications expenses, and courier charges, for example.

The drop balance of $47,900 was mainly due to reduced travel as

Newfoundland and Labrador withdrew from participation in trade agreement

negotiations. The agency actively

participates in those negotiations, so there were some savings as a result of

the Province withdrawing from participation in those negotiations until further

notice.

addition, expenditures relating to training and auditing were limited based on

vacancies, also based on spending restrictions that were implemented partway

through the fiscal year throughout government, and also timing changes in the

implementation of the new legislation that we are still working on.

MR. MITCHELMORE:

Would it be possible to get

a listing of the fourteen permanent vacant positions and the thirteen, a

description of what those positions are, and the three vacancies as well as the

current positions that are filled?

MR. KENT:

We will endeavour to provide

that information. That is not a

problem.

MR. MITCHELMORE:

Thank you.

The

Professional Services line last year was revised; $80,000 was allocated and

$148,100 was spent. That is a

ballooning number. I am wondering

if you could explain what purchases were made in terms of Professional Services.

Was a consultant hired to do specific work within the Government

Purchasing Agency?

MR. KENT:

That is a very good

question. The line item includes a

couple of things. It provides for

auctioneering fees for the disposal of government assets and that occurs every

year. It also includes consulting

services related to procurement opportunities, and also related to legislative

issues which explain the difference last year.

The increase of $68,100 was due to additional auction fees, and a

consultant to assist with RFP development and strategic procurement.

I can

give you some information on what that consultant work included.

It consisted of amending the policy and procedure manual as it relates to

legislative reform. It also

included the development and implementation of standardized procurement

templates for RFP development and also for strategic procurement.

Finally, that consultant work also consisted of management of existing

strategic procurement contracts while focusing on strengthening them and

redefining them for future years as well.

MR. MITCHELMORE:

Would we be able to get a

copy of this new updated policy and procedure manual?

MR. KENT:

We can certainly provide it

once it is finalized as well. It is

still under development, is my understanding.

Certainly as soon as it is available we would be happy to provide it.

MR. MITCHELMORE:

Could we get a breakdown of

the fees as to what were the auctioneering fees and what actual assets were

disposed of?

MR. KENT:

We can provide that

information. That is not a problem.

Just to your previous question, I should also note that a lot of that

policy and procedure development that is underway relates to the development and

drafting of the new legislation that we are working on.

It is tied in. That still

continues to be a work in progress.

We can

get you details on the audit fees.

That is also not a problem. I am

happy to provide that.

MR. MITCHELMORE:

Would you be able to provide

the information around the contract and what the terms of reference would be for

this consultant when it comes to RFP development?

MR. KENT:

Yes, we can provide that

information.

MR. MITCHELMORE:

Is this consultant doing two

different aspects? You are talking

about RFP development. Government

has already endeavoured into a number of RFP contracts.

Are they following the current rules for a RFP policy and procedure

manual? If so, can we have that

document? If not, if it is just a

work in progress as you are saying, what are the criteria when it comes to RFPs

here in the Province?

MR. KENT:

You are asking if there have

been any changes to the RFP process in the Province?

MR. MITCHELMORE:

Yes.

MR. KENT:

What I will say, generally,

is that despite the fact that we have not brought in new legislation, our work

on improving procurement practices in government continues.

We are always looking for opportunities to get better value for

taxpayers' money, and there has been a number of initiatives related to

strategic procurement reform undertaken that has saved taxpayers considerable

dollars.

I will

ask Mr. Puddester to elaborate a little further.

MR. PUDDESTER:

With respect to Requests for

Proposals, there are no changes in place in terms of the rules around those.

Those would be governed by the current Public Tender Act or guidelines

for the hiring of consultants. I

think what you are seeing is that we are starting to consider the use of them

more frequently than in the past where there has been a predominant focus on

tenders as opposed to Requests for Proposals.

The

development of some of the templates were around trying to provide some

consistency and best practices for public bodies to consider if they are going

to use RFPs rather than tenders. I

think that has been the change. I

am not sure if I have answered your question.

MR. MITCHELMORE:

Sure.

When

RFPs are called, are the criteria made public around how a company would be

chosen that would be somewhat open and transparent because there may be 50 per

cent allocated to financial reasons, technical, or whatnot.

Can the public find out, when RFPs are reviewed or selected, what aspects

were pertaining to technical, what aspects were financial, or if there were

other reasons why a company, may be a Made in Newfoundland and Labrador content

or other regulations when these are put forward, is there information given on

that, Mr. Puddester or minister?

MR. KENT:

You go ahead.

MR. PUDDESTER:

I cannot speak for every RFP

because each public body would be responsible for issuing their own.

They are not centrally issued necessarily by the Government Purchasing

Agency; however, good practice when it comes to Requests for Proposals is to

provide an explanation to the bidders as to how a decision on a winner will be

made. That would typically include,

as you said, a listing of the various criteria that would be used to judge a

proposal as well as the waiting that would be used, as you said, financials at

50 per cent, previous experience at 25 per cent or whatever the combination.

MR. MITCHELMORE:

Okay.

MR. PUDDESTER:

Those would typically vary

depending on the nature of the work that you were acquiring and obviously the

individual circumstances.

Typically those documents would all be available publicly either through the

Government Purchasing Agency's website or the websites of the entities that were

issuing them. That information

would typically be in those.

MR. MITCHELMORE:

Minister, based on what you

have said in this consultant work that is ongoing, the March 5 tabling of the

procurement by public bodies act has died on the Order Paper.

It is not coming back in the House of Assembly.

You are saying a series of consultations need to take place, et cetera.

When can government expect or the people of the Province, business,

companies that do government purchasing, contracts with government, anticipate

seeing this new legislation?

MR. KENT:

It is a fair question and

one that I know has been asked previously in Estimates.

It is very difficult for me to pinpoint when that legislation will be

ready. I can tell you that we still

have more work to do. We want, for

obvious reasons, to be very thorough.

We want to ensure that we get it right.

It is not simply a matter of making some minor adjustments to existing

legislation. It is also not a

matter of simply looking across the country and picking somebody else's

legislation and changing a few details and adopting that.

We are

trying to come up with something that is unique and progressive and reflective

of the realities of doing business in Newfoundland and Labrador.

That work is ongoing. I wish

I could be more precise with you, but I can assure you that as soon as that

legislation is ready to go we will be having discussions as a Cabinet and

ultimately bringing that legislation into the House of Assembly.

I cannot say whether that will be this session or not.

MR. MITCHELMORE:

Thank you. Minister.

CHAIR:

Thank you, Christopher.

I appreciate you starting off in the right spot this morning because I

neglected to call for the subhead, which I will right now.

So we will call for the subhead.

CLERK (Ms Murphy):

Subhead 1.1.01.

CHAIR:

Subhead 1.1.01.

With

that, George, you will get your fifteen minutes.

CLERK:

Ten.

CHAIR:

I am sorry, ten.

MR. MURPHY:

Thank you very much.

Good

morning, Minister, and good morning to all of your staff.

Thanks for the work that you are doing, in advance.

Mr.

Minister, just to pick up on some of the lines of questioning that have already

occurred here this morning, what are some of the issues that are holding up the

new procurement act? Are you at

liberty to say what some of those issues may be?

MR. KENT:

I really do not have

anything further to add beyond what I just outlined, I would say, respectfully.

There are no specific issues holding things up, as you suggest.

It is more of a case that the work is continuing.

Our research is continuing.

We continue to look at what is happening in other jurisdictions.

Now, as a result of new ATIPP legislation coming into place, we also need

to examine if that new legislation has any impact on the work that we are doing

in terms of procurement.

We just

want to make sure that we get it right.

We want to be thorough. I

look forward to seeing us introduce new legislation because I think there are

opportunities to take procurement reform in this Province even further.

There have been a number of initiatives in recent years that we have

undertaken that have resulted in significant savings for taxpayers.

We need

to continue to do that work, and that work is definitely not on hold while we

development new legislation. We are

always looking for opportunities to do better in that regard, but ultimately we

want to put a modern, progressive legislative framework in place and we want to

make sure we do it well and do it correctly.

MR. MURPHY:

Okay.

You

mentioned earlier as well in the line of questioning about a consultant that

have been awarded some of the work here as regards to the new regulations that

will be coming in. Can you let us

know who the new consultant is? Was

it an unsolicited Request for Proposals that was put in on the part of this

party or if government went looking was it a tender process, for example, for

the consultant work?

MR. KENT:

There were two consultants

involved. One is a gentleman named

Mr. Joe Day, who is actually a former employee of the Government Purchasing

Agency with considerable background, experience, and expertise.

Particularly given some of the turnover and some of the vacancies that

exist at the Government Purchasing Agency, having somebody with Mr. Day's

experience and skills has been extremely valuable in the ongoing work of the

Government Purchasing Agency.

addition to that, there was a law firm contracted to assist with some of the

work on the RFP templates as well.

So those would the two consultants involved.

MR. MURPHY:

Which law firm was that?

MR. KENT:

Mr. Puddester, do you have

the name of the law firm? I do not

have it at my fingertips.

MR. PUDDESTER:

I believe the name of the firm was actually the Procurement Office out of

Ottawa, so they are public procurement specialists.

MR. MURPHY:

Okay.

All right, thanks for that.

Just to

come back again to earlier discussion, you mentioned trade negotiations.

There were some costs as regards to the trade negotiations that were

happening. Can you adlib on trade

negotiations, with whom?

MR. KENT:

Any trade negotiations that

the Government of Newfoundland and Labrador are involved in, there is a role for

the Government Purchasing Agency to play.

While those negotiations are typically led by the Department Business,

Tourism, Culture and Rural Development which is a mouth full there is a role

for the Government Purchasing Agency because of the procurement implications of

some of those negotiations.

As a

result of the Province withdrawing, for the time being, from participation in

trade agreement negotiations, as a result of issues related to CETA, which I

know members are well familiar with, there has been some savings in the

Transportation and Communications budget line for that reason.

MR. MURPHY:

Okay, so it is just from the

CETA negotiations themselves that these savings were realized or were there

other negotiations?

MR. KENT:

The one we actually withdrew

from was the Agreement on Internal Trade.

MR. MURPHY:

Agreement on Internal Trade,

okay.

I want

to ask about the role of the Government Purchasing Agency and their role with

other departments, for example, the Department of Transportation and Works and

their role in awarding a contract to Damen shipyards.

Did Government Purchasing have a role in briefing the Department of

Transportation and Works, for example, on the issues of the impacts of free

trades agreements, that sort of thing?

Was there any consultation with the Government Purchasing Agency on that?

MR. KENT:

I would say upfront that the

Government Purchasing Agency regularly consults with other government

departments, as required. For

instance, even in the short time that I have been the Minister of Health and

Community Services, my department has had reason to seek advice and guidance on

procurement practices from the Government Purchasing Agency.

The health authorities would do that from time to time as well.

As to

your specific question around Transportation and Works, I will ask Mr. Puddester

to respond. It pre-dates me.

MR. PUDDESTER:

The Department of Transportation and Works is responsible for the procurement of

capital projects including, in this case, transportation-related ferry contract.

So that contract would have been led by themselves.

I am

sure there were consultations with the Department of Justice lawyers who would

have procurement experience, but they did not ask the Government Purchasing

Agency for any input into that.

That would not be unusual.

MR. MURPHY:

That would not be covered by

you people at that particular time.

I am

just wondering because, of course, one of the oversights with the contract was

the realization that we had a free trade agreement with Chili at the same time

and there was a way that they scored it, one purchase over the other from

Romania. I was just wondering, your

department did not have any influence or they would not set guidelines in this

particular case over procurement.

Whose responsibility would that be to make a department aware, for example, that

there would be a free trade agreement in place that would affect purchasing in

this particular case?

MR. PUDDESTER:

The Department of Business,

Tourism, Culture and Rural Development have primary responsibility and ownership

of our trade agreements. The

minister mentioned GPA's involvement with the procurement aspects because most

trade agreements do have a procurement element.

Our role in negotiations has typically been to advise on the

procurement-specific issues. Our

legislation is quite open in this Province when it comes to procurement aspects

of trade agreements, so we rarely have any issues locally in terms of the

impacts those agreements would have on our specific Province.

MR. MURPHY:

Okay.

MR. PUDDESTER:

In the case of that contract, they would have taken advice, I would assume, from

the Department of Business, Tourism, Culture and Rural Development.

MR. MURPHY:

Okay.

The

Auditor General has had issues in the past with public tender exceptions, as we

know from past reports. Last year,

we were told in Estimates that there was money allocated for travel, for

auditing, and training around the Province that would help people to ensure that

they understand and comply with the Public Tender Act; training on when they can

use exceptions to open calls and how to make sure that they are doing those to

be compliant with the act. I notice

that the department has well, in this particular case, fourteen permanent

positions are gone. What are we

doing as regards to education around the Province when it comes to this now,

what the Auditor General was talking about?

MR. KENT:

You go ahead.

MR. PUDDESTER:

We did have auditor positions in the staff complement.

We did have some challenges in filling those positions last year;

however, two of three positions are now filled.

We do have auditors in place.

We are proceeding to develop the audit program for the current year,

which would address reviewing the procurement activities of various public

bodies.

terms of the exceptions, though, that are reported, those are not generally

when exceptions are reported by departments all of them are reviewed by the

staff, the Government Purchasing Agency, and follow-up with the departments and

public entities who have filed forms Form B is for exceptions those are made

anyway. So they were not held up

because of the lack of auditor positons.

Typically, about 25 per cent of all exceptions are quarried

MR. MURPHY:

Yes.

MR. PUDDESTER:

to seek more information or clarification as to the rationale for the

exception. That activity is going

on. There are audit positions now

in place to review the practices of those other bodies.

MR. MURPHY:

Okay, that is good.

there is money in this budget for more training then obviously, according to

that. I guess, Mr. Chair, at this

point I will carry on with a couple of line items that I have because I have no

further questions that come to mind right now.

Just in

Purchased Services, $139,000 was budgeted for but only $65,000 was spent.

I take it well, maybe you should give me the breakdown on what happened

here, why the money was not spent, and of course $89,000 was budgeted for this

year.

MR. KENT:

Thank you.

I will

speak to a couple of the Purchased Services numbers.

First of all, to provide some context, the Purchased Services line

provides for advertising, copier rentals, maintenance, printing, and other

general purchased services. It also

covers membership in the Purchasing Management Association as well.

The

decrease of $50,000 mainly relates to one-time funding received in 2014-2015 for

training material and an e-procurement system and based on timing changes

related to the new act as well as procurement system requirements under CETA, it

is now anticipated that the development of an e-procurement system will occur in

2016-2017 instead.

The

drop balance of $74,000 relates to timing changes in the new legislation and the

development of the system.

MR. MURPHY:

Could you tell me how much

membership is in this Purchasing Management Association?

MR. KENT:

I cannot, but maybe somebody

else can.

MR. MURPHY:

Who would be the other

members of this association, for example?

OFFICIAL:

(Inaudible).

MR. KENT:

My officials tell me it is a

fairly small figure. It is probably

approximately $1,000. It is not a

big amount of that line.

MR. MURPHY:

Who would be the other

members of this purchasing association?

MR. KENT:

Other jurisdictions across

Canada would be members.

MR. MURPHY:

If we could have a list, out

of curiosity if nothing else, just so that we can see, if that is possible.

MR. KENT:

Yes, we would not have the

full list of members of that association in our possession, but we can certainly

get it for you. That is not a

problem.

MR. MURPHY:

Sure, okay.

Just

down here to Revenue Provincial in line 02, if I can get a breakdown of what

was happening here. I am thinking

that this might be monies that people might have had to put in for proposals,

that sort of thing, tenders.

MR. KENT:

So, the Revenue Provincial

line that you are referring to is revenue that we received from the disposal of

assets.

MR. MURPHY:

Okay.

MR. KENT:

For instance, in the last

fiscal year, there was an auction that took place in Deer Lake, there was an

auction that took place in Holyrood, and there was one in Grand Falls-Windsor as

well. There were a number of

disposal tenders, and that line also includes the sale of items by the

auctioneer.

terms of the difference between the numbers from year to year, there was an

increase of approximately $100,000 over the previous year's revenue.

That is because we conducted one additional auction.

There was also a significant additional disposal tender.

So that would explain the difference.

The

revenue for auctions fluctuates from year to year based on the disposal

schedules of departments. Those

kinds of items that could be included range from vehicle to furniture to scrap

metal, and the auctioneer fee is based on gross sales.

The auctioneer's fee is 12.8 per cent.

That is covered under Professional Services.

MR. MURPHY:

Okay.

There

is nothing else I can think of at this particular time, so I will digress to the

Opposition, if the Opposition has any questions at this particular point in

time.

CHAIR:

As you can see, I want to

treat you the same as Christopher, so we just let the time go on, the extra five

minutes for you, because we only started you at ten.

MR. KENT:

It is time well spent, Mr.

Chair.

CHAIR:

So you are finished, George?

MR. MURPHY:

I think so.

CHAIR:

Okay.

Back to

you, Christopher.

MR. MITCHELMORE:

I wanted to ask of the

current fifteen employees that are with Government Purchasing, is there any

indication that some of these will be retiring within the next five years; and

will that impact, based on government's attrition plan, the staffing levels at

the Government Purchasing Agency?

MR. KENT:

We are subject to the

attrition targets, like other government departments and agencies.

Our target for this year is one position, and I believe it is three

positions over the next five years that represent the attrition target.

Like every organization, there are retirements and resignations from time

to time. Certainly, the Government

Purchasing Agency would be no different in that regard.

MR. MITCHELMORE:

Okay.

Minister, would all of those positions be permanent positions that are in

the target or would some of them be temporary positions as well that would fit

in that target?

MR. KENT:

It could be either is my

understanding.

MR. MITCHELMORE:

Okay.

I want

to go down to the Purchased Services and what Mr. Murphy was talking about

around revenue, around the auctioneering fees that you said there were

additional auctions. This year you

are projecting less revenue so you are anticipating having less auctions and

less sales from surplus assets or things that need to be disposed of.

MR. KENT:

Truthfully, it is always a

best guess. We cannot predict from

year to year exactly how many auctions will happen or what value will be derived

from items that are sold at auction.

This

past year was a little higher than normal because there was an additional

auction. There was also a

significant disposal tender that was in addition to what was anticipated.

So we anticipate that this next year will be similar to past years.

We think it was a little higher than normal last year, which is a good

thing if we are generating additional revenue through the proper disposal of

assets that are no longer needed for public purposes.

We think that the $258,000 is a good guess based on the trends over the

last number of years.

MR. MITCHELMORE:

So of the $25,000 that is in

the Estimates for Professional Services, what percentage of that is budgeted for

auctioneering fees?

OFFICIAL:

(Inaudible).

MR. KENT:

Sorry, I am just making sure

I am giving you accurate information.

All of that line is for auction services this year.

In the Professional Services line this year, there are not fees for

consulting work budgeted.

MR. MITCHELMORE:

Right.

Getting

back to my previous question about the report and the consultant that was hired

for the RFP and the approval, since there is no payment this year, in this

year's budget, when do we anticipate that a report will be made available to the

Government Purchasing Agency that can be made public?

MR. KENT:

There were two elements of

work done in the previous fiscal year, as I outlined.

One was a law firm was engaged to assist with the templates for the

Request for Proposals. Mr. Day was

engaged to assist us in the development of policies, procedures, and other

things that would be necessary as we advance the legislative reform that is

contemplated. That is ongoing.

Our work is ongoing, but the consultant's input into that process has now

concluded.

The

result of his work is not a formal report, per se.

He has been involved in working with the agency in the development of

policies and procedures and assisting in the development of the new legislation.

MR. MITCHELMORE:

Okay.

You had

also confirmed that government has pulled out of AIT.

Is that correct?

MR. KENT:

That is correct.

MR. MITCHELMORE:

There is no other trade

agreement that government has currently suspended negotiation talks.

Because it appeared that there were a number of others made public

previously around the Asia-Pacific or TTP, South Korea, and there is a variety

of ongoing that Canada would be having with the world.

MR. KENT:

To clarify, we have

suspended our involvement in all of them.

The only one that the Government Purchasing Agency was actively involved

in at this point in time was the Agreement on Internal Trade.

If you have questions related to the status of those other negotiations,

they would probably be better directed to the minister responsible.

MR. MITCHELMORE:

Of course, I agree.

The

AIT, though, there is already a current trade agreement in place for AIT.

The current round of negotiations were to enhance or expand the role; is

that correct? Would the department

or the government in general still have to follow the current agreement that was

signed?

MR. KENT:

My understanding is yes,

that is correct, but our role is to offer input on procurement-related issues.

We are not the agency of government that leads trade negotiations, or

even manages or co-ordinates trade negotiations.

That is typically led by the Department of Business, Tourism, Culture and

Rural Development.

MR. MITCHELMORE:

Okay.

I do

not think that I have any other questions at this time, but I do believe my

colleague for Mount Pearl South, who is responsible for this portfolio, has a

question.

CHAIR:

Before I do, I go back to

George. Do you have anything else,

George, before we clue up?

MR. MURPHY:

No, Sir; I am good.

CHAIR:

Okay, that is fair.

Do you

want to clue it up, Paul?

MR. LANE:

Yes.

Thank you, Mr. Chair.

Mr.

Minister, in terms of the Auditor General, the Auditor General did a report back

in 2012 and had a number of concerns around purchasing.

According to my notes here anyway, he reported a total of 1,472

exceptions that were valued at over $100 million.

We were assured at the time that there would be training that would be

taking place to deal with all those issues.

recall there were issues there around exceptions, for example, and people just

using emergency in areas where I think most people would feel and I think the AG

felt that it was not an emergency, and there was plenty of time to put out RFPs

, tenders and so on. There were a

number of other issues. As I said,

over 1,400 of them.

I am

just wondering what training has taken place.

I assume it would be led by the Government Purchasing Agency.

Perhaps the departments themselves would actually do the training, I am

not sure, but certainly you guys would be the lead on it, I would imagine.

What has been done in terms of training in the departments to assure that

the Public Tender Act and the RFPs and all that stuff is being applied the way

it should and to also ensure that all of the documentation is being filled out

correctly? I believe that was

another area of concern that there was a lot of documentation that was not

filled out, or it was not filled out properly and so on.

If you

can comment on that, please.

MR. KENT:

I certainly can.

Thank you for your question.

As you joined us in progress, I want to begin by wishing you a Happy McHappy

Day. Your drive-through performance

was questionable, but so was mine.

They did allow me to handle the money.

I am a little uncomfortable from a safety perspective that you were

handling the food, but I know that organization has good quality control

standards, even on McHappy Day.

To your

question, first of all, the Auditor General in 2014 did provide an update on

progress that has been made on the 2012 recommendations, and considerable

progress has indeed been made. On

the training question specifically, I am going to invite Leigh and Patricia to

comment. I can tell you that there

has been informal training conducted internally.

There is not a formal training program as such, but I will allow Mr.

Puddester to start.

MR. PUDDESTER:

Yes, training is an important part of the mandate of the Government Purchasing

Agency moving forward. The

strategic plan for 2014-2017, that was one of the primary focuses.

The plan talked about initially the focus was going to be on developing

some training material in an approach for the GPA staff, and then once that was

in place, it was going to start to be broadened to the public sector overall.

So some

work was done on that in the most recent year, and I will ask Patricia to speak

to that in just a second and again, that will then be expanded outwards.

What I would say, though, is the training specific to exceptions is just

one part of what we would want to be training civil servants on how to do.

Obviously, it is a very large act, and the focus would be on ensuring

they have got a good understanding of how to use the act quite broadly,

including those exceptions. There

is not a specific program focus just on exceptions; it is a broader issue that

we are trying to deal with.

MR. LANE:

Yes, thank you.

I understand that; that was just one

part I was keying in on.

MR. PUDDESTER:

I would ask Patricia if she might to just elaborate on the training that has

been done.

MS HEARN:

Sure. Thank you for your question.

terms of the Public Tender Act, it encompasses the exceptions as well as the

rules for public tendering. In this

past year, we have taken on a journey of training both the public sector

employees within core government, in the departments, as well as we have reached

out to other government-funded bodies.

Within the Province, we have in excess of 500 government-funded bodies

that follow the Public Tender Act.

So it

is a challenge, of course, to get the training out and to reach all entities.

What we have done in this past year is we have had seven sessions to

train all entities in terms of the contractual obligations of the Public Tender

Act, including the exceptions that fall within the legislation as well.

terms of your second question, filling out I think the Auditor General

referenced filling out the Form B or the exception report incorrectly.

What we do on a daily basis, these forms come directly to the Government

Purchasing Agency. We have the

expertise in-house for many, many years now that we will provide clarity to each

individual exception. When a

question comes up, if it is not filled out properly or correctly, we will

actually contact the government-funded body directly, have a one-on-one

conversation to explain and bring clarity to the exception itself.

What we

do then is we roll up all of those questions throughout the year that come in as

a result of the Form B's and we incorporate that into our training material as

we move forward.

MR. LANE:

When you talk about the

government-funded bodies first of all, it is the same training I imagine, but

we are talking about internally in terms of all of the government departments

and agencies that we would be doing training.

Are there any measures in place or training, for example, for

municipalities because they also have to follow the Public Tender Act?

Or if there is no training, is there any monitoring or whatever to make

sure that those bodies are in compliance as well?

Like school boards and things like that also.

MS HEARN:

Yes, we do. We roll out the

training to both core government, which is the departments, and we invite as

well government-funded bodies to attend where possible.

Within

the St. John's region, we hold one-on-one in-person training.

We also provide for virtual training for any individual across

Newfoundland and Labrador to attend as well.

MR. LANE:

Okay, thank you.

The

only other question I had and I am assuming, again, in a general sense it

would fall to this division, but certainly it applies to all departments.

We have heard of the concept I believe my colleague here for Virginia

Waters may have referenced it in the House yesterday or the day before this

phenomenon that I think she said it was March madness, where basically you have

this scenario where because come March 31 is year end and you have departments

that have budgets and I guess there is thought that if you do not spend the

money you will not get the money next year.

So you hear all of these stories all the time about let's purchase some

new vehicles. Even though the

vehicle we have might be fine, let's buy a new one anyway.

Let's buy new furniture.

Even though the furniture we have may be fine, but let's update it.

Let's paint everything.

Let's tear up the carpets, whatever.

What

measures are in place, if any because it is one thing to have practices in

place to deal with if you make a purchase, that you are required to put out

RFPs, tenders, whatever, but is there any mechanism or monitoring, or auditing

or whatever done at all in government to ensure that when departments are making

these purchases that somebody at least spot checks to make sure that this is a

reasonable purchase, this is a needed purchase that is being made.

MR. KENT:

I have seen the light the

little red one I mean.

I will

provide some general commentary because the issue you are raising really does

not involve the Government Purchasing Agency directly.

We exist to ensure that proper processes are followed when government is

involved in purchasing, as you are well aware.

MR. LANE:

Yes.

MR. KENT:

There are numerous checks

and balances in place in the public service to prevent the phenomenon, as you

refer to it, from occurring. It is

one of those issues that I, too, have heard over time, and as a minister it is

an issue that I have definitely watched for over the last couple of years.

In this past fiscal year, there has been even greater scrutiny.

There has been a freeze on any discretionary spending so we, as

ministers, expect and demand that our deputy ministers and the executives in our

departments ensure that the freeze is adhered to and that discretionary spending

is not occurring.

Exceptions, when there needs to be money transferred from one budget line to

another or there is some other sort of deviation, those decisions have to go

directly to Treasury Board for approval.

As the Vice-Chair of Treasury Board, I have seen numerous issues come to

the table where we really examine them carefully; they are under very close

scrutiny to make sure that there is good justification for any funds being spent

and that they are truly necessary.

I think

government has gotten better at managing that dynamic and ensuring that funds

are not spent unnecessarily, and that is even more important when you are in

tough fiscal times as we find ourselves.

I know the Premier and the Minister of Finance and other members of

Cabinet would have no tolerance for discretionary spending that is not

absolutely necessary, and any spending decision has to be justified.

MR. LANE:

Still on this same train of

thought, I suppose, I am wondering you say you have auctions a couple of times

a year or whatever. Maybe you can

comment on the frequency; you may have already and I may have missed it.

You

have auctions, so at some point in time I am assuming and you can correct me

somebody decides that this surplus equipment, maybe it is table and chairs, or

whatever it might be that a particular department or division within the

department from any part of the Province that has this equipment they no longer

need so it is going to be auctioned off.

Is there a warehouse somewhere, for example, that all of this excess

equipment would go to, to be stored until you have enough of it to do an

auction? Can you explain how that

system works for me?

MR. KENT:

There are some warehouses,

but there are other options as well.

I will let Mr. Puddester speak to that.

MR. PUDDESTER:

There are a couple of different things that happen.

First of all, if it is things like furniture, filing cabinets, chairs and

things, the Government Purchasing Agency actually operates its own small

warehouse where we will take that material and try and reuse it within

government first because oftentimes we will have other departments who need

chairs, filing cabinets, or whatever.

Before, obviously, we dispose of those through an auction process we will

try and reuse them internally.

Again,

that is done through GPA's own small warehouse.

When it comes to assets that are surplus for government's needs, those

would typically be spread out all over the Province and be all sorts of

different types. They would often

be held by the department wanting to dispose of them until we can arrange for an

auction to take place. That would

be based on critical mass, where the items are, what they are and those types of

things. I think sometimes we also

give them to the auctioneering firm to hold until we are ready as well.

MR. LANE:

Okay, that is great.

The first part of your answer kind of answered where I was going.

I was wondering about it being reused because, obviously, from a cost

perspective it would not make sense if you have equipment and you are putting it

in storage for auction and now you have another department who needs that

equipment and are going to buy new stuff, so I am glad to hear that there is

some reusing going on.

terms of that reuse, is that something that if you hear about someone looking

if I could put it this way: Does every department know or whatever, or is there

a protocol, if you will, in each department that says if I need some new chairs

before I issue a purchase order to buy new chairs, I must first contact

Government Purchasing to see if we have chairs that can be reused; or is that

discretionary, they can do it if they feel like it; or are they required to do

that? Do you know?

MR. PUDDESTER:

I might ask Patricia to

answer the details on that one, if I could.

MS HEARN:

What we offer through the

Government Purchasing Agency, through our Intranet, is a website that shows what

we currently have at our warehouse accessible to core government users.

Any public servant who is looking for a chair, a desk, some of the small

more office furnishing type things, they can go online and see some photos that

we have up.

We do

not have a policy in place or a procedure in place where it is mandatory to do

that. The departments have the

right to spend their money as they choose, but they do have access to our

database of what we currently have.

That changes daily, so we try to keep that updated as much as possible so that

you can see, in real time, what we currently have at the warehouse.

MR. LANE:

Thank you for your answer.

I am a little disappointed with the answer, but thank you for it.

I think it could be argued that we should have a policy.

It is fine to say here is our inventory, go look at our online catalogue;

but if you do not want to look at it, you can go and buy brand new stuff because

you do not want to use that, even though what we have is perfectly fine.

Just as

a comment, I suppose, for the record, I think that it is something that should

be looked at to make it mandatory, but I do thank you for that answer.

MR. KENT:

Can I just speak to that,

Mr. Chair?

CHAIR:

Yes.

MR. KENT:

I will not prolong the

discussion, but I just want to be clear that we have an expectation there is

certainly a good general understanding among departments that we should reuse

first. What I have witnessed in the

departments that I have been in is just that: you reuse the good equipment.

Then there is equipment that may no longer be in great condition and

certainly not in perfect condition and may no longer be suitable for reuse.

That is often the equipment that ends up in surplus, that ends up going

to auction, that ends up in warehouses.

I just

want to be clear that there is a very good amount of reuse occurring, wherever

possible, and the equipment that ends up not being reused and going into a

warehouse to be sold at auction is usually far from perfect condition, just to

be clear.

MR. LANE:

Thank you, Mr. Minister.

that, I am wondering if you can provide us, if you do not have the numbers per

se, with a sense of what is the uptake.

If you have this system in place, then I would like to know: What is the

uptake? How many departments are

actually doing that?

Do they

all know about it?

MR. KENT:

They definitely

MR. LANE:

It is the first I ever heard

of it. That does not mean anything

just because I never heard of it. I

have never heard of that process before.

MR. KENT:

All I can tell you is that

in the various departments that I have been in, it has been clear that practice

is in place. Equipment is reused.

There are people in departments who coordinate the assets that are within

that department and ensure that equipment is put to good use.

If somebody is in need of a new desk, or whatever the case may be, the

first objective is to find that equipment within the system, as opposed to

simply getting a purchase order.

It may

be difficult to quantify exactly how much of that is going on, to your

particular question, because each department is managing its assets.

I can certainly tell you from experience I have seen it happening in

every department that I have been in.

It is one of those issues that executives within departments would be

paying close attention to also.

MR. LANE:

Okay, thank you.

The

last question I have and it relates to what my colleague here asked, but I do

want to go back to it just for a second is the procurement by public bodies

act. As was indicated on March 5,

that piece of legislation was introduced and it basically died on the Order

Paper.

Now we

are into May 2015. That is over

three years. Now we are still

talking about I believe the words you used, Mr. Minister was that it is an

ongoing process; we are trying to gauge best practices and we want to get it

right. We obviously agree.

If we are going to do it, let's do it right.

We are talking over three years and we still have not seen it.

I am

just wondering why that big gap? I

know that you have not been responsible for this portfolio up until now, or

recently, but it was a full three years where somebody had an opportunity to get

it right. As a matter of fact, it

was already written. If it was on

the Order Paper it means it was written, ready to go.

Obviously all the work at the time was done.

Maybe it needs to be tweaked, but it would seem to me that three years

later and now we are still talking about trying to get it right; that seems like

an excessive amount of time to redo, or revamp, or tweak what was already there.

I am

just wondering, I know on a go-forward basis you are going to say, well, I

appreciate that, but why the three years of nothing, or what seems to be

nothing?

MR. KENT:

I appreciate your question.

First of all, I do not feel it would be fair to say nothing has been

done. In fact, we can demonstrate

that is not the case. I will not

rehash everything I have already said because I do not really have a lot new to

say beyond what I have already said this morning on this issue.

I can tell you that despite the fact we have not brought in new

legislation, there are many initiatives to improve procurement within government

that have been ongoing and that have saved money over those three years that the

member is referencing.

Beyond

that, the legislation is taking more time than anticipated.

We are continuing to work on it.

There have been issues raised that we want to further explore.

As we outlined earlier, we have engaged expertise to assist us in that

work. We are developing the

policies and procedures. So we are

looking forward to introducing that legislation as soon as it is ready.

cannot say for certain that it will be in this session of the House.

That remains to be seen as our work continues, and that depends on the

legislative agenda, of course, too.

I have spoken to this issue a couple of times this morning and I do not really

have a lot else to add, Mr. Chair.

CHAIR:

Thank you.

MR. LANE:

That is all I have, Mr.

Chair.

Thank you.

CHAIR:

Okay.

Thank you, Paul.

Paul

Lane, the Member for Mount Pearl South, right?

MR. LANE:

South, yes.

CHAIR:

Never got in on the

introductions in the beginning. He

was just a little bit late getting in, but thank you anyway.

MR. KENT:

His drive-through orders

were late as well, Mr. Chair.

CHAIR:

Thanks for the reason.

Okay,

we will call for the vote. We will

call for the subhead.

CLERK:

Subhead 1.1.01.

CHAIR:

Subhead 1.1.01.

Shall

the total carry?

All

those in favour, 'aye.'

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

motion, subhead 1.1.01 carried.

motion, Government Purchasing Agency, total head, carried.

CHAIR:

Shall I report the Estimates

of the Government Purchasing Agency carried without amendment?

All

those in favour, 'aye.'

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

Thank you.

motion, Estimates of the Government Purchasing Agency carried without amendment.

CHAIR:

There were some Government

Services Committee minutes circulated from yesterday, May 5, for the Department

of Transportation and Works.

Can I

have a motion for adoption?

MR. DINN:

Moved.

CHAIR:

John Dinn.

We do

not need a seconder for that, do we?

All

those in favour, 'aye.'

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

Thank

you.

motion, minutes adopted as circulated.

CHAIR:

Okay, I thank the Committee.

I thank the minister for filling in and doing a great job this morning on

such short notice, because he is only acting, and the staff as well.

With

that, I will ask for a motion for adjournment.

MR. DINN:

Moved.

CHAIR:

Moved by John Dinn.

Thank

you very much.

MR. KENT:

Thank you.

motion, the Committee adjourned.

Document details

Collection	Newfoundland and Labrador — Committees
Citation	2015-05-06
Type	committee
Volume / chapter	committees_standingcommittees_govservices_ga47_2015-05-06gscgovernmentpurchasingagency.html
Language	en
Format	html
Source	PROVINCIAL
Identifier	d5f443603e542062e685af847d94f4aeb923b75e

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