Standing Committee on Government Operations and Estimates: March 20, 2024

2023 to 2024 Supplementary Estimates (C)

Date: March 20, 2024 4:30pm-5:30pm

Location: 025-B West Block

Public Services and Procurement Canada

Minister's opening statement

The Hon. Jean-Yves Duclos
Minister, Public Services and Procurement Canada

Standing Committee on Government Operations and Estimates
2023-2024 Supplementary Estimates (C)

March 20, 2024

Check against delivery

588 words

Opening remarks

Thank you, Mr. Chair.

We are gathered on the traditional, unceded territory of the Algonquin Anishinaabe People.

As Minister of Public Services and Procurement Canada (PSPC) and Shared Services Canada (SSC), I am pleased to discuss our requests in the 2023‑2024 Supplementary Estimates (C).

Four priorities

Allow me to position these requests in the context of my priorities.

First of all, modernizing procurement includes simplifying our processes and improving access to public contracts for small and medium enterprises (SMEs) and suppliers from historically under‑represented groups.

My second priority is to resolve pay issues for public servants and move forward with the Next Generation Human Resources and Pay system.

The third priority involves supporting our government's response to the housing crisis. To do so, we are accelerating the conversion of surplus federal properties into affordable and accessible housing.

This year alone, through agreements with developers, the Canada Lands Company will enable the construction of more than 2,800 housing units and, over the next five years.

The company plans to build over 26,000 new homes on its properties, at least 20% of which will be affordable housing units.

And of course, my fourth priority is to continue working in close collaboration with key partners to implement the Canadian dental care plan.

To date, over 1.5 million seniors have become eligible for the Plan, and oral health care providers have started signing up.

ArriveCAN

I'd like to update you on the work done by PSPC officials to answer questions about Canadian government procurement processes.

First, I'm very proud and grateful for all the hard work done by public servants to protect Canadians' health during the pandemic.

Whether it be by ensuring the supply of vaccines, rapid tests or personal protective equipment, the work of these public servants and Canadians helped save lives and keep our economy running.

I wish to reassure this Committee that the findings of improper behaviour, including fraud, are unacceptable.

In November 2023, PSPC temporarily suspended all delegated authorities to authorize professional services-based task authorizations. Now, all other federal departments must formally agree to a new set of terms and conditions to obtain access to select professional services methods of supply.

That same month, PSPC suspended all Government of Canada (GC) Strategies contracts with the Canada Border Services Agency (CBSA).

PSPC has since suspended the company from participating in the department's procurement processes and instruments, and has asked all other departments and agencies to review any active contracts with GC Strategies that were entered into under their own authorities.

Following further investigations, both PSPC and SSC have also recently suspended two other companies, Dalian and Coradix.

Strengthening integrity, pursuing wrongdoing

We also need to have more tools that can protect our supply chains from bad actors and respond to evolving threats.

Earlier today, I announced the establishment of the Office of Supplier Integrity and Compliance.

This new office will enable PSPC to better respond to misconduct and wrongdoing and further safeguard the integrity of federal procurements.

I also provided an update on investigations by PSPC that had uncovered several fraudulent schemes undertaken by subcontractors working on federal professional services contracts between 2018 and 2022.

The department has revoked or suspended the security statuses of these subcontractors and is taking steps efforts to recover illegitimate amounts billed to the Government.

These cases have also been referred to the Royal Canadian Mounted Police (RCMP).

Mr. Chair, all of this work is part of renewed efforts at PSPC to improve federal procurement and hold bad actors accountable for wrongdoing.

I would be pleased to answer any questions the Committee might have.

Thank you.

Public Services and Procurement Canada 2023 to 2024 Supplementary Estimates (C) Overview

PSPC is seeking a net increase of $263.4 million^{footnote 1} for the items below through Supplementary Estimates (C), increasing its available funding from $5,197.2 million to $5,460.6 million net of revenues.

Voted Appropriations: $236.2 million Increase

Funding for capital investments

$200,000,000

Purpose of funding

Reversed reprofile of $200 million in capital funding in order to assist the department in the delivery of critical infrastructure projects that provide services to Canadians. The cost estimates, scopes and schedules are refined through time, thus creating the need to adjust the Vote 5 cash profile. PSPC previously sought and received a similar reprofile of $175 million in the 2023 to 2024 Supplementary Estimates B.

Given the nature of capital investments, the increasing number of in-flight projects, coupled with their size and complexity, changes in cash requirements are to be expected as project forecasts and Investment Plan priorities are updated. The reprofile will reduce strategic financial risk and provide funding to pursue, as intended, the implementation of critical infrastructure projects as per the approved Investment Plan and ensure sound investments within the Capital Investment Fund.

• $100 million of this funding is sourced from approved capital funds for 2027 to 2028 reallocated into fiscal year 2023 to 2024 (reversed reprofile)

• $100 million of this funding is sourced from approved capital funds for 2028 to 2029 reallocated into fiscal year 2023 to 2024 (reversed reprofile)

• Funding will not be for any single specific project, but rather a suite of projects that includes Place du Portage III, Les Terrasses de la Chaudière, and the West Memorial Building

Funding for the Long-Term Vision and Plan of the Parliamentary Precinct

$14,446,997

Purpose of funding

The Long Term Vision and Plan (LTVP) is a multi-decade strategy to restore and modernize Canada's Parliament buildings, address health and safety risks, and preserve our built heritage for the future. The LTVPwas first approved by Cabinet in 2001 and revised in 2006. Cabinet decisions in 2016 and 2017 approved proceeding with the rehabilitation of the Centre Block and the creation of an integrated parliamentary campus.

• The $14.4 million in funding is to continue implementing the LTVP. The adjustment in funding is to align with current timelines for project development and delivery. PSPC is accessing funds earmarked in the fiscal framework for the next 3 years in order to continue in-flight pre-planning work on 21 projects, including campus planning, the 100 Sparks/30 Metcalfe Redevelopment, and the Block 2 Redevelopment

Funding for accommodation costs related to pension administration

$11,554,660

Purpose of funding

Funding for accommodation costs for employees who provide pension services relating to the Public Service Superannuation Act, Canadian Forces Superannuation Act, Royal Canadian Mounted Police Superannuation Act, Canadian Forces Pension Fund and Reserve Force Pension Fund. This funding is a yearly administrative adjustment requested through Supplementary Estimates exercises.

The $11.6 million is broken down as follows:

• Accommodation costs for PSPC's employees:
  • $11.2 million: Public Service Superannuation Act, Canadian Forces Superannuation Act and Royal Canadian Mounted Police Superannuation Act
• Accommodation costs for the Department of National Defence's employees:
  • $0.3 million: Canadian Forces Pension Fund and Reserve Force Pension Fund

Funding for the Laboratories Canada Strategy

$5,990,926

Purpose of funding

The Laboratories Canada strategy (previously referred to as the Federal Science and Technology Infrastructure Initiative) was established in 2018 as a long-term initiative, delivered in phases, to renew federal laboratories and support a collaborative approach to conducting science and technology. Budget 2018 outlined $2.8 billion largely in capital funding, with additional funding being granted in Budget 2023 ($59 million over two consecutive years starting in 2023 to 2024).

A reprofile of funds from the previous year into fiscal year 2023 to 2024 is required to undertake activities such as pre-planning, schematic design, and site selection on the Regulatory and Security Science Main project.

Funding for payment card acceptance services and postage fees

$3,424,764

Purpose of funding

The Receiver General pays for debit and credit card acceptance fees incurred by federal departments and agencies as a result of the collection of revenues via debit and credit cards (e.g. revenues collected for passports, citizenship services, entrance and visitor services for national parks, etc.).

In addition, the Receiver General pays for the postage fees to mail up to 20 million cheques to Canadians.

The total costs of these services are out of PSPC's control due to annual fluctuations in the price and volume of transactions. When the total projected costs exceed available funding, additional funds are sought. Any unused funds are returned to the Consolidated Revenue Fund (CRF).

• Funding is for increases in non-discretionary expenses incurred by the Receiver General on behalf of federal departments and agencies for card acceptance and postage fees

Funding for a cyber security certification program for defence contractors (Budget 2023) (horizontal item)

$798,446

Purpose of funding

The GC's supply chains are subject to frequent, sophisticated and malicious cyber activity. Through harmful cyber activity, malicious actors could leverage vulnerabilities in unsecured GC supplier networks to gain intelligence on defence systems, and impact the confidentiality, integrity and readiness of our supply chains. Introducing mandatory cyber security certification requirements for defence contractors to the Government of Canada will help protect federal unclassified contractual information and increase supply chain security, thereby better protecting Canadian economic and national security interests. The GC aims to introduce mandatory cyber security certification requirements for federal contractors by winter 2024.

• PSPC will lead and oversee the design and implementation of the Canadian Program for Cyber Security Certification, in collaboration with 6 federal departments and 1 Crown Corporation. The overall scope of the program is to establish a government-wide solution for mandatory cyber security certification for federal procurements, starting with select defence contracts, to be identified on the basis of a risk framework

Statutory appropriations : $30.3 million Increase

Real Property Services Revolving Fund (Revolving Funds Act)

$30,100,000

Purpose of funding

• Update of the Real Property Services Revolving Fund (RPSRF)'s statutory forecast by increasing the planned deficit for 2023-24 by $30.1 million, from the planned deficit of $3.5 million in the 2023-24 Main Estimates to the revised planned deficit of $33.6 million. The increase in the planned deficit mainly results from higher salary expenditures to fund ratified collective agreements (CA)s, combined with additional investments in the modernization of service delivery tools and office space

Contributions to employee benefit plans

$178,060

Purpose of funding

The employee benefit plans includes cost to the government for the employer's matching contributions and payments to the Public Service Superannuation Plan, the Canada and Quebec Pension plans, Death Benefits, and the Employment Insurance accounts.

• Employee Benefit Plans applicable on salary relating to Budget 2023 funding for the cyber security certification program for defence contractors

Net transfers between government departments: ($3.1 million) Net Decrease

Transfer from the Department of Agriculture and Agri-Food and the Department of Public Works and Government Services to the Treasury Board Secretariat for the implementation of renewed assessment tools related to the Policy on the Planning and Management of Investments

Transfer of ($161,300)

Purpose of funding

Over the past 5 years, working in collaboration with departments, the Treasury Board of Canada Secretariat (TBS) has renewed the Organizational Project Management Capacity (OPMC) and Project Complexity and Risk (PCR) assessments. This renewal initiative was informed by external expertise, lessons learned, and best practices.

The renewed assessment tools are expected to increase management utility by providing clearer information on organizational strengths and potential areas for improvement, and by more effectively integrating and PCR results to better inform project risk management planning and oversight. As a result, TBS has initiated a project to modernize its OPMC/PCR Information technology (IT) application (known as Callipers):

• The transfer of $161,300 is for the definition and implementation of an OPMC/PCR Renewal Initiative IT application modernization project, transitional operations and maintenance of the new application as well as the conduct of broader organizational change management activities for the renewal initiative

Transfer from the Department of Public Works and Government Services to Shared Services Canada for reimbursement related to reduced accommodation requirements as a result of data centre consolidations

Transfer of ($656,448)

Purpose of funding

SSC was created in 2011 to transform how the Government manages its information technology infrastructure. In line with its mandate, one of SSC's core objectives is to generate savings through IT consolidation. Through the data centre consolidation project, SSC will close and PSPC will decommission several hundred legacy data centres and consolidate them.

The $0.7 million transfer represents savings of power and space in fiscal year 2022 to 2023 as a result of closing data centres. These savings are passed on to SSC. PSPC is the only department that can access the funding related to accommodation, and therefore, the only one able to compensate SSC for its power and space savings reduction.

• Funding is for reduced accommodation requirements as a result of data centre consolidations (SSC's savings incurred in 2022 to 2023):
  • Space ($294,664)^{footnote 2}; and
  • Power ($361,783)^{footnote 2}

Transfer from the Department of Public Works and Government Services to the Department of Indigenous Services for the National Indigenous Procurement Initiative

Transfer of ($2,324,593)

Purpose of funding

The Strategic Partnerships Initiative (SPI) helps Indigenous communities participate in complex economic opportunities and provides a way for federal partners to coordinate their efforts, reduce administrative burden and pool resources in support of Indigenous communities. This approach fills gaps in other funding programs that might create a barrier to Indigenous involvement in economic opportunities. In 2019, PSPC obtained approval to become a signatory to the SPI administered by Indigenous Services Canada and it has partnered with them to deliver projects since then.

The funding will be used to help Indigenous communities receive funds for projects that have a potential of generating economic opportunities and benefits to Indigenous peoples in Canada.

Funding usually supports activities such as:

• Pre-feasibility and feasibility studies, diagnostic studies, environmental evaluations, information gathering, etc.
• Enhancement of the organizational capacity of communities or organizations mandated to lead and/or support the implementation of economic development projects
• Skills development, including management and technical training
• Construction, architectural, engineering and project design activities
• Economic infrastructure development
• Establishment, expansion, or modernization of an Indigenous business or joint venture

Changes to the Procurement of Professional Services

Issue

On November 2, 2022, a motion was passed by the House of Commons that called on the Office of the Auditor General of Canada (OAG) to conduct a performance audit, including payments, contracts, and subcontracts of ArriveCAN.

The Office of the Procurement Ombud (OPO) and the OAG audit reports were tabled on January 29, 2024, and February 12, 2024, respectively. The reports highlight serious concerns regarding project management and offer recommendations pertaining to procurement, specifically professional services.

Key facts

• The Procurement Ombud report gave 14 recommendations based on the analysis of information and documentation provided to OPO by CBSA, PSPC and SSC during the course of the review; PSPC responded to 8 recommendations
• The Auditor General (AG) report gave 8 recommendations, 1 of which relates to PSPC (jointly with CBSA)

Key messages

• PSPC takes the conclusions of the AG and the OPO very seriously and is acting on the recommendations in line with our commitment to open, fair and transparent procurement processes, while obtaining value for Canadian taxpayers
• Over the past year, PSPC has taken concrete actions to strengthen the oversight of all the professional services contracts falling under PSPC authority
• In light of the reports from the OPO and the AG, PSPC instituted measures and controls on new and existing professional services contracts to strengthen contract management practices and is actively engaging with client departments and agencies to ensure these new measures are implemented quickly and efficiently
• Collectively, these measures will help us continue to strengthen and enhance federal procurement processes to promote greater competition, particularly in the field of IT consulting services
• As of February 23, 2024, according to information gathered by PSPC, all contracts with GC Strategies and the Government of Canada have either expired or have been suspended. GC Strategies is no longer eligible to participate in PSPC tenders, and has been removed from supply arrangements

If pressed on immediate actions PSPC is taking to strengthen existing controls and oversight for professional services contracting:

• PSPC has implemented the following changes:
  • Requiring increased clarity from business owners on the scope, tasks and deliverables of new professional services contracts and task authorizations
  • Improving evaluation requirements to more effectively validate that all resources have the required work experience and validated security clearances
  • Improving documentation requirements at the time of contract award and when task authorizations are issued
  • Suspending delegated authorities for departmental issuance of task authorizations against contracts awarded by PSPC until PSPC's newly mandated professional services measures are implemented by departments
• The department is actively engaging with client departments and agencies to ensure these new measures are implemented quickly and efficiently

If pressed on the actions being taken in response to the AG report:

• PSPC accepts recommendation 73, and has already taken action:
  • PSPC provided direction, in a December 4, 2023 communiqué, to procurement staff to ensure that task authorizations include clear tasks and deliverables, in addition to identifying the specific project(s) or initiative(s) that are included in the scope of contracts
  • Additionally, PSPC sent a directive to its client departments, via their Senior Designated Official for Procurement, indicating this change was immediately being brought into effect for professional services contracts, as of November 28, 2023
  • PSPC will also update the Guide to Preparing and Administering task authorizations as well as the Record of Agreement template for clients by April 2024

If pressed on the actions being taken in response to the procurement ombuds review:

• PSPC responded to 8 of 14 recommendations outlined in procurement ombud's report
• As one example of actions being taken, PSPC is implementing a new checklist for task Authorizations to ensure that contracts include specific criteria for Technical Authorities to assess resource qualifications and criteria
• PSPC is also reviewing the "Substantiation of Professional Services Rates" clause that permits Canada to require bidders to substantiate proposed rates that fall below the lower limit of the median band

If pressed on suspension of GC strategies:

• PSPC suspended the CBSA contract with GC Strategies on November 3, 2023, and has not awarded any new contracts to GC Strategies
• On February 14, 2024, PSPC informed GC Strategies that, until further notice, it was suspended from all business and solicitations issued by PSPC, either directly as a contractor or indirectly as a subcontractor. GC Strategies was also informed that all its existing supply arrangements have been suspended
• GC Strategies' security status has also been suspended by PSPC, effective March 1, 2024

If pressed on suspension of Dalian and Coradix:

• On February 29, 2024, PSPC became aware that the CEO of Dalian Enterprises is currently employed by the Department of National Defence, while concurrently contracting with the Government of Canada
• PSPC suspended the security status of Dalian Enterprises, effective March 1, 2024
• PSPC suspended the professional services supply arrangements for Dalian Enterprises and Coradix Technology Consulting Ltd., in joint venture as well as those with Coradix Technology Consulting in its own rights on February 29, 2024
• For Dalian and Coradix in joint venture, PSPC informed its client departments of the immediate suspension and sought their concurrence to suspend work on all remaining active contracts. PSPC issued stop work orders for all current PSPC-issued contracts on March 6, 2024
• For Coradix, PSPC informed its client departments of the immediate suspension and sought their concurrence to suspend work on all remaining active contracts on March 6 and subsequently issued stop work orders for all current PSPC-issued contracts
• PSPC is also recommending all client departments suspend work with the company for contracts awarded within their own delegated authorities
  At this time, PSPC is aware that only Global Affairs Canada has continued its work with Coradix, and that department has informed PSPC that Coradix is performing a critical service on one of their essential functions

Background

Under its authorities, PSPC awarded contracts in support of ArriveCAN and was responsible for providing procurement guidance to the client department. The CBSA was responsible for developing and managing the ArriveCan tool based on the Public Health Agency of Canada's health requirements enforced by the Quarantine Act.

• A total of 46 different contracts were used in support of ArriveCan. Of these 46 contracts, it has been confirmed that 31 were awarded by PSPC under its authorities:
  • 19 contracts were competitive under normal contracting authorities, including 6 hat were set-aside for Indigenous businesses under the Procurement Strategy for Indigenous Business program
  • 12 contracts were non-competitive, including 8 contracts to procure software licenses that were sole sourced due to intellectual property rights or urgent need
  • Of the 12 non-competitive contracts, 4 used COVID emergency contracting authorities for the contracting of IT consultants
  • 11 of the 31 contracts PSPC issued were awarded before the COVID-19 pandemic and were leveraged by the CBSA to bring in resources to work on ArriveCan
  • 4 contracts were awarded to GC Strategies, including 3 that were awarded non-competitively, using emergency contracting authorities

On November 14, 2022, the House of Commons Standing Committee on Government Operations and Estimates (OGGO) adopted a motion recommending the Procurement Ombud conduct a review of contracts awarded in relation to the ArriveCAN application.

On January 13, 2023, the OPO determined there were reasonable grounds to launch a review of procurement activities associated with the creation, implementation and maintenance of ArriveCAN.

In light of the findings of the audits, PSPC took immediate action to strengthen existing controls around the administration of professional services contracts. On November 28, 2023, other government departments and agencies were informed of new measures, introducing a common set of principles and mandatory procedures that clients must abide by to use PSPC's professional services contracting instruments.

These changes closely align with the recommendations in the OAG and OPO audits and are echoed in the resultant management action plans PSPC committed to.

Status of the Long Term Vision and Plan for the Parliamentary Precinct

Issue

PSPC is implementing the LTVP—a multi-decade strategy to restore and modernize the Parliamentary Precinct. The core of the Parliamentary Precinct includes the grounds and buildings on Parliament Hill and the three city blocks directly facing it.

The Department is also supporting Crown-Indigenous Relations and Northern Affairs Canada to develop a national space for Indigenous Peoples within the Parliamentary Precinct. The project includes the re-development of the former United States Embassy (located at 100 Wellington Street), the Canadian Imperial Bank of Commerce (CIBC) building (located at 119 Sparks Street) and an infill space between the two buildings.

Key facts

• PSPC has invested approximately $4.9 billion in the Parliamentary Precinct to date. This has created approximately 70,000 jobs (person-years of employment) to date
• Over 200 projects have been completed, including 26 major projects such as West Block, Wellington Building and the Senate of Canada Building
• The Centre Block Rehabilitation Program remains on track to complete main construction in the 2030-31 timeframe and within the estimated $4.5 to 5 billion budget
• $6.7 million has been awarded to Indigenous businesses through the Centre Block Rehabilitation Program
• The Parliamentary Precinct Greenhouse Gas Emissions have already been reduced by 63% below 2005 levels and are on track to meet net zero carbon targets

Key messages

• PSPC is restoring the Parliamentary Precinct for future generations of Canadians, making it more modern, safe, green and accessible. We are working with Parliament to ensure that their requirements are being met
• Work is advancing on track to restore and modernize the Centre Block and construct Canada's new Parliament Welcome Centre, the largest and most complex heritage rehabilitation project in Canada's history
• Work on redeveloping Block 2 for Parliament will commence in 2024. Contracts have now been awarded for both design and construction management services. Construction activities are targeted to begin in fall 2024

If pressed on Wellington Street:

• As committed to in March 2023, my department has launched discussions with the City of Ottawa on acquiring Wellington Street as a critical first step to addressing longstanding security challenges in the Parliamentary Precinct
• Through this collaborative engagement, we aim to create a plan for Wellington Street that preserves the Parliamentary Precinct as a safe, open and accessible place in a manner that works for local residents, supports vibrant business activity and creates an improved visitor experience in the capital
• If a transfer occurs, any future plans for Wellington Street would ensure it is an accessible and engaging space and planning would be made in consultation with the City, residents and businesses, as well as Indigenous partners

If pressed on the transportation study:

• To support discussions and informed decision-making around Wellington Street, PSPC has funded and undertaken a joint transportation study with the City of Ottawa and the National Capital Commission to understand the impact of reinstating vehicle restrictions on the street to the City's transportation network
• I am encouraged by the results of the study, which underlined that the street would offer an exceptional environment to pedestrians. The study also found that, should traffic volumes increase, the implementation of mitigation measures would be sufficient for the transportation network to meet the City's Level of Service
• PSPC is committed to working collaboratively with the City to ensure the surrounding area remains usable and safe for all, including vehicles and public transit users, pedestrians, as well as cyclists

If pressed on the purchase of 181 Queen Street:

• Following the completion of much due diligence and approval by the Treasury Board, PSPC has purchased the building located at 181 Queen Street in Ottawa, to provide long-term accommodations for the House of Commons as part of the LTVPfor the Parliamentary Precinct
• This building space has been leased for use by the House of Commons since 2004. This is a critical space for the House and a sound investment to support future parliamentary operations that will result in long-term cost savings

If pressed on the semi-annual update to Parliament:

• PSPC works with Parliament to plan and deliver the LTVP. As part of this collaborative process, each House of Parliament is responsible for establishing requirements and priorities to support their parliamentary operations
• As recommended by the AG, my department is submitting a progress update to the Speakers of the Senate and House of Commons twice a year. This report is focused on updating Parliament, as well as identifying and prioritizing the key decisions required from Parliament to maintain momentum
• I submitted the first update in October 2023 and will be submitting the second one in the coming weeks. Thanks to the collaborative efforts of our institutions, significant progress was made since the fall, and we are well positioned for continued success if the pace of decision-making is maintained

If pressed on the Centre Block rehabilitation program:

• The project continues to advance within estimated costs and schedule. Design work continues to mature to support the construction work, which is well underway
• Detailed excavation work for the new Parliament Welcome Centre is approximately 60% complete and the interior demolition and removal of hazardous materials is substantially completed. Other ongoing work includes masonry rehabilitation, Trompe-L'oeil installation and structural pilling
• The rehabilitated Centre Block will provide modern infrastructure to support Parliament, be significantly more accessible, and will be carbon neutral

If pressed on the Centre Block's dedicated rooms:

• PSPC continues to work closely with the Senate and House of Commons to determine the requirements for a modern Centre Block and Parliament Welcome Centre

  Through our work with various Senate and House committees, a requirement for accessible dedicated spaces was confirmed and as such, the design for the Centre Block and Parliament Welcome Centre includes several quiet rooms that could be used for quiet reflection, as well as a dedicated family room for parliamentarians, and a shared cultural indigenous practices space

If pressed on the AG's report 3—rehabilitation of parliament's Centre Block:

• A year ago, in March 2023, the AG published an audit on the Centre Block Rehabilitation Program and I was encouraged by her positive observations on the management of this historic project
• The Audit found that PSPC has successfully managed cost and scope of the project and kept work within targeted timelines despite challenges brought on by the pandemic. It also recognizes our effort to collaborate with stakeholders, including Parliamentarians, Indigenous partners and experts
• PSPC has completed the 3 recommendations. The first semi-annual update was submitted in October 2023, the 2022-2023 LTVP Annual Report was publicly released in December 2023, and a gender-based analysis plus for the Centre Block Rehabilitation Program was completed in 2023

If pressed on parking garage:

• At the request of Parliament, the current landscape design for the Centre Block includes 109 surface parking spots, and includes no underground parking
• In an effort to balance parliamentary requirements and heritage considerations, my officials developed a suite of options for Parliament's consideration, including incorporating parking in a planned underground material handling facility, which was ultimately not approved
• We will continue to work hand-in-hand with Parliament and the National Capital Commission to find solutions that support parliamentary operations, preserve Parliament Hill's heritage landscape and are financially sound

If pressed on the redevelopment of Block 2:

• The redevelopment of Block 2 will transform a mix of functionally obsolete heritage buildings and two vacant lots into a modern, sustainable and accessible facility to meet the needs of a 21st century Parliament
• The design contract was awarded to the winner of the Block 2 Design Competition, Zeidler Architecture, in May 2023. In December 2023, my department also awarded the construction management services contract for this project to Pomerleau Inc.
• Next steps include establishing detailed requirements with Parliament to create a baseline project budget and schedule, continue advancing the design, and begin construction

If pressed on the Indigenous Peoples space (100 Wellington and 119 Sparks):

• PSPC continues to support Crown Indigenous Relations and Northern Affairs Canada and Indigenous partners in developing a national space for Indigenous Peoples' in the Parliamentary Precinct
• As the overall lead for the Indigenous Peoples' Space, Crown-Indigenous Relations and Norther Affairs Canada is best positioned to answer questions on the status of a dedicated space for the Algonquin people

Background

The LTVPwas first approved in 2001 and updated in 2006 for the restoration and modernization of Canada's Parliamentary Precinct. This program supports the mandate commitment of advancing work to rehabilitate and reinvigorate places and buildings of national significance. Key priorities underway include the rehabilitation of the Centre Block and the construction of a new Parliament Welcome Centre, the redevelopment of Block 2 (the city block directly south of Parliament Hill), and finalizing the next update to the LTVP. All major projects continue to track on time and budget, including the rehabilitation of Centre Block.

In 2017, the LTVP began shifting from a building-by-building strategy to a campus-based approach, for which the redevelopment of Block 2 is a crucial first step. Approved by all Parliamentary Partners, this approach takes into consideration important and interconnected elements including security, the visitor experience, urban design and the landscape, material handling, the movement of people and vehicles, environmental sustainability, and accessibility. The LTVP is currently undergoing an update to transform the Precinct into an integrated campus beyond Parliament Hill which will be ready for consideration by Parliament and Government in 2024. As part of this update and the ongoing landscape design for the Centre Block, PSPC is working with Parliament and the National Capital Commission to resolve misaligned expectations with respect to parking as a top priority.

Since the Library of Parliament in 2006, PSPC has successfully delivered 26 major capital LTVP projects, including the restored West Block and Senate of Canada Building and the new Parliament Welcome Centre (Phase 1), which were transferred to Parliament in fall 2018. These projects followed the completion of the 180 Wellington Building (2016) and the Sir John A Macdonald Building (2015).

Wellington Street

Discussions with the City of Ottawa on the future of Wellington Street were launched in April 2023 and remain ongoing. PSPC has undertaken a number of due diligence activities in support of a possible transfer of the street to federal jurisdiction, including a land survey and independent appraisal of the portion of the street in question, as well as a now completed joint transportation study with the City and the National Capital Commission. The findings of the study identify mitigation measures at approximately $0 to $26 million based on 3 traffic volume scenarios: current (75% of pre-pandemic); pre-pandemic; high / long-term (110% of pre-pandemic). City officials briefed the Transportation Committee on February 22, 2024 and are expected to brief City Council in March 2024 on the results of the study. In March 2024, the government published its response to the Public Order Emergency Commission, in which it renewed its commitment to work with the City on a transfer of Wellington Street into federal control.

181 Queen Street

The building located at 181 Queen Street was purpose-built for use by the House of Commons in 2004 and has been in use by House administration ever since (leased space). The House has confirmed its long term requirement for the space, and its desire to remain in-situ upon the expiry of the lease.

In February 2023, following much due diligence and collaboration with the Department of Justice, Treasury Board approved the purchase of the building located at 181 Queen Street, as per an Option to Purchase included in the lease for the building. This purchase closed on February 29, 2024, and has secured long-term accommodations for the House of Commons administration. This will yield millions of dollars in cost savings for Canadians and contribute to making the Precinct more sustainable and accessible.

Centre Block Rehabilitation Program

Work is underway to restore and modernize the Centre Block, which is the largest, most complex heritage rehabilitation project ever seen in Canada. 50% design development milestones were achieved for the Centre Block and landscape design in fall 2023, with the Parliament Welcome Centre following in March 2024. On the inside of Centre Block, demolition and abatement has been substantially completed, setting the stage for re-building efforts to begin, starting with structural upgrades. Detailed excavation for the Parliamentary Welcome Centre is approximately 60% complete.

In March 2023, the AG released her report on the Centre Block, finding that PSPC had effectively managed the scope, schedule and costs through its flexible management approaches, and that it had collaborated with stakeholders and experts, including Parliamentarians and Indigenous partners. Three recommendations were made: 1) to conduct a GBA+ assessment specifically for the Centre Block; to submit a semi-annual report to the Speakers of the Senate of Canada and House of Commons outlining key risks and mitigations, and key decisions required, in order to address complex governance challenges; and to publish the LTVPannual report within the calendar year. The recommendations have since been addressed and implemented.

Indigenous Procurement

With a goal of reaching of 5% of procurement with Indigenous businesses, PSPC has established agreements with organizations, such as the National Aboriginal Capital Corporations Association, the Canadian Council for Aboriginal Business, the Council for the Advancement of Native Development Officers, the Aboriginal Apprenticeship Board of Ontario and the Anishinabeg Algonquin Nation Tribal Council to assist with fulfilling that target as it pertains to the Parliamentary Precinct. To date, $6.7 million has been awarded to Indigenous businesses through the Centre Block Rehabilitation Program.

National Shipbuilding Strategy

Issue

The National Shipbuilding Strategy is a long-term commitment to renew the vessel fleets of the Royal Canadian Navy and Canadian Coast Guard, create a sustainable marine sector, and generate economic benefits for Canadians.

Key facts

• As of September 30, 2023, we have awarded approximately $25.52 billion in contracts under the National Shipbuilding Strategy to businesses across the country and, of these, $1.32 billion went to small businesses with less than 250 employees
• National Shipbuilding Strategy contracts awarded between 2012 and 2022 are estimated to have contributed close to $25 billion ($2.1 billion annually) to Canada's gross domestic product, and created or maintained approximately 18,800 jobs annually between 2012 and 2023

Key messages

• The National Shipbuilding Strategy is about Canadians and Canadian businesses working together to strengthen and renew our Naval and Coast Guard fleets
• So far, 7 large vessels and numerous small ships have been delivered, and many more are under construction across Canada
• We will continue working closely with industry to manage costs and schedules, and ensure the best value is provided to Canadians throughout the duration of these projects

If pressed on Chantier Davie Canada Inc.'s acquisition of Finland's Helsinki shipyard Oy:

• On November 3, 2023, Chantier Davie announced that it had officially acquired Helsinki Shipyard Oy. This purchase was supported by funding from Investissement Québec
• The Government of Canada was not involved in the purchase and did not provide funding
• The National Shipbuilding Strategy umbrella agreement signed between the Government of Canada and Chantier Davie does not prevent the acquisition of international shipyards by Davie
• The Government of Canada remains committed to building ships in Canada as part of the National Shipbuilding Strategy. Canada will continue to work with our strategic partners to ensure that members of the Royal Canadian Navy and Canadian Coast Guard have the equipment they need to do their jobs and protect Canadians, while maximizing economic benefits for the country

If pressed on the amount of contracts awarded to Chantier Davie Canada Inc.:

• From 2012 to September 30, 2023, Chantier Davie was awarded approximately $2.88 billion in contracts – or 11.28% of the value of all National Shipbuilding Strategy contracts awarded across the country, of which approximately $1.99 billion was for repair, refit and maintenance contracts

If pressed on the increase in the cost for the construction of the offshore oceanographic science vessel:

• The budget for the Offshore Oceanographic Science Vessel was established in 2007, prior to the announcement of the National Shipbuilding Strategy and was never intended to represent the full construction cost of the ship. It was revised in 2009, 2016, 2021 and 2023
• In June 2023, the project obtained additional build contract authorities to reflect new and updated information related to the impacts of COVID-19 to the shipyard, higher than anticipated inflation and global supply chain challenges, a more mature vessel design, and a better understanding of production and material costs

If pressed on contract amounts:

• The National Shipbuilding Strategy is a long-term investment that is delivering results now: ships for the Royal Canadian Navy and the Canadian Coast Guard and jobs and economic growth for Canada
• Across the country, opportunities exist for Canadian shipyards and businesses to win contracts for vessel construction, repair, refit and maintenance

If pressed on economic benefits:

• The National Shipbuilding Strategy is generating economic benefits
• In 2022 alone, the Government of Canada awarded approximately $2.72 billion in new contracts to Canadian companies under the Strategy, including approximately $238.1 million to small and medium businesses with fewer than 250 full-time employees
• Contracts awarded in 2022 are estimated to contribute approximately $1.84 billion to Canada's gross domestic product, and will create or maintain close to 8,303 jobs during 2022 and 2023

If pressed on the 3rd yard:

• Following successful negotiations, the Government of Canada signed an Umbrella Agreement on April 4, 2023, with Chantier Davie Canada Inc. and announced that it has become the third strategic shipbuilding partner, joining Irving Shipbuilding Inc. and Seaspan's Vancouver Shipyards Co. Ltd
• The third shipyard will build 1 of 2 Polar Icebreakers and 6 Program Icebreakers for the Canadian Coast Guard, and 2 Ferries for Transport Canada
• The exact build schedules, sequence and costs will be negotiated and finalized during the individual contract negotiations

If pressed on the polar icebreaker:

• On May 6, 2021, the Government of Canada announced its intention to move forward with the construction of 2 Polar Icebreakers
• Vancouver Shipyards will engineer and construct one Polar Icebreaker while the other vessel will be engineered and constructed at Chantier Davie

If pressed on the Canadian international trade tribunal and federal court challenges to the award of the Canadian Coast Guard Ship (CCGS) Terry Fox vessel life extension contract:

• The Government of Canada recognizes the decision of the Canadian International Trade Tribunal
• The Tribunal asked that the parties make best efforts to negotiate and report back to it by November 21, 2023, on the outcome of discussions regarding bid preparation costs, the amount of compensation for lost opportunity and litigation costs
• The parties reported back to the Tribunal that they were unable to reach an agreement, and subsequently filed submissions supporting their respective proposals. The Tribunal reserved jurisdiction in this matter and will provide a ruling on the settlement amount. There is no set timeline for the Canadian International Trade Tribunal ruling
• The contract award remains with Ontario Shipyards (formerly Heddle Shipyards) and work continues in support of the Canadian Coast Guard's mandate

If pressed on government funding of $463 million in infrastructure upgrades at Irving Shipbuilding:

• On August 8, 2023, the Government of Canada announced an investment in the Canadian Surface Combatant project's infrastructure at Irving Shipbuilding
• PSPC, on behalf of the Department of National Defence, amended the Definition Contract with Irving Shipbuilding for an additional $463 million (including taxes) for the Canadian Surface Combatant project
• This investment will enable the production and delivery of the Canadian Surface Combatant ships at the pace required to replace the ageing Halifax-class ships and meet the needs of the Royal Canadian Navy while delivering the best value for Canadians
• The infrastructure enhancements were identified during the design phase and adopt specific accommodations identified by Australia and the United Kingdom in the construction of their ships that are based on the same design

Background

The National Shipbuilding Strategy is a long-term plan to renew the Royal Canadian Navy and Canadian Coast Guard fleets. It aims to eliminate the boom and bust cycles of vessel procurement that have slowed Canadian shipbuilding in the past.

In 2011, following a competitive, fair, open and transparent process, the government established long-term strategic relationships for the construction of large vessels with 2 Canadian shipyards: Irving Shipbuilding in Halifax, Nova Scotia, for the construction of combat vessels, and Vancouver Shipyards in British Columbia for the construction of non-combat vessels.

Following successful negotiations, the Government of Canada signed an Umbrella Agreement on April 4, 2023 with Chantier Davie. Chantier Davie will build 1 of 2 Polar Icebreakers and 6 Program Icebreakers for the Canadian Coast Guard, and 2 Ferries for Transport Canada.

All Canadian shipyards across the country, except the three strategic shipyards, can compete to win contracts for small vessel construction, whereas all Canadian shipyards can compete for repair, refit and maintenance contracts.

Original budgets for large vessel construction projects were set many years ago and were guided by limited experience and projections. Shipbuilding is highly complex and we continue to build on lessons learned to ensure future project budget and timeline projections are realistic and achievable. We continue to work closely with the shipyards and industry to address ongoing challenges including cost, time estimates and productivity.

Canadian Multi-Mission Aircraft Project

Issue

On November 28, 2023, Canada entered into a government-to-government agreement with the United States (US) Government for the acquisition of up to 16 P-8A Poseidon aircraft for the Royal Canadian Air Force (RCAF). Fourteen multi-mission aircraft will be procured, with options for up to an additional two. The estimated value of this government-to-government agreement, which also includes associated equipment, training devices and initial sustainment, is $5.9 billion USD including contingency.

Key facts

• On June 27, 2023, the United States Government issued a Congressional Notification announcing the potential sale of up to 16 P-8A aircraft with associated spare parts, support equipment, training, training devices, associated mission equipment and initial sustainment for up to three years to Canada. The notification included the estimated cost of purchase at $5.9 billion USD
• On July 14, 2023, Canada received a response from the United States Government, in the form of a Letter of Offer and Acceptance, for 14 P-8A aircraft and associated equipment and services (including initial sustainment for up to three years). Canada has the option to obtain up to two more aircraft from the United States Government
• Canada has reviewed the offer and determined that it meets all of Canada's requirements. The offer was accepted on November 28, 2023, and Canada anticipates delivery of the first aircraft as early as 2026. The United States Government has put in place various contracts with its suppliers to implement the offer made to Canada
• The long term plan for the sustainment of this aircraft is currently being assessed through a Sustainment Business Case Analysis
• On November 24, 2023, the Standing Committee on National Defence submitted a report stating that "the committee is of the opinion that the government must proceed by way of a formal Request for Proposals before awarding any procurement contract of the new Canadian Multi‑Mission Aircraft". The government response will be tabled in the House of Commons on April 8, 2024

Key messages

• As part of Canada's defence policy, Strong, Secure, Engaged, the Canadian Multi-Mission Aircraft project has been initiated to replace Canada's CP-140 aircraft fleet
• Between June and December 2021, Canada undertook numerous assessments of the requirements. A Request for Information was released in February 2022 to obtain information from industry. Canada also engaged with its closest allies to explore all available options
• Following the assessments and engagements, the government has determined that the P-8A Poseidon is the only readily available military off-the-shelf capability that meets the Canadian Multi-Mission Aircraft requirements and allows the replacement of the CP-140 Aurora byv2030
• On November 28, 2023, Canada accepted an offer from the United States Government for the acquisition of 14 P-8A aircraft with associated spare parts, support equipment, training, training devices, associated mission equipment and initial sustainment for up to three years. Canada has the option to obtain up to two more aircraft from the United States Government
• Canada has also signed an agreement with the aircraft manufacturer, Boeing, to ensure important economic benefits to Canadian industry and Canadians

If pressed on why Canada did not undertake a competition notwithstanding the opinion of the standing committee on national defence:

• The P-8A Poseidon is the only readily available military off-the-shelf capability that meets the Canadian Multi-Mission Aircraft requirements and allow the replacement of the CP-140 Aurora by 2030
• It is essential to obtain that capability as rapidly as possible to provide our forces with the equipment they need to protect Canada and meet our international commitments
• As it has been reasonably determined that only the P-8A Poseidon would meet Canada's requirements, it would be counterproductive to proceed with a competitive procurement process. This would result in unnecessary additional costs and significant delays, and undermine Canada's ability to acquire the only viable solution

Background

The aim of the Canadian Multi-Mission Aircraft (CMMA) project is to replace the CP-140 Aurora fleet with a new fleet that will provide long-range, long-endurance and multi-mission capability. The current CP-140 Aurora fleet consists of 14 aircraft which were originally procured in 1980 primarily for maritime patrol and anti-submarine warfare. The estimated life expectancy of the CP-140 Aurora fleet is 2030.

Since its acquisition, the aircraft has been used for a variety of operations at home and abroad including surveillance of Canada's coastal waters, anti-submarine warfare, maritime and overland intelligence, surveillance, strike coordination, disaster relief missions and many other functions.

Between June and December 2021, Canada contracted the services of a third-party consultant to assess the CMMA requirements. This multi-phased assessment concluded that the P-8A Poseidon is the only readily available military off-the-shelf capability that meets all of CMMA's requirements.

Public Service and Procurement Canada, in collaboration with the Department of National Defence and Innovation, Science and Economic Development Canada, has engaged with industry and Canada's closest allies to determine the best capability to replace the aging CP-140.

Information obtained by Canada demonstrated that the only solution that meets all of the CMMA requirements within the timeframe required to replace the CP-14 fleet by 2030 and avoid an increased capability gap is the Boeing P-8A Poseidon. It should be noted that the P-8A is also owned and operated by all of Canada's closest defence partners.

Conversion of federal properties to housing

Issue

On November 7, 2023, the Government of Canada announced that 6 surplus federal properties will be developed into more than 2,800 new homes in Calgary, Alberta, Edmonton, Alberta, St. John's, Newfoundland and Labrador and Ottawa, Ontario.

Key facts

• By the end of March 2024, Canada Lands Company will have enabled the construction of more than 13,000 new homes since 2016
• Canada Lands Company is on track to enable the construction of more than 26,400 new homes over the next five years

Key messages

• The Government of Canada is redoubling efforts in the face of Canada's housing crisis on several fronts and doing everything it can to create more housing and make more housing affordable for Canadians from coast to coast to coast
• PSPC is accelerating and streamlining the disposal process to enable the redevelopment of surplus federal properties into housing. We are continuing to work with Canada Lands Company to enable the construction of housing units
• My department is committed to ensuring sound stewardship of our real property portfolio, including the identification of surplus and underutilized properties to enable housing outcomes

Background

PSPC is the federal government's administrator of real property and is responsible for approximately 6.9 million square meters of space across Canada. This includes the office portfolio, special purpose buildings, and other assets. About 6.2 million square meters is considered office space. PSPC is working to right-size, modernize and green the federal office portfolio, which will result in the disposal of assets that are no longer required.

Canada Lands Company is a self-financing, federal, Crown corporation specialized in real estate development and attractions management. By the end of March 2024, Canada Lands Company will have enabled the construction of more than 13,000 new homes since 2016. Canada Lands Company is now on track to enable the construction of more than 26,400 new homes over the next five years. Canada Lands Company has a new minimum affordable housing target of 20 per cent across projects in its residential pipeline. The new affordability requirement would apply where a municipal minimum requirement for affordable housing is lower or does not already exist.

Integrity regime enhancements

Issue

The marketplace has greatly evolved in recent years, and gaps in the current Integrity Regime have impacted the government's ability to fully mitigate the risk posed by some suppliers. PSPC has announced the launch of a new Office of Supplier Integrity and Compliance.

Key messages

• The Government of Canada is committed to taking action against improper and unethical business practices, and to holding companies accountable for their misconduct while protecting federal expenditures
• The Government of Canada announced the launch of the Office of Supplier Integrity and Compliance, which will come into effect in May 2024, replacing the existing Integrity Regime
• The new Office will improve the government's ability to respond to emerging risks of misconduct and fraud while protecting the integrity of the federal procurement and real property systems

• The Office will provide new tools to address corporate misconduct, and support federal efforts to eradicate forced labour from Canadian supply chains, in addition to targeting financing of terrorism, human trafficking and offences under federal environmental laws
• My department is currently engaging with key stakeholder groups, and we will work with them to ensure that industry partners understand the program changes and requirements

Background

The Integrity Regime was introduced in 2015 as a government-wide policy-based debarment system designed to further protect the integrity of the Government of Canada's contracts and real property transactions.

The current Regime is a government-wide debarment system that is designed to help ensure that the Government of Canada conducts business with ethical suppliers in Canada and abroad. The program plays a significant role in safeguarding the federal procurement system, which encompasses approximately $20 billion annually for procurement contracts, real property agreements, the management of Crown-owned properties, and rental payments on 1,690 lease contracts across Canada.

The new Office of Supplier Integrity and Compliance program will provide new tools and flexibility for PSPC to respond to evolving risks to the procurement system, in a manner proportionate to the actual risks posed by suppliers of concern.

Further details concerning the launch of the new office and the revised Ineligibility and Suspension Policy will be made available in the coming weeks, in advance of the new program coming into effect.

Overbilling

Issue

The Government of Canada was overbilled an estimated $5 million by individual subcontractors working for suppliers on professional services contracts.

Key messages

• My department has detected several overbilling schemes undertaken by individual subcontractors working on federal professional services contracts. This has been the result of PSPC's efforts over the last five years to strengthen its approach to detecting fraudulent activity and other types of wrongdoing
• PSPC took swift action to suspend the security clearances of the subcontractors in question. This prevents these individuals from doing business with the Government on contracts with security requirements
• These cases have required months of efforts by officials within my department as these schemes spanned multiple organizations and suppliers
• PSPC is pursuing efforts to recover illegitimate amounts billed to the Government of Canada
• These cases have been referred to the RCMP, so I will not comment further

Background

PSPC uncovered three overbilling cases by professional services subcontractors (i.e. individuals who were subcontracted) who were employed by prime contractors that held multiple contracts a number of federal departments and agencies:

• An IT subcontractor overbilled eight departments between May of 2020 and June of 2022

• A second IT subcontractor overbilled a total of 20 departments between April 2018 and May 2022
• The third subcontractor provided professional services as a business architect from April 2019 until December 2022 and overbilled a total of 24 departments

Administrative investigations were launched and found that the subcontractors' actions resulted in 40 federal departments, agencies and Crown corporations being overbilled. Illegitimate payments are estimated to be $5 million.

PSPC has a framework in place to prevent, detect and respond to wrongdoing in order to safeguard the integrity of the federal procurement system. This approach includes the use of a variety of tools to actively detect fraudulent activity, and respond to alleged misconduct that the Government of Canada is being defrauded in either a specific contract or on a broader scale.

PSPC employs active measures to raise awareness among procurement officers on how to identify potential instances as well as the use of data analytics and tips from the public to identify potential instances of fraud and wrongdoing. In order to respond to alleged instances, the department has an investigatory capacity to examine allegations that the Government of Canada is being or has been defrauded within its procurements.

The identified three cases demonstrates that departmental approach and techniques to prevent, detect and respond to instances of fraudulent activity are working.

The department will continue to refine and expand the use of our tools to detect and address wrongdoing and ensure that individuals or entities engaging in fraud or other illegal activities are held accountable for their actions and return monies owed to the Crown.

Rehabilitation of National Capital Commission assets

Issue

The Official Residences of Canada: 2021 Asset Portfolio Condition Report was released by the National Capital Commission in 2021 and identified a requirement for an injection of $175 million over 10 years to address the deferred maintenance deficit for all six official residences.

Key facts

• The 2021 report found that the overall condition of the Portfolio continues to deteriorate with only 24% of the assets considered to be in "good" condition, down from 34% in 2018
• The National Capital Commission completed works at Harrington Lake (known in French as Lac Mousseau) in December 2020 with an overall cost of $5.8 million, which is less than the original budget of $6.1 million. The asset is no longer considered to be in "critical' condition

Key messages

• The National Capital Commission is an independent Crown Corporation and is responsible for year-round maintenance and operations for the six official residences in Canada's National Capital Region
• The National Capital Commission and the Government of Canada recognize the importance of the official residences and their heritage and cultural value
• The National Capital Commission is committed to full transparency and reports annually on capital expenditures incurred at the official residences

If pressed on 24 Sussex:

• We continue to work closely with the National Capital Commission to develop a plan for the future of the Prime Minister's Official Residence
• 24 Sussex remains the only official residence in critical condition. In order to protect the health and safety of residence staff, as well as to ensure the integrity of this Classified Heritage Asset, the National Capital Commission closed 24 Sussex Drive. Residence employees have been relocated, and the abatement of designated substances, as well as the removal of obsolete systems, is completed. Installation of minimal, temporary heating and cooling systems is currently underway

• The current project will carry out the urgent and necessary work at 24 Sussex that must be undertaken regardless of any decision taken on the future of the residence
• The estimated cost of this project is $4.3 million

If pressed on Harrington Lake:

• The National Capital Commission's work at Harrington Lake was part of a broader program to preserve, maintain, and restore all official residences under National Capital Commission management. As detailed in the 2018 Asset Portfolio Condition Report released by the National Capital Commission, the Harrington Lake main cottage was one of 2 main residences deemed to be in "critical" condition; the other being 24 Sussex
• As an independent Crown corporation led by its Board of Directors, the National Capital Commission plans, initiates, and implements the works and investments related to the Official Residences to ensure their continued operation and to safeguard their national heritage

If pressed on Stornoway:

• The National Capital Commission works in close collaboration with the offices of each future resident of an Official Residence—including Leaders of the Official Opposition destined to live at Stornoway—to determine the timing and logistical details of their move, including required updates to the residence
• During transitions, typical moving tasks are performed to ensure the residence is clean and appropriately furnished so that occupants can feel at home and are able to execute their official duties as soon as they move in. Moving costs are not associated with the occupant's personal belongings

If pressed on the National Capital Commission's asset portfolio condition report:

• The National Capital Commission released this report in June 2021 to remain transparent and open with the Canadian public and it remains committed to working with its partners to ensure that issues related to security, heritage preservation, sustainability, and accessibility are addressed
• Of the six main official residences, four are in "fair" condition (Rideau Hall, Harrington Lake, Stornoway, 7 Rideau Gate), and the Farm is in "poor" condition while 24 Sussex remains in "critical" condition

If pressed on Rideau Hall:

• All National Capital Commission projects that are planned or underway at an official residence are important to ensure the residence's continued operation and to safeguard its national heritage
• The National Capital Commission works in close collaboration with the Office of the Secretary to the Governor General to ensure the effective implementation of planned projects

Background

In 2017, the National Capital Commission commissioned in-depth building condition reports for the largest and most complex buildings in the official residences portfolio. These reports, made public in 2018, found that 58% of the assets in the official residences portfolio were considered to be in "poor" to "critical" condition, including half of the main residences. This analysis was refreshed in 2021 using the same methodology. The findings are laid out in the Official Residences of Canada: 2021 Asset Portfolio Condition Report, which details the current state of all six official residences and their ancillary buildings under the stewardship of the National Capital Commission. The latest findings confirm that the overall condition of the Portfolio continues to deteriorate with only 24% of the assets considered to be in "good" condition, down from 34% in 2018. The report was presented to the National Capital Commission's Board of Directors on June 23, 2021, and subsequently published on the National Capital Commission's website.

The report highlights the shortfall in funding required to restore and maintain the heritage buildings in this asset portfolio. Since the 2018 report, the National Capital Commission has invested approximately $26 million in capital funding on rehabilitation work. Despite these investments, the cost of addressing the portfolio's deferred maintenance deficit has increased and it is now estimated that an injection of $17.5 million per year, over 10 years—for a total of $175 million—is needed to close the deferred maintenance gap. In addition to this sum, the report identifies a need for $26.1 million in annual funding to cover ongoing maintenance, repair and renovation costs.

Recent government budget investments in the National Capital Commission were not targeted towards assets in the Official Residences portfolio. Canada's official residences remain in dire need of rehabilitation.

Update on Pay Stabilization: Support for employees and investments

Issue

This note focuses on efforts and progress to date to provide support to employees and stabilize the administration of pay, and on financial investments in Phoenix.

Key facts

• We have put in place a significant number of system enhancements and fixes, which have helped bring increased stability to the pay system and overall pay administration environment
• To date, $3.51 billion has been invested in Phoenix

Key messages

• The Government of Canada is committed to supporting employees and continues to take action on all fronts to resolve public service pay issues
• Since the launch of Phoenix, we have implemented a series of measures and made consistent progress towards pay stabilization
• These measures will ensure that we will continue to progress towards our goal of processing new transactions within service standards 95% of the time, and having no outstanding transactions over one year old
• The Government has also tested and confirmed the technical viability of a commercial integrated human resources and pay solution that could meet the varied and complex Human resources (HR) and pay needs of the Government of Canada
• The confirmation of the technical viability of the solution, and the findings from the testing of that solution will be used to inform a recommendation to the Government of Canada regarding whether or not it should replace the current pay system and the 32 human resource systems that are currently in use

If pressed on Dayforce:

• The Government has been exploring options to move to a new human resources and pay system that meets the needs of its employees
• Since 2022, we have been testing the Dayforce application, a commercial off-the-shelf global software-as-a-service human resources and pay solution
• The testing is done in a simulated environment, against the complex HR and pay landscape that currently exists across departments and agencies
• It has demonstrated that Dayforce is a technically viable option for the next modern HR and pay system for the Government of Canada
• To ensure best results, improvements to the way the federal public service manages HR and pay processes will also be required
• Over the coming months, the Government will continue to expand testing, and will design the system to its specific needs, while exploring options for simplifying HR processes and procedures
• A final recommendation on the way forward for HR and pay is expected later this year

If pressed on the backlog:

• As of February 28, 2024, the overall queue of transactions waiting to be processed at the Pay Centre has decreased by 32% since the peak of January 2018, representing a reduction of 203,000 transactions

• As of February 28, 2024, there are 216,000 outstanding transactions over one year old, a decrease of 3,000 from the previous month
• Progress in reducing the queue of outstanding transactions has slowed as a result of significant increases in transactions received at the Pay Centre
• I note that significant staffing efforts have been underway to build capacity at the Pay Centre. Since September 2022, the Pay Centre has onboarded approximately 1,000 new compensation employees to support Pay Operations, while also expanding the skillsets of its existing workforce. We expect ongoing improvements as recent hires become more proficient in pay processing
• We continue to review the future resource needs of the Pay Centre to ensure public servants are paid accurately and on time

If pressed on renewed public dashboard:

• The reason for the renewed and improved Public Service Pay Dashboard is to better reflect the experience of public servants and the current reality of our pay operations
• Our goals of processing 95% of transactions within service standards, and having no transactions older than one year, remain unchanged
• Instead of reporting against a fixed volume of cases deemed to be 'normal' workload, our new measures recognize that Pay Centre workload fluctuates in accordance with seasonality of HR activity, and also provides improved transparency on how we're doing against set service standards
• The Dashboard is now focused on the total number and age of outstanding transactions at the Pay Centre, presented in a user-friendly format

If pressed on CA implementation—2022 contracts:

• Implementation of the 2022 round of CA is well underway
• PSPC continues to implement new salary rates, mass retroactive payments and other provisions within negotiated timelines
• As of February 26, 2024, new rates of pay have been updated in the pay system for approximately 269,000 employees
  • New salary rates were updated within 4 to 6 weeks of the agreement signature
• The Pay system began executing the mass retroactive process for the Program Administrative services (PA) group October 7
  • Retroactive payments for approximately 157,000 active and inactive employees were paid on October 25
  • The first batch of $2,500 lump-sum payments were paid to eligible employees on November 8, 2023, for various groups
• As of February 26, 2024, retroactive payments have been paid to over 320,000 active and inactive employees

If pressed on support to employees:

• PSPC has implemented a series of measures focused on stabilizing the administration of pay. These include providing employees with greater support through our Client Contact Centre, introducing the Pay Pods model, and implementing technical fixes that have improved payroll processing, such as increased automation of transactions
• Improved automation has helped mitigate some of intake's growth. Between 2019 and 2024, net intake increased by 64%, but manual workload only increased by 47%
• Financial support is and will remain available for employees missing any of their pay. This support includes an emergency salary advance or priority payment. Flexible measures have been put in place to help minimize financial hardships for employees for the repayment of overpayments related to Phoenix pay system issues

If pressed on specific actions:

• We have introduced MyGCPay to all departments and agencies served by Phoenix. MyGCPay is a web application that provides employees with a centralized and simplified view of their pay and benefits, to help employees better understand their pay
• We implemented a Retro Redesign Solution that further automates processing of individual late transactions and eligible mass retro payments
• In April 2021 we launched the MyGCPay stub—designed to be more user-friendly and to help employees better understand their pay
• In July 2023, we introduced external access to MyGCPay, so employees on leave or former employees can have secure access to the tool outside of the Government of Canada network
• We continue to focus on addressing outstanding transactions while also working towards processing new transactions within service standards 95% of the time. For example, from December 2020 to February 14, 2024, pre-2020 outstanding transactions decreased from 117,000 to 39,000 (67%)
• In addition, we are increasingly meeting service standards. In 2023, the Pay Centre met service standards 83% of the time on average, on par with 2022, and improved from 80% in 2021, and 72% in 2020

Background

Stabilizing the administration of pay

Since the launch of Phoenix, PSPC has implemented a series of measures focused on stabilizing the administration of pay.

In addition, we are focusing on other operational priorities in pay administration including pension arrears, terminations, and overpayments. We have improved service standard compliance while managing sustained increases of transactions submitted to the Pay Centre by departments and agencies, starting in 2021 and expected to continue going forward.

Employees who have been underpaid can request emergency salary advances or priority payments from their departments.

NextGen HR and Pay Initiative

In November 2023, the Next Generation Human Resources and Pay (NextGen HR and Pay) Initiative team, formerly with SSC, officially joined PSPC.

The mandate of the NextGen HR and Pay Initiative was to assess the viability of adopting a commercially available, integrated Human Resources and pay Software-as-a-Service (SaaS) solution given the complexities of the Government of Canada's human resources and pay requirements.

After the testing with pilot departments within government as part of phase 1, the Dayforce solution was deemed technically viable to provide human resources and pay services for the Government of Canada. The enterprise strategy will build on the testing results and findings to complete further design, planning, testing and validation on the scalability of this solution. These activities are needed to deliver an evidence-based recommendation to the Government of Canada on the future of HR and Pay.

Collective agreement implementation—2018 and 2022 contracts

The 2018 round of Collective Agreement Implementation includes agreements signed in 2018 through 2023, and is nearly complete. To date, 2018 Collective Agreement Implementation salary adjustments and retroactive payments have been completed through the automated process for 147 TBS and separate employer agreements, representing over $2 billion in payments to employees (as of April 2023).

The implementation of the 2022 round of CA started in 2022, and in the summer 2023, the Government of Canada began processing the first wave of signed agreements from the recent rounds of collective bargaining for major groups. As of February 26, 2024, the new rates of pay have been updated in the pay system for approximately 269,000 employees.

For the 2022 round of CA implementations, and similar to the 2018 round, we expect an overall average of approximately 10% of employees will see at least one transaction needing manual intervention. The results of each retroactive payment process are expected to vary due to a combination of many factors, including agreement complexity. We are on track to complete the 2022 CA implementation within negotiated timeframes.

MyGCPay

MyGCPay is a web application developed by PSPC to help rebuild federal government employees' confidence in the integrity of their pay. It provides employees with a centralized and simplified view of their pay and benefits. It helps employees identify pay issues earlier and allows them to monitor their open cases with more detail.

In July 2023, we introduced external access to MyGCPay, providing inactive employees, former employees and employees without access to the GC network (i.e., Phoenix Self-Service or Compensation Web Applications (CWA)) secure access to their pay and benefits information.

Phoenix Salary Overpayments

Issue

This note focuses on Phoenix salary overpayments. A salary overpayment is an amount of money paid to an employee to which they are not entitled. Overpayments exist for current and former employees.

Key facts

• Outstanding salary overpayments stand at roughly $529 million (as of February 28, 2024)
• Since the launch of Phoenix, approximately 444,900 employees have been identified as having received either an administrative overpayment or true overpayment, totaling $3.34 billion. As of February 2024, overpayments were repaid by approximately 325,200 of those employees, representing a total of approximately $2.81 billion in recovered funds
• As of February 2024, approximately 119,700 employees have an outstanding overpayment, representing about $529 million

Key messages

• Our priority is to support current and former employees and resolve outstanding pay issues as quickly as possible, including the recovery of overpayments
• Overpayments to employees can occur in all pay systems, and the recovery of overpayments has been a part of Government of Canada activities, even before the implementation of the Phoenix Pay System
• The recovery of overpayments from active and former employees, as well as employees in receipt of a pension, is also a normal part of the pay administration process
• In its stewardship role, the Government has an obligation to recover outstanding overpayments
• Since the launch of Phoenix, over 325,200 current and former federal employees have reimbursed overpayments, or have made arrangements to do so. This represents over $2.81 billion in recovered funds

If pressed on support to employees:

• We recognize that the recovery of overpayments can be stressful for those affected. Multiple measures have been put in place to support individuals experiencing financial hardship, including flexible repayment options
• The overpayment letters sent to employees provide detailed information on the pay event that led to the overpayment, repayment options, as well as the steps to follow should they have questions about the overpayment amount identified
• If an employee acknowledges the overpayment within the timeline stated in the letter, typically four weeks, they will continue to benefit from flexible repayment measures
• For pensioners who do not make arrangements with their compensation office to repay their overpayments, the Receiver General will recover the overpayment from pension benefits through the Government of Canada Pension Centre

Background

Recovery of overpayments supports the Government of Canada's mandate to eliminate the backlog of outstanding pay issues for current and former public service employees, in order to rebuild their confidence in the integrity of their pay and pensions. Salary overpayments impact current and former public service employees across departments, agencies and across the country.

We recognize that the recovery of overpayments can be a source of stress. The Client Contact Centre is the first point of contact for current and former federal public servants looking to report a pay issue, provide status updates on their files or to receive assistance with technical issues (when using the Compensation Web Applications or the Phoenix pay system) and general enquiries. The Client Contact Centre is available to all current and former federal public servants with pay and benefits questions.

Flexible measures have been put in place to help minimize financial hardships for employees for the repayment of overpayments. This means that, for the recovery of most overpayments, a flexible repayment plan can be put into place in situations where public servants have acknowledged their overpayment and agreed to repay it.

Current employees and pensioners facing financial hardship can have their recovery rate, traditionally set at a rate of 10% of their regular payment, lowered upon request and as long as the overpayment is acknowledged and recovery will be complete within a reasonable period of time (typically within 5 years).

It is important to note that the information regarding overpayments included in the Key Facts includes both administrative and true overpayments. Administrative overpayments were a normal part of the pay administration process, from 2017 to 2020, and used to ensure employees were paid accurately. They would be generated when an employee's acting assignment was entered late and were automatically recovered at the time of the acting assignment's retroactive payment. This allowed the pay system to automatically reconcile the difference between the regular salary rate and the acting salary rate in subsequent pay periods without affecting the employee's pay. As of October 2020, a new process was put in place and these types of overpayments are no longer created for this purpose. A true/non-administrative overpayment is an amount of money paid to an employee to which they are not entitled. They usually occur when certain pay transactions are not submitted or processed promptly.

Processing of Pay Transactions

Issue

This note focuses on the efforts and progress to stabilize the administration of pay, manage intake of pay transactions, and the ongoing reduction of the backlog.

Key facts

• PSPC administers payroll for more than 422,000 current and former employees
• The Public Service Pay Centre provides full compensation advisory services to approximately 250,000 active employees

Key messages

• Canada's public servants deserve to be paid accurately and on time
• The Public Service has grown in recent years. This, combined with increased human resources activity and employee movement, has resulted in significant increases in intake at the Pay Centre starting in 2021 and throughout 2022 and 2023
• The Government of Canada remains committed to resolving pay issues for public servants, reducing the number of outstanding transactions and continuing to implement numerous measures to improve pay delivery and support pay stabilization

If pressed on the increase of the backlog:

• Progress in reducing the backlog of outstanding transactions has slowed as a result of significant increases in transactions received at the Pay Centre
• We are working hard to manage new transactions within service standards to minimize and prevent the creation of new backlog cases
• Many outstanding transactions are complex and require processing by experienced staff
• We are ensuring that the most complex cases are assigned to our most experienced staff, and we are fast-tracking hiring efforts to fill vacancies
• I would note that significant staffing efforts have been underway to build capacity within the Pay Centre
• Since September 2022, the Pay Centre has onboarded approximately 1,000 new compensation employees to support Pay Operations, while continuing to expand skillsets of its seasoned workforce
• Although managing intake continues to be the top case-processing priority, the Pay Centre initiated a renewed, focused effort towards backlog elimination, beginning in Fall 2023

• We remain committed to processing the most critical outstanding transactions first, prioritized by transaction age and impact on the employee

Background

Queue and backlog

Since January 2018, PSPC's Pay Centre has made significant progress in reducing the overall queue and backlog of pay transactions, Despite productivity improvements, high intake levels have outpaced pay processing capacity, leading to increases in the queue as well as in the backlog of cases that are a year old or more.

Intake and workload at the Pay Centre has grown. Intake for the 2023 calendar year was almost 1.44 million cases, surpassing the intake for 2019 (1 million) by 44%, 2020's intake (865,000) by 66%, 2021's intake (1.04 million) by 38%, and 2022's intake (1.24 million) by 16%.

PSPC continues to make progress on older cases, but that progress has slowed as intake, and therefore the overall volume of work, has grown. These outstanding transactions, both intake and backlog, are not errors—they represent the normal pay administration work we do to support our client population.

The number of transactions processed each month varies based on a number of factors, such as the complexity of cases and CA implementation. Intake also shows seasonal trends, with peaks at the end of the calendar year, the end of the fiscal year, and the end of summer, which marks the completion of many casual and student work terms.

In 2023, the Pay Centre processed 247,000 more transactions compared to 2022. However, the increase in output was met by an increase in intake of 203,000 transactions, offsetting the impact of the increase in productivity. The growth in intake is driven by the increase in the population of departments served by the Pay Centre as well as changes in per capita intake trends. Per capita intake is now higher than it was in 2019, having fully rebounded from the dip that began in March 2020.

In addition, new challenges have been affecting progress to eliminate outstanding transactions and keep up with new intake since March 2021. These challenges include the high complexity of transactions that remain in the backlog, changing employee and enterprise behaviour such as increased HR activity and employee movement, as well as government-wide operational and human resources policy priorities which have contributed to workload increases. Examples include classification conversion, implementation of the mandatory vaccination policy and associated leave without pay processing, vacation/compensatory leave cash-out, and others including strike-period leave without pay processing in 2023.

2024 to 2025 Departmental Plan

Issue

On February 29, 2024, the 2024 to 2025 Departmental Plan for PSPC was tabled in the House of Commons by the President of the Treasury Board.

Key facts

• The Departmental Plan outlines the 2024 to 2025 planned activities that PSPC will undertake on behalf of Canadians and other federal organizations
• To support the goals of the Government of Canada in refocusing government spending, PSPC is planning reductions of at least $464,514,000 over the next three years
• Reductions will be mainly achieved by reducing operating, professional and travel expenditures, leveraging new business models and technologies, and shifting the composition of the workforce toward future core competencies

Key messages

• In 2024 to 2025, PSPC will advance the modernization of procurement and increase the diversity of suppliers participating in federal procurement, including Indigenous suppliers
• My department will develop a plan to right-size real property, modernize office space, estimate savings and transfer federal buildings for housing. PSPC will also advance greening initiatives and climate change strategies for its real property portfolio and infrastructure, while further supporting the hybrid work model
• PSPC will continue its collaboration with key partners to ensure high-quality services for Canadians, including resolving pay issues for public servants, advancing the Next Generation Pay and Human Resources System, and implementing the Canadian Dental Care Plan
• These are just a few of the examples of the many activities that PSPC has outlined in its Departmental Plan

Background

The Departmental Plan is a mechanism of ministerial accountability, communicating departmental expenditure plans for the next three years, as well as the organization's priorities and expected results of the next fiscal year. The Plan is tabled annually in Parliament and published for all Canadians.

The 2024 to 2025 Departmental Plan outlines specific targets for 98% of the Departmental Result Indicators (DRIs), encompassing 41 out of 42 indicators. As a result of cumulative Departmental Results Framework (DRF) enhancements over the last few cycles, PSPC has developed meaningful indicators in support of its Departmental Results, for which targets are established and results will be available in subsequent Departmental Results Reports.

For information on PSPC performance for the last completed fiscal year, refer to the 2022 to 2023 Departmental Results Report.

Health, safety and interpretation capacity of the Translation Bureau

Issue

The Translation Bureau supports hybrid sittings of Parliament by providing interpretation services. Since the start of the pandemic, the Translation Bureau has implemented several measures to protect the health and safety of interpreters. Although there has been a decrease in sound-related incidents, they continue to occur on occasion. Additional measures will be added gradually to those put in place as the Translation Bureau responds to the results of ongoing expert studies. The Translation Bureau sometimes faces capacity issues that impact parliamentary committee meetings. These issues have been the subject of numerous discussions, notably during parliamentary committee meetings. The fact that the interpretation profession is in great shortage in Canada and throughout the world contributes to this lack of interpretation capacity.

Key messages

• The Translation Bureau is committed to providing quality interpretation services in support of Parliament and federal government departments and agencies while ensuring a safe environment for staff and freelance interpreters
• The Translation Bureau has put in place several measures to safeguard interpreters in collaboration with its parliamentary partners
• The working conditions of interpreters continue to improve thanks to the sustained efforts of the Translation Bureau and its parliamentary partners
• Despite a decrease in sound-related incidents, they continue to occur and the Translation Bureau continues its research in support of prevention and continuous improvement
• The Translation Bureau continues to collaborate with all key partners and consult hearing and sound experts to collect conclusive data to improve its protection measures as well as protocols
• The Translation Bureau is working with stakeholders in the Canadian language sector, including universities and professional associations, to find ways to foster a succession of certified interpreters and, eventually, the implementation of new interpretation programs

If pressed on capacity:

• The Translation Bureau is doing everything possible to increase its capacity and respond to Parliament's requests, including extended or unscheduled meetings

• The Translation Bureau is committed to continuing research with experts to adapt to the hybrid Parliament and to understand the source of the issues, and it continues to work with Parliament to improve the working conditions of interpreters. This will help prevent incidents, prevent injury, and prevent interpreters from being absent for extended periods

Background

The Translation Bureau is working closely with the House Administration to provide hybrid sessions. Demand for interpretation services can fluctuate greatly. To better meet demand, the Translation Bureau collaborates with its clients to plan and prioritize their needs in advance, retains the services of freelancers as required, and works closely with the House Administration, which determines where resources are allocated based on House priorities.

Directions and continuous improvements

Following a complaint filed on January 31, 2022 by the Canadian Association of Professional Employees under the Canada Labor Code, the Translation Bureau received two directions from the Labor Program of Employment and Social Development Canada on February 1, 2023, regarding the mandatory use of ISO-compliant microphones. The second direction ordered random tests in the workplace. The directions were closed in August of 2023, and the Translation Bureau is committed to follow up on all the recommendations from experts, several of which have already been implemented. It will continue relying on its evidence-based approach to protection and will explore new lines of research, suggested by experts, to shed light on this recent issue that the scientific community has just begun to examine.

Following the ratification of the new TR group CA in spring 2023, the Translation Bureau held discussions to find ways to increase the Bureau's interpretation capacity while protecting health and safety interpreters.

In 2022, the Bureau established a contract with Ms. Josée Lagacé, audiologist at the University of Ottawa, to assess the hearing health of interpreters. She submitted her first report in November 2023. The Bureau agreed with Ms. Lagacé, in light of her recommendations, that it was preferable to wait for data from the next phase of her study  before increasing interpretation hours in hybrid mode. In the meantime, the Bureau has decided to return to a practice that had been in place for many years, namely the assignment of translation tasks to fill the time in the full working day not devoted to interpreting or authorized administrative tasks.

The Translation Bureau, with the House of Commons Administration, is testing the provision of interpretation by interpreters located off the parliamentary premises, enabling it to use freelancers located outside the National Capital Region to better meet Parliament's needs.

Canada Post Corporation Financial Stability

Issue

On November 24, 2023, Canada Post Corporation released its 2023 Q3 results and recorded a loss before tax of $290 million. Canada Post's mandate is to be financially self-sufficient and it is striving for ways to do that while facing continued challenges of lower revenue and volume trends. Canada Post continues to provide Canadians with affordable postal rates.

Key facts

• Loss before tax of $290 million in 2023 Q3

Key messages

• Canada Post is a Crown Corporation that operates at arm's length from the Government and its operations are funded by the revenue generated by the sale of its products and services, not taxpayer dollars

• As is the case with other postal carriers around the world, Canada Post is evolving to meet the changing customer needs and expectations
• Canada Post connects the country from coast to coast to coast. We continue to work with the corporation to examine opportunities to improve the financial sustainability of its important operations
• While it is forecasting a sixth consecutive year of operating losses in 2023, Canada Post's immediate focus is on much-needed investments and improvements to meet the changing needs of Canadians and businesses
• Financial self-sustainability remains the corporation's medium-to-long term goal

If pressed on financial situation:

• While the parcels business has increased volumes, revenue declines in an increasingly competitive market
• An increasingly competitive parcel delivery market continued to impact Parcels revenue in the first three quarters of 2023
• Transaction Mail volume continued to erode, while Direct Marketing volumes and revenue increased in the third quarter

Background

The operations of Canada Post are funded by the revenue generated by the sale of its products and services, not taxpayer dollars.

Contracts awarded to McKinsey & Company

Issue

There has been recent media and Parliamentary attention related to contracts awarded to McKinsey & Company.

Key facts

• As central purchaser for the Government of Canada, PSPC awarded 24 contracts to McKinsey & Company since 2011 with a total value of $104.6 million
• Of the 24 services contracts awarded by PSPC, 3 contracts were awarded through competition, 19 were undertaken as call-ups against a non-competitive standing offer that was established for McKinsey & Company's benchmarking services and which ended as planned in February 2023, and 2 other sole source contracts, of low dollar value, were awarded outside the standing offer
• All 24 contracts were awarded in 2018 or later. The 3 competitive contracts represent more than half (53%) of the total value of contracts awarded to McKinsey & Company

Key messages

• PSPC is committed to open, fair and transparent procurement processes, while obtaining the best possible value for Canadian taxpayers
• The decision to procure professional services to meet operational requirements rests with client departments, which can then request PSPC's procurement services or award contracts within their own authorities

If pressed on reviews of contracts to McKinsey & Company:

• In January 2023, the Prime Minister tasked the President of the Treasury Board and my predecessor to review contracts awarded to McKinsey. The review's final report, published on June 27, 2023, noted the integrity of the procurement process was maintained, compliant with the Values and Ethics Code for the Public Sector, Directive on Conflict of Interest, and supporting procurement policy. It also noted areas for improvement related to record management and contract administration

• PSPC has accepted all the recommendations and put in place a Management Action Plan
• PSPC continues to collaborate with the OPO and the OAG on their respective audits

If pressed on allegations of tax fraud and actions abroad that McKinsey is facing:

• We are aware of the adverse information related to McKinsey & Company and its affiliates. The company's status under the Integrity Regime remains unchanged at this time:
• Under the Government' Integrity Regime, if a supplier is charged or convicted of an offence listed in the Ineligibility and Suspension Policy, the supplier may be suspended determined to be ineligible to be awarded a contract. A suspension or determination of ineligibility would also be triggered by a foreign offence that is similar to one of the listed offences

Background

PSPC awarded 24 contracts to McKinsey & Company between 2011 and 2023. These contracts have recently been assessed via PSPC's internal audit services and are also subject to ongoing reviews by the OPO and the AG.

The internal review determined that overall, the integrity of the procurement process was maintained and complied with the Values and Ethics Code for the Public Sector, Directive on Conflict of Interest, and supporting procurement policy instruments and procedures. Specifically, no instances of non-conformity were found with respect to conflict of interest regarding current or former public servants or public office holders as well as McKinsey & Company. However, it also found areas for improvement related to record management and contract administration.

PSPC has accepted all recommendations associated with this audit and has put in place a Management Action Plan. In addition, the department is reviewing all National Master Standing Offers related to Benchmarking data analytics and services and will replace these tools in the future with a procurement approach that ensures open, fair and transparent competition as a starting point.

The McKinsey & Company standing offer has sunsetted in February 2023 as planned and all other Standing Offers for benchmarking services will sunset between February and June 2024.

At the request of the Minister of Public Services and Procurement, the OPO is currently reviewing the procurement processes associated with the award of contracts to McKinsey & Company by all federal departments and agencies.

Ten departments that contracted with McKinsey & Company have been the focus of attention from the TBS and auditors including the OAG and the OPO. PSPC procured various professional services including strategic advice, subject matter experts, benchmarking services and development of transformation strategies for 7 of these departments.

Canadian Dental Care Plan

Issue

PSPC is working with Health Canada to support the design and implementation of the new Canadian Dental Care Plan.

Key facts

• A comprehensive multi-stage procurement process was initiated in July 2022 through a Request for Information and then an Invitation to Qualify
• A Request for Proposals process closed on July 20, 2023, with the submission of one compliant bid
• A contract valued at an estimated $750 million has been awarded to Sun Life

Key messages

• PSPC worked with Health Canada and its partners to undertake an open, fair, transparent and competitive procurement process. Following extensive industry engagement, Sun Life Assurance Company of Canada (Sun Life) has been selected as the claims processor for the new Canadian Dental Care Plan
• A contract was awarded to Sun Life, valued at approximately $750 million for five years—from December 2023 to November 2028, to adjudicate and manage the payment of claims made under the Plan
• The implementation of the Canadian Dental Care Plan is moving forward in accordance with the projected timeline, with member enrollment underway and the Contact Centre launched
• Work is on track to start processing claims in May 2024

If pressed on the fairness of the procurement approach:

• PSPC used an agile and collaborative procurement approach for the Canadian Dental Care Plan to ensure fairness, transparency, and compliance with procurement rules and regulations, while delivering value for money and timely access to dental care services for Canadians
• Canada awarded an Early Work Agreement to Sun Life for preliminary tasks like staffing, information technology setup, space acquisition, and work plan development. This interim measure enabled Sun Life to undertake necessary pre-contractual work to ensure the timely launch and successful operation of the Canadian Dental Care Plan
• Canada finalized the contractual details and awarded a Contract to Sun Life to continue the work required for the Canadian Dental Care Plan

Background

In Budget 2022, the Government of Canada committed $5.3 billion over five years to Health Canada to provide dental care for the estimated 7 to 9 million Canadians who are unable to access proper dental care because of the cost. This started with under 12-year-olds in 2022, expanding to under 18-year-olds, seniors, and persons living with a disability in 2023. Full implementation is expected by 2025. The program would be restricted to families with an income of less than $90,000 annually, with no co-pays for those under $70,000 annually in income.

PSPC was responsible for managing the procurement to select a private partner for the delivery of dental claims processing. This involved engaging with industry, developing procurement documentation, conducting the procurement process and managing the resulting contract(s) associated with the program.

PSPC issued a Request for Information on July 25, 2022. The Request for Information closed on August 22, 2022, and 26 responses were received from various organizations within the dental care community. The feedback received helped guide the development of a long-term dental care program. A subsequent Invitation to Qualify was issued on October 28, 2022, and closed on December 5, 2022. Once the evaluation was completed, three pre-qualified suppliers (Express Scripts Canada, Medavie Inc., and Sun Life Assurance Company of Canada) were announced in January 2023.

A collaborative process ensued from February to May 2023, refining requirements with suppliers' input. A subsequent Request for Proposals was sent to the three pre-qualified suppliers on June 20, 2023, and closed on July 20, 2023, yielding one compliant proposal.

An Early Work Agreement was awarded to Sun Life on August 22, 2023, for necessary pre-contractual work while Canada finalized its due diligence. Treasury Board approval was obtained to award the Canadian Dental Care Plan Contract on October 26, 2023.

Since Treasury Board approval was obtained, Canada has finalized the details of the Contract and awarded it to Sun Life on December 1, 2023, in order for Sun Life to continue the work required for the Canadian Dental Care Plan.

Rural Postal Service

Issue

Questions have been raised in the past on the level of postal service in rural communities and on the moratorium on rural post office closures. On February 6, 2024, the Government Operations and Estimates Committee passed a motion to study the decline of rural postal services

Key messages

• Canada Post is a Crown Corporation that operates at arm's length from the Government and its operations are funded by the revenue generated by the sale of its products and services, not taxpayer dollars
• Canada Post is committed to quality postal services in every corner of this country
• The Canadian Postal Service Charter confirms that providing postal services in rural settings is an integral part of Canada Post's universal service

If pressed:

• Unavoidable situations affecting the operation of a post office in small communities may arise, such as retirement, illness or a fire. In these circumstances, Canada Post consults with the community to find solutions to ensure they continue to receive postal services
• The Rural Moratorium has been in place since 1994, and has remained unchanged, meaning rural post offices are protected
• Canada Post has been expanding services right across the country, including in rural areas
• Community Hubs have been a successful model for rural, northern and Indigenous communities
• Canada Post opened Hubs in Little Current, ON; Membertou, NS; High Prairie, AB; and Fort Qu'Appelle, SK

Background

The operations of Canada Post are funded by the revenue generated by the sale of its products and services, not taxpayer dollars.

Rural Moratorium

In 1994, the Government announced that no rural or small town post offices would be closed or converted to franchised postal outlets and thus established an indefinite moratorium on rural post office closures.

In 1999, the Government confirmed that the moratorium was to remain in place and in 2009 introduced the Canadian Postal Service Charter. This charter reflects the Government's commitment to a universal, effective and economically viable postal service for all Canadians, rural and urban. Canada Post continue to meet all of our obligations under the Canadian Postal Service Charter. This ensures postal services remain universal, affordable and reliable. Canada Post serve all 17.2 million residential and business addresses in Canada, including rural and remote regions. Canada Post provide five-day-a-week delivery while maintaining an extensive network of post offices.

The Charter recognizes that situations affecting the operation of some small post offices do unfortunately arise, whether the office is corporately or privately operated. Retirements, illness, death, fire, termination of a lease or sale of a business occurs and it is unavoidable that service at small rural post offices will be affected. Canada Post has established an assessment and consultation process to manage these changes in rural communities.

Canada Post's first priority is always to ensure that local mail delivery is maintained without interruption while the options available to meet the postal needs of the community are explored. In some cases, emergency temporary arrangements are put into place to ensure that mail delivery is not interrupted. If a dealer operates the post office, Canada Post attempts to replace the dealer. Canada Post proceeds to immediately staff the corporate post office where:

• There are other businesses in the community
• The community is the acknowledged central hub of a farming area, or
• The affected post office is far from the next post office

Canada Post consults with elected officials from communities where:

• There are no other businesses left in the community; and
• The distance to the next post office is not unreasonable

Decisions are made on a case-by-case basis, and the approach is to find solutions that are satisfactory to the community by providing the service required in a practical manner. All affected Members of Parliament and municipal officials are informed when a situation affecting a post office arise. In 2022, there were 135 events potentially affecting ongoing operation of rural post offices. In 77% of cases, retail services were maintained within the same community. The other 23% of cases were resolved through services provided in nearby towns.

Shared Services Canada

2023 to 2024 Supplementary Estimates (C) Overview

• SSC is seeking a net increase of $52.6 million through the Supplementary Estimates (C), increasing its available funding from $2,850.9 million to $2,903.5 million net of revenues
• The main increase in funding is to offer core information technology (IT) services and strengthen the protection of the government IT infrastructure against ever-evolving cyber threats

New funding: $62.8 million increase

(A) Funding for core IT services

$52,000,000

Purpose of funding

• SSC is seeking a total of $52.0 million for core IT services
• The funding is to support the onboarding of new Full-Time Equivalent (FTE) employees with core IT services, including:
  • standardized network services
  • procuring software and hardware for workplace technology devices
  • providing technology-related services

(B) Funding for Reinforcing the Government of Canada's Cyber Security (Fall Economic Statement 2022)

$10,821,171

Purpose of funding

• SSC is seeking $10.8 million to strengthen the GC's Cyber Security efforts
• This funding will be used to strengthen the protection of the GC's IT infrastructure against ever-evolving cyber threats
• The funding will be used to enhance technological and human capacity, identify and assess vulnerabilities, and deliver new enterprise capabilities that will enable organizations across the GC to continue delivering services to Canadians securely
• This is a joint initiative between SSC and TBS

Transfers: ($11.2 million) decrease

(C) Transfer from Public Services and Procurement Canada for reimbursement related to reduced accommodation requirements as a result of data centre consolidations

Transfer of $656,448

Purpose of funding

• SSC is seeking a transfer of $0.7 million from PSPC for data centre consolidations
• Under an agreement with PSPC, SSC receives an amount for power and space savings achieved from closing data centres (winding-down operations)
• PSPC completes the decommissioning (physical removal of hardware and equipment), and these forecasted costs are subtracted from the amount
• SSC will receive a total of $0.7 million in savings, as no decommissioning costs were identified by PSPC for 2023-2024

(D) Transfer from Immigration, Refugees and Citizenship Canada related to the GC IT Enterprise Service Model (GC IT ESM)

Transfer of $324,252

Purpose of funding

• SSC is seeking a transfer of $0.3 million from IRCC related to the GC IT ESM
• This transfer is to adjust the amount that is invoiced to IRCC in support of implementing the IT ESM
• As part of the Budget 2021 ESM transfers, an agreement was made in 2022-2023 and 2023-24 which took into account the unique requirements of those departments that are revenue-dependent, such as IRCC
• As part of this agreement, a total of $432,336 of the Budget 2021 transfer was returned to IRCC, as it would be invoiced throughout the year instead
• However, in 2023-2024, only a portion of this amount was invoiced
• It was agreed with IRCC that the remaining will be covered through IRCC's appropriation instead

(E) Transfer to the Canadian Border Service Agency to support the Canadian Border Service Agency Assessment and Revenue Management project

Transfer of ($1,500,000)

Purpose of funding

• SSC is seeking to transfer $1.5 million to CBSA to support the CBSA Assessment and Revenue Management (CARM) project. This transfer is made up of:
  • ($0.8 million) in Vote 1—Operating Expenditures
  • ($0.7 million) in Vote 5—Capital Expenditures
• This one-time transfer is to support additional project costs incurred by CBSA for the CARM

(F) Transfer to Treasury Board of Canada Secretariat for the GC EPM and the Customer Identity and Access Management initiatives

Transfer of ($4,790,341)

Purpose of funding

• SSC will transfer $4.8 million to TBS for the GC EPM, and the Customer Identity and Access Management (CIAM) initiatives
• A total of $4.8 million will be transferred to TBS for:
  • the GC EPM for $1.3 million
  • the CIAM initiatives for $3.5 million

(G) Transfer to Immigration, Refugees and Citizenship Canada for the Asylum Interoperability Project

Transfer of ($5,944,755)

Purpose of funding

• SSC will transfer $5.9 million to IRCC for the Asylum Interoperability Project. This includes:
  • ($0.5 million) in Vote 1—Operating Expenditures
  • ($5.4 million) in Vote 5—Capital Expenditures
• This transfer is to return surplus funds following changes in scope and a delayed project end date, which resulted in significant reduction in SSC requirements

Internal vote realignment within Shared Services Canada

(H) Internal Vote Realignment within Shared Services Canada from Operating to Capital to strengthen cyber security and for other capital requirements

Transfer of $25,000,000 from Vote 1 Operating to Vote 5 Capital (nil net impact)

Purpose of funding

• SSC is seeking a transfer of $25.0 million from Vote 1 Operating to Vote 5 Capital to fund capital requirements identified for initiatives/investments during the mid-year financial review
• The capital requirements are related to the procurement for the Secret Fabric project, and for additional prioritized capital requests

Statutory appropriations: $1.0 million increase

Employee Benefit Plans

$981,473

Purpose of funding

• SSC is requesting a total increase of $1.0 million (Statutory) for Employee Benefit Plan adjustments due to Full-Time Equivalent increases related to a new initiative (Reinforcing the Government of Canada's Cyber Security)

Shared Services Canada Involvement in ArriveCAN

Issue

The ArriveCAN application continues to be under scrutiny.

Key facts

• ArriveCAN was developed for the GC to assist with border screening measures during the COVID-19 pandemic
• The program has been under scrutiny for its cost, effectiveness and reported errors in its functionality
• SSC awarded 7 contracts on behalf of Canadian Border Service Agency (CBSA) in support of ArriveCAN. It is important to note that CBSA has accounted for these contracts in their own reporting

Key messages

• SSC delivers digital services to GC organizations. It does this by providing networks and network security, data centres and cloud offerings, digital communications, and IT tools to enable federal organizations to effectively deliver programs and services to Canadians
• SSC's primary role was to support the operations of ArriveCAN by enabling connectivity between the cloud and data centres and providing access to IT goods and services
• SSC did this by:

• enabling the application to exchange information between the cloud solution and GC data centres;
• ensuring the connections are secure, and that the information of Canadians is protected; and
• providing the CBSA with contracting mechanisms to acquire IT goods and services in support of the ArriveCAN application

If pressed on SSC's role in application development:

• SSC is only mandated to develop applications for its own department
• SSC supports other organizations by ensuring that the applications they develop are securely hosted in GC data centres or, if hosted in the cloud, can communicate securely with GC data centres

If pressed on SSC's contracts in support of ArriveCAN

• One pre-existing GC enterprise-wide contract was leveraged to provide backbone network connectivity for a value of $87,000
• SSC awarded 7 contracts on behalf of CBSA in support of ArriveCAN. It is important to note that CBSA has accounted for these expenses in their own reporting
• The contracts included Cloud services, software licenses, cyber security services and microcomputer equipment
• 6 of the 7 contracts were competitive
• One contract for $39,998.00 was sole-sourced for software licenses scanning application using mobile phone camera

If pressed on the suspension of contracts with Dalian and Coradix:

• SSC did not award any contracts to either Dalian Enterprises (Dalian), Coradix Technoloy Consulting Ltd, or Dalian and Coradix Technology Consulting (Coradix) in joint venture in support of ArriveCAN

Canada Border Services Agency's processing Access to Information and Privacy requests electronically

Issue

On February 8, 2024, information on 40 CBSA servers was made inaccessible as a result of infrastructure maintenance performed by SSC to expand CBSA storage capacity.

Key facts

• This technology change was undertaken by SSC. There was no expectation at the outset that the work would impact CBSA services
• Most of the information was restored from readily available backups within a few days of the initial incident
• As a result of issues with backups, however, information within CBSA's Access to Information and Privacy (ATIP) processing system was not readily recoverable. It remained available, but inaccessible
• To recover the inaccessible information, the CBSA and SSC have sought advice and assistance from the vendor of the ATIP processing system that manages the affected files
• Recovery efforts continue on approximately 16,000 pending ATIP requests dating back to 2021. It will take time to determine the effectiveness of restoration efforts; however, as of early March, the chances of recovering most – if not all – open files and cases was high
• SSC and CBSA remain in close contact with both the Office of the Information Commissioner and Office of the Privacy Commissioner of Canada on this matter

Key messages

• The infrastructure maintenance which impacted CBSA's ATIP operations was a routine IT change undertaken by SSC to augment CBSA's storage area network
• SSC and CBSA have since been working together, as well as with vendors of the affected systems and with experts across government, to restore access to digital files and rebuild the ATIP database to restore CBSA operations as quickly as possible
• Individuals can continue to make new ATIP requests through the GC's online portal
• The incident has only affected CBSA operations. There is no impact to other departments and agencies, and the Canadian Centre for Cyber Security has confirmed that no cyber security breach has occurred. The inaccessible information has not been lost or deleted
• The right to access information under the control of government institutions and the protection of personal information remains at the forefront of recovery efforts
• SSC is taking this situation very seriously and is reviewing its change management and system restore procedures to enhance the resilience of GC systems

If pressed on what happened:

• Routine maintenance rendered some digital files inaccessible, including ATIP files
• No cyber security breach has occurred and no bad actors have access to the affected data
• Digital files related to ATIP requests received by CBSA continue to reside on the system. However, due to a malfunction in the backup procedures, CBSA is currently unable to access the files
• On February 21, 2024, CBSA announced that individuals could continue to make new ATIP requests through its online portal. The Agency expected to process about half of its usual volume of 1,200 weekly ATIP requests the week of February 21, 2024, as restoration efforts continued, and would keep bolstering its processing capacity

If pressed on back-up procedures:

• In this situation, after the digital files were rendered inaccessible, SSC teams tried to restore them from backups. However, it was determined that some devices had not been backed up recently due to procedural errors
• CBSA remains in close contact with both the Office of the Information Commissioner and Office of the Privacy Commissioner of Canada on this matter
• SSC is treating recovery efforts as a top priority

Background

CBSA has advised they will field all questions related to ATIP implications. They are best positioned to know how many of the 16,000 original ATIP requests have been recovered so far.

Shared Services Canada Procurement

Issue

This note explains SSC's general procurement practices and achievements.

Key messages

• In delivering digital services to GC departments, SSC ensures that supplied goods and services are of high quality, procured at the best value, and provided in a timely fashion
• SSC conducts fair, open, and transparent procurement in accordance with domestic and international trade agreements and within the government's procurement policy framework
• Whenever possible, SSC uses competition to get the best value for Canadians
• As IT service delivery is modernized, the government is making procurement more agile, collaborative, and inclusive, to promote social values, as well as environmental sustainability

If pressed on sole sourcing:

• It is sometimes necessary for SSC to issue a non-competitive contract, where equipment must be compatible with existing IT infrastructure. Such contracts are avoided wherever possible
• In all instances, non-competitive procurement strategies are fully justified with a reference to the applicable exception to competitive bidding under the Government Contracts Regulations (GCRs) of the Financial Administration Act (FAA)
• In the case of procurements subject to one or more trade agreements, non-competitive procurement strategies are also justified using the limited tendering provisions of Canada's national and international trade agreements
• In fiscal year 2022-2023, SSC awarded a total of 8,535 contracts valued at approximately $2.8 billion
  • Overall, 65% (by volume) and 86% (by value) were competitively sourced contracts
  • 35% (by volume) and 14% (by value) were sole-sourced contracts

If pressed on transparency:

• Under open government principles, SSC proactively discloses all contracts with a value over $10,000 on a quarterly basis
• Whenever amendments occur to a contract above $10,000, the details are also proactively published, so that the information is available to Canadians

If pressed on SSC software procurement for other departments:

• SSC procures software in two different ways for other departments:
  • Enterprise software
  • Requests from other departments for business-specific software
    • These are usually smaller purchases, and are 100% funded by the requesting departments, rather than SSC
    • The requirements are defined by the departments and reviewed by SSC

If pressed on GC Strategies, Coradix and Dalian contracts:

• SSC has had no contracts with GC Strategies
• PSPC has taken immediate action to formally suspend contracts with Dalian Enterprises (Dalian), Coradix Technology Consulting Ltd, as well as Dalian and Coradix Technology Consulting (Coradix) in joint venture
• As such, SSC took similar actions for all contracts and contract vehicles with Dalian, Coradix and Dalian and Coradix in joint venture
• None of the contracts that SSC held with Dalian and Coradix were related to the ArriveCAN project

If pressed on details of actions taken on contracts with Coradix, Dalian, and Dalian and Coradix in joint venture:

• On March 1, 2024, SSC terminated 6 active contracts and contract vehicles with Dalian, and Dalian and Coradix in joint venture 
• Furthermore, on March 6, 2024, SSC terminated its only active professional services contract with Coradix, providing Workload Migration IT Professional Services
• In addition, SSC took action on 10 Dalian contracts, for which any maintenance and support that was purchased will continue to be provided since payment has already been remitted
• No additional work or orders will be added to these contracts as of March 1, 2024. Once the associated maintenance and support expires, the contracts will be deemed terminated on the basis of default

Outsourcing Information Technology Services

Issue

Media reports have focused on the year-over-year increase in general outsourcing by federal departments.

Key messages

• SSC works to ensure the operation of secure, modern, and reliable government information technology (IT) infrastructure and systems
• SSC has established a robust process to assess all potential options for delivery. This process focuses on best practices, existing capacity and solutions to determine whether:
  • the solution can be built and operated in-house
  • commercial solutions should be included
  • external expertise is needed to achieve the desired outcome
• Accessing some services and technologies through contracts enables SSC to provide effective digital solutions and services that are aligned with global best practices
• Providing access to services and technologies best delivered by industry allows SSC to provide secure and cost-effective solutions to meet the needs and expectations of a digital government
• In doing so, SSC is able to leverage large-scale investments that industry has made in other public sectors and private markets to obtain cost-effective, secure and reliable off-the-shelf products and highly specialized solutions

If pressed on management consulting:

• SSC is committed to providing high-quality services to Canadians while ensuring the best value for taxpayers. The procurement of professional services, including management consulting services, is sometimes needed to acquire special expertise
• Work performed by management consultants is diverse, and can include providing advice on SSC's technology roadmaps, performing a third-party review on a business case, providing support to SSC in developing processes, and supporting tools for SSC enterprise services
• SSC exercises due diligence when contracting for goods or services. All contracts are to be issued in accordance with Treasury Board policies, as well as regulations, guidelines and procedures

If pressed on reasons for "outsourcing" technologies:

• SSC 'outsources' access to technology where it would be more costly to deliver it directly. Satellite services are an example of a highly specialized domain where industry excels and the technology is better delivered by the private sector
• Another example is the contract for the High-Power Computer that Environment and Climate Change Canada uses to generate environment and weather forecasts, advisories, and warnings. This is an example of a highly specialized domain that would cost more if delivered internally

If pressed on reasons for "outsourcing" work:

• SSC uses temporary professional services for specialized IT expertise from the industry to complement its internal capacity and support programs and projects that have defined periods and require surge capacity for delivery
• SSC is committed to leveraging industry resources responsibly without compromising the planning and execution of its time‑limited programs and projects