Government Operations Committee on May 15th, 2024

[The Chair, Conservative, Kelly McCauley]

Good afternoon. I call this meeting to order.

Welcome to meeting number 122 of the House of Commons Standing Committee on Government Operations and Estimates.

There are just four of us in the room, but for the benefit of our witnesses today, we have some new rules about our audio. Please keep your earpiece away from the microphone. There's a sticker on your desk for you to leave it on if you're not using it. Please be aware of that. These measures are, of course, to protect our very valued interpreters.

We'll start with an opening statement from Ms. Carruthers.

Please go ahead. The floor is yours.

[Shirley Carruthers, Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology, Department of Foreign Affairs, Trade and Development]

Good afternoon, Mr. Chair. It is a pleasure to be here today.

Let me begin by thanking this committee for the invitation to appear to speak on this important topic.

The audit of procurement of consulting services was included in Global Affairs Canada's 2023‑25 internal audit plan, which was approved by the deputy minister of foreign affairs in June 2023.

The findings of the audit were presented and recommended for approval by Global Affairs Canada's departmental audit committee in December 2023 and subsequently published on our website, as part of the requirement set by the Policy on Internal Audit. The deputy minister of foreign affairs supported and approved this audit, recognizing its critical role in helping the department identify strengths and vulnerabilities.

The audit found that 79% of contracts were fully compliant with the Financial Administration Act. That is, 72 contracts were found to be fully compliant out of a total of 91 contracts assessed. Others were found to be partially compliant. Proactive disclosure of contracts over $10,000 was found to be fully compliant.

As a result of the internal audit, the department has been able to identify areas for further improvement of information management practices of the procurement processes to demonstrate compliance and support fair, open and transparent procurement. Global Affairs Canada is a big, complex department working in Canada and 182 missions abroad. In general, many of the issues flagged during the audit stem from the complexity of our operating environment.

Our procurement system has undergone significant improvements in the past two years. They include the implementation of an electronic signature solution aimed at mitigating the risk of inappropriate authority or lack of required segregation. Furthermore, the department has implemented additional controls, bolstering the effectiveness of our financial controls surrounding procurement. These measures collectively contribute to a more robust and reliable procurement process within our department. It is important to note that two-thirds, or 68%, of the contracts identified as having issues were signed prior to these adjustments being implemented.

On the first recommendation of reviewing the processes in place to ensure compliance with the requirements of the Financial Administration Act, the department has already implemented various tools and processes, including the electronic signature solution embedded in the automated Procure-to-Pay solution, an enhanced account verification procedure and updated training. The department is also in its final stage of revising the payment process framework, along with which a communication strategy including dashboards is being developed to enhance communication of financial results to senior management.

In response to the second recommendation to “put processes in place to ensure that information related to contract administration is accessible, preserved and retained throughout the procurement lifecycle to comply with applicable authorities and support fair, open, and”—

[Andréanne Larouche, Bloc, Shefford, QC]

On a point of order, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

I'm sorry, Ms. Carruthers.

Go ahead, Ms. Larouche.

[Andréanne Larouche, Bloc, Shefford, QC]

There's no interpretation.

[The Chair, Conservative, Kelly McCauley]

Okay, thanks.

Bear with us for one moment.

[Andréanne Larouche, Bloc, Shefford, QC]

It's working now.

[The Chair, Conservative, Kelly McCauley]

Great.

Ms. Carruthers, maybe you can back up about 30 seconds of your statement. Thanks.

[Shirley Carruthers]

Yes, that is not a problem.

In response to the second recommendation to “put processes in place to ensure that information related to contract administration is accessible, preserved and retained throughout the procurement lifecycle to comply with applicable authorities and support fair, open, and transparent procurement”, GAC's management action plans include reviewing current directives and procurement guidelines and, where required, updating procurement guidance documents to assist departmental personnel in the fulfillment of their procurement-related duties, which we are on track to completing before December 2024.

We are committed to assessing the training curriculum for procurement employees abroad and to updating procurement training based on this assessment, which we completed in February 2024 and have begun to roll out to our employees. We will ensure that information related to contract administration is accessible, preserved and retained throughout the procurement life cycle to comply with applicable authorities and support fair, open and transparent procurement.

In conclusion, I would like to reiterate that this audit was undertaken proactively to objectively assess our procurement of consulting services and to identify areas where we can improve. We are a large, complex department and fully recognize that there are areas where we can do better, as we are committed to the integrity of the contracting process to support best value to Canadians.

As part of our next steps to further strengthen our rigorous approach, the department has already implemented various tools and processes and will continue to evolve our practices.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We start our six-minute rounds with Mr. Genuis.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Chair.

The committee has been seized with the contracting abuse that has happened during the tenure of this NDP-Liberal government, and now this corruption and abuse issue is coming to Global Affairs, the domain of yet another prospective Liberal leadership candidate. In the last five years, Foreign Affairs has hired outside consultants over 8,000 times, spending over half a billion dollars. Your audit suggests that the rules are not being followed in about a quarter of those cases, so if that proportion holds, we're talking about a total of, roughly, 2,000 contracts at Global Affairs, Mélanie Joly's department, that didn't follow the rules.

I note that we're supposed to be promoting democracy and fighting corruption around the world, yet we're looking at a situation where one-quarter of the contracts at Global Affairs are not following the rules. I think that's really disgraceful and shouldn't be passed off as simply part of the complexity of the operating environment.

I'll start by asking the assistant deputy minister what kind of message this sends to our allies and partners and to emerging democracies that we're working with on issues of adherence to rules and to the rule of law. How does this impact our credibility, and what kind of message does it send that we have these massive problems internally?

[Shirley Carruthers]

First, the audit found that we generally comply with the applicable authorities and that we maintain the integrity of the process—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

A quarter of the time you don't, so that's a huge problem. That's not acceptable. We wouldn't consider that acceptable if we were looking at a developing country or an emerging democracy.

What kind of a message does it send that a quarter of the time the rules aren't being followed?

[Shirley Carruthers]

I will just clarify the issues that the audit found.

First, in terms of the compliance of authorities, one of the findings was that the audit was unable to demonstrate that all of the necessary information was on file. To this I will mention that in a lot of these cases, it wasn't necessarily that the documentation didn't exist but more that when the auditors were looking into finding that information, the information wasn't readily available on file.

Maybe just—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Ms. Carruthers, I think you're avoiding the question, though. This is a grave problem. It speaks to the rule of law that rules weren't followed. We're supposed to be standing for and championing the rule of law on the world stage, and we have rules for a reason. You or others can say that you don't think particular rules are that important or significant, but rules were not followed in about a quarter of cases, and documentation that should have been available wasn't.

I'm asking you a very specific question: What message does it send that when we're trying to project a message about the rule of law on the world stage, a quarter of Global Affairs contracts are seemingly not complying with rules?

[Shirley Carruthers]

I want to address the compliance issues that were outlined in the audit. There were 19 different instances where the—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Ms. Carruthers, what message does it send? That's my question. What is the impact on our credibility? I've been asking you the same question for about four minutes.

[Shirley Carruthers]

Something important to recognize first is that your number, a quarter, is probably inaccurate in terms of the number of transactions that were found to be non-compliant. Of course, additional measures have been taken within the department to ensure that these types of errors don't come up again in the future.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

I think it's pretty clear that the witness is not answering the question, so I want to put the witness on notice that this committee does expect answers to questions, and we insist on those answers.

I'll follow up on the point of what message it sends, because I think you clearly don't want to respond to that. Maybe it's because the answer is fairly obvious that it sends a terrible message.

In terms of the specifics of this audit [Technical difficulty—Editor] identified, some of which appear to speak to explicit corruption. There are instances of intentional contract splitting, for example—

[Andréanne Larouche, Bloc, Shefford, QC]

On a point of order, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

I'm sorry. Just wait one moment, Mr. Genuis. I paused your time.

Go ahead, Ms. Larouche.

[Andréanne Larouche, Bloc, Shefford, QC]

The interpreters are saying that Mr. Genuis's connection is not good enough to allow for interpretation.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Chair, just on that point, I believe my connection has now been restored. I know I was having some problems, but it should be restored.

[The Chair, Conservative, Kelly McCauley]

Okay. Why don't you rewind about 30 seconds and restart the question you're working on right now? Start from the beginning, please.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Maybe before that, Ms. Larouche, can you confirm whether the interpretation is coming through? It's telling me on my end that my connection has been restored.