Opening Statement to the Standing Committee on Public Accounts

Report to the Minister of Public Works and Government Services on Three Contracts Awarded to Groupaction

Thank you, Madam Chair and good afternoon ladies and gentlemen. I am pleased to have the opportunity to brief members of Parliament on the results of our audit. As you already know, on Monday, I submitted my report to the Minister of Public Works and Government Services on the audit that he requested of the government's handling of three contracts awarded to Groupaction, worth a total of $1.6 million.

What you may not know is that I have already referred this matter to the RCMP. I did that on Monday, just before I submitted my report to the Minister.

Our audit revealed significant shortcomings at all stages of the contract management process: the decision to contract the work; developing the contract specifications, selecting the contractor; and ensuring that the government got what it had contracted for before the contractor was paid. Moreover, the files were so poorly documented that key questions about the management of the contracts remain unanswered.

However, another reason I referred this matter to the RCMP is that we also found extensive non-compliance with the law that applies to the government's financial transactions and with government policies and regulations. Although it happens rarely, the Auditor General can refer matters to the RCMP's commercial crime unit whenever we believe it appropriate.

Before I discuss the findings of our audit in more detail, let me point out that the audit focussed on the actions of public servants and not on the communication firm Groupaction, the contractor.

The Financial Administration Act and government contracting regulations are rules that apply to public servants, not to contractors. And senior public servants broke just about every rule in the book.

Now let me turn to the findings of our audit.

We identified several practices that did not comply with the law or with government regulations that apply to financial transactions. For example:

• The government did not receive everything it contracted for. Key elements specified in the contracts were never delivered. No one has been able to locate a report for the second contract, for which the government paid $549,990.
• Officials approved payments for work that varied significantly from the work requested in the contracts and for work that failed to satisfy contract specifications.
• Officials told us payments had been made for verbal advice, even though advice had not been stipulated in any of the three contracts. We found no evidence of any such advice.
• What Groupaction delivered under the third contract was similar to what it provided under the second, because the government had asked for similar work in both contracts.

The three contracts were awarded by parts of Public Works and Government Services Canada, namely the Advertising and Public Opinion Research Sector and the Communications Coordination Services Branch (CCSB). Responsibility for public opinion research and advertising now rests with Communication Canada, while PWGSC remains the contracting authority for these services.

I am troubled by the appalling lack of regard for rules and regulations that we saw in the way these three contracts were managed. Equally disturbing is that it happened in the very department that is supposed to ensure prudence, probity, and fairness in contract management throughout the government.

I have shared my concerns with the Minister, and I have also informed him that I will undertake a government-wide value-for-money audit of advertising and sponsorship programs of the Government of Canada. I expect to complete that audit and report the results to Parliament late next year.

In closing, I would like to take this opportunity to acknowledge the efforts of my staff who conducted this audit and prepared this in less than six weeks. I thank them for their diligence and professionalism.

Thank you. Now I would be pleased to take your questions.