Thank you, Mr. Speaker. The Standing Committee on Public Accounts is pleased to present its Report on the Review of DeLury and Associates Limited Contracts.

Background

Mr. Speaker, on September 14, 1992, the Standing Committee on Finance tabled its Report on the Review of the 1992-93 Main Estimates. I believe the report is Committee Report 17-12(2). The following comments were included.

DeLury and Associates Limited Contracts. The committee is concerned with three contracts spanning a two year period, from November 1989 to December 1991, totalling $530,279 that were sole-sourced with DeLury and Associates Limited of Burns Lake, British Columbia. We were informed that Mr. DeLury was one of very few people with experience in the negotiation and implementation of a land claim settlement. The committee questions the practice of sole-sourcing and value for money in these circumstances. In addition, the amount reported by the department did not agree with the Government of the Northwest Territories contract listing.

In recommendation 34, Mr. Speaker, the committee recommends that the Standing Committee on Public Accounts review the contracts awarded by sole source to DeLury and Associates Limited to ensure proper accountability and value for money in these circumstances.

This recommendation was subsequently passed by a motion of the Legislative Assembly on October 2, 1992. Background materials were transmitted to me, as chairperson of the Standing Committee on Public Accounts, by the chairperson of Standing Committee on Finance on November 17, 1992.

In following up on this recommendation, Mr. Speaker, the committee was advised of the following:

-That it would likely be necessary to draw on the expertise of an accounting professional with extensive experience in public administration audit.

-Consulting and Audit Canada could be retained to complete the review, through a memorandum of understanding with the federal government.

-The analyst would not have the usual authority that an auditor from the territorial Audit Bureau or the Auditor General's office would have in accessing government records. Accordingly, it would be necessary to rely on the good offices of the Department of the Executive to acquire and use information needed for the review.

Memorandum Of Agreement

Consulting And Audit Canada

Mr. Speaker, the Public Accounts department, at a special meeting held on June 15, 1993 in Hay River, NWT, moved that Consulting and Audit Canada be contracted, through a memorandum of agreement, to conduct an independent review of the DeLury contract.

A memorandum of agreement was negotiated with Consulting and Audit Canada and the consultants commenced their work in Yellowknife on July 19, 1993. The findings presented in the attached report are based primarily on interviews with and documentation provided by the deputy minister of Intergovernmental and Aboriginal Affairs.

The review conducted by Consulting and Audit Canada, was divided into two phases. The first phase that ended in the preparation of this interim report, included: planning and orientation; field work, which involved reviewing and analysing documentation; and, interviewing appropriate individuals.

The memorandum of agreement with the consultants indicated that the second phase of the review, which would include preparation of a final report and attendance at meetings of the Standing Committee on Public Accounts, would be undertaken only if required. The Standing Committee on Public Accounts decided at a meeting in September, 1993, that it would not be productive or necessary for Consulting and Audit Canada to undertake the second phase of the review.

Review Of DeLury And Associates Limited Contracts

Interim Report Prepared By Consulting And Audit Canada

Mr. Speaker, Consulting and Audit Canada concluded that, although some deficiencies had been identified, the decision to award contracts by sole-source to DeLury and Associates Limited was taken at the Executive Council level, and was in compliance with the applicable statutory authorities set out in the Government of the Northwest Territories' Financial Administration Act.

However, several deficiencies related to the administration of the contracts were identified, including:

-Procedures used for the reporting of contract details in the government's contract listing were inadequate;

-A post-contract internal evaluation of this large consulting contract was not carried out;

-The total contract costs reported to the Legislative Assembly of the Northwest Territories were understated, in that certain travel costs were not reported; and,

-Consulting fees paid by the Government of the Northwest Territories in the amount of $8,780 which related to services provided to the Inuvialuit Regional Corporation by the contractor, may not have been recovered.

Further, given the documentation made available, Consulting and Audit Canada was unable to assess or comment on whether adequate monitoring, supervision, or direction over the contractor was maintained or whether the Government of the Northwest Territories obtained adequate value for money, in terms of the services provided by the contractor.

Finally, Mr. Speaker, the consultants recommended that the second stage of this review -- namely, the preparation of a final report and their attendance at the meetings of the Standing Committee on Public Accounts -- be set aside, as this interim report provides all existing information from the documentation made available for review.

Standing Committee On Public Accounts Review Of Interim Report Prepared By Consulting And Audit Canada

Mr. Speaker, the standing committee called Mr. Lew Voytilla, Comptroller General, and Mr. Bob Overvold, Deputy Minister, Intergovernmental and Aboriginal Affairs, to discuss the findings of the interim report prepared by Consulting and Audit Canada. The issues raised and discussed with these witnesses include the following:

- the accuracy of the contract listing; - the authority and obligation to produce the contract listing;

- the question of value for money for the whole of Mr. DeLury's work for the Government of the Northwest Territories;

- accountability and the adequacy of contract monitoring; and,

- the reason why the Government of the Northwest Territories paid for work done by Mr. DeLury for the Inuvialuit Regional Corporation.

The Contract Listing

Mr. Speaker, the contract listing can be an effective financial management tool. However, the committee is not satisfied that the contract listing has provided the required degree of public accountability. Members noted that much of the controversy surrounding the DeLury contracts could have been avoided, had the contract listing been produced in a timely manner with clear, accurate information. Any questions about these contracts could have been asked and addressed, long before the total expenditures amounted to over half a million dollars.

Mr. Speaker, with regards to the recommendations of our committee;

Recommendation 1

Our committee recommends that the Financial Management Board Secretariat formalize the process by which the contract listing is produced in order to ensure that accurate information is conveyed to the Legislative Assembly and the public in a timely fashion.

Value for Money

Mr. Speaker, Consulting and Audit Canada reported that based on the available documentation, they were unable to assess or comment on the value for money or the accountability and contract monitoring aspects of the DeLury contracts. The standing committee is not convinced, given the magnitude of the total expenditures for the DeLury contracts, that the Government of the Northwest Territories received sufficient value for money.

Accountability And Contract Monitoring

Mr. Speaker, the secretary to the Financial Management Board informed the committee that a new audit and evaluation division has been established in the Financial Management Board Secretariat, as part of the reorganization of Executive functions. The audit and evaluation division is composed of the territorial Audit Bureau, an information management section and an evaluation section. The secretary to the Financial Management Board suggested that the development of this in-house capacity to conduct program and project evaluations would hopefully address the concerns raised by the committee with respect to contract monitoring. The committee will be tracking the development of this organizational unit, with interest, to ensure that its concerns are addressed.

Recommendation 2

Therefore, Mr. Speaker, our committee recommends that the Government of the Northwest Territories, and in particular the Executive department, document and monitor service contracts to ensure full accountability and the capacity to assess value for money. The committee further recommends that the concerns identified, regarding contract monitoring, be addressed through policy development.

GNWT Payment For Services Rendered To The Inuvialuit Regional Corporation

Mr. Speaker, government officials did not provide a rationale to the committee concerning the reason the Government of the Northwest Territories agreed to pay for Mr. DeLury's consulting services to the Inuvialuit Regional Corporation. In addition, no explanation has been provided regarding the government's apparent failure to recover the consulting fees for services provided to the Inuvialuit.

Recommendation 3

Therefore, our third recommendation from our committee, recommends that the government review the payment of consulting fees to Mr. DeLury, for services provided to the Inuvialuit Regional Corporation, assess the feasibility of recovering these fees, and take appropriate action, as required.

Motion To Receive Committee Report 7-12(4) And Move To Committee Of The Whole

Mr. Speaker, that concludes the Standing Committee on Public Accounts report and I would therefore move, seconded by the honourable Member for Inuvik, that Committee Report 4-12(4), be received and moved into committee of the whole.

Mr. Speaker, being known for brevity, I wish to table, Tabled Document 25-12(4), Audit Report, Commission for Constitutional Development.

---Applause