2010-715 PWGSC Management Action Plan

2.20 We recommend that Public Works and Government Services Canada (PWGSC) continue to address all concerns that remain outstanding from the Office of the Chief Risk Officer's (OCRO) report.

On July 18, 2007, PWGSC's Office of Chief Risk Officer (OCRO) issued a report to assess whether PWGSC's Real Property Branch (RPB) had sufficient controls and frameworks in place to fulfill RPB's responsibilities under Section 34 of the Financial Administration Act.

The OCRO Report recommended that PWGSC clarify the issue surrounding Project Management (PM) Labour and identified the following concerns:

• There is a lack of clarity on whether the PM Labour is a fixed cost or an estimate, as per the SNC Contracts
• The annual audited statement (the "Statement") with respect to SNC's actual costs has never been provided as the Statement is based on SNC's billed statements of costs and not actual costs incurred.

2.21 PWGSC proactively follow-up on any audit adjustments identified in the Financial Cost Audits conducted by ASC (Audit Services Canada). We understand that PWGSC has incorporated the recovery of any audit adjustments in their management action plans

2.22 We understand that since the commencement of the SNC contracts, PWGSC has commissioned Financial Cost Audits on three (3) regional portfolios. We also understand that PWGSC recently launched cost audits covering the eight (8) regional portfolios. We recommended and PWGSC concurred to prepare a cost audit strategy to provide more frequent and regular coverage of the administration of the SNC contracts.

2.24 We recommend that PWGSC establish a standard for both the required documents to be maintained on the project files and the level of the detail required to ensure that all cost quotes submitted by SNC for approval contain sufficient supporting information. This will result in SNC obtaining the necessary detail required for its files and also provide PWGSC with sufficient detail for assessment/authorization purposes.

2.25 We recommend that PWGSC:

1. Conduct a review of all of their files for any other additional cleaning services that SNC may have provided under any of the SNC contracts;

2. Determine whether or not the associated costs were calculated in accordance with the contractual agreement between SNC and the cleaning subcontractor; and

3. Determine next steps, if required, including any request for recovery.

2.26 As outlined in Chapter 1 of this Report, we could not confirm the exact date(s) that the Subcontractors performed the work in relation to any of the Transactions. SNC stated that the SNC Contracts do not stipulate that they are required to maintain records of when Subcontractors attend to perform the work for particular projects. We recommend that PWGSC review this matter and determine what documentation/procedures are required to track the exact date and location that subcontractors are attending and what documentation /process SNC should maintain/implement.

2.27 We recommend that PWGSC:

1. Review their records to assess the extent to which such extra cleaning services have been rendered since the commencement of the SNC Contracts with respect to assessing the extent of any management fee discrepancy;

2. Consider any other services that may be provided as PD Services which should be considered PM Services; and

3. Determine next steps including resolution of any discrepancies.