Thank you, Ms. Bisaro. Mr. Minister.
Thank you, Mr. Chairman. What we are going to get is some efficiencies and economies of scale where, recognizing that as a large organization, a corporation, there are some core services where you need to have consistency and integration where there is some standard volume directed processes, transaction issues, as Mr. Aumond indicated, where you need that consistency yet you can have more economies of scale. We are better coordinated. We tried to have a very devolved, decentralized type of model, which works in some program areas, but as we’ve discovered with information, IT, with finances, with procurement services, with our planning for capital planning, that with a big organization, with the volume of money we generate in a number of programs we are involved in, there is a core service area that requires this type of coordination. That’s what you’re going to get for this investment, and you’re going to get on the procurement services and you’ve gotten on the shared TSC services.
Thanks to the Minister for the explanation. I have to ask the question, and I think I probably know the answer, but we are spending this money, we are going to probably be providing better services in terms of our financial services. Are there any savings from bringing things in together and doing things in a consolidated way? Are we saving money?
The savings issue would be, I believe, addressed through the cost avoidance of the inefficiencies we’ve just talked about and the better use of our manpower that we’ve discussed would be some of the key areas where you can equate the two, I believe. Thank you.
Office of the comptroller general, not previously authorized, $560,000. Agreed?
Agreed.
Total department, not previously authorized, $739,000. Agreed?
Agreed.
Page 7, Municipal and Community Affairs, operations expenditures, directorate, not previously authorized, negative $68,000. Agreed?
Agreed.
School of Community Government, not previously authorized, $1,000. Agreed?
Agreed.
Regional operations, not previously authorized, $10,000. Agreed?
Agreed.
Total department, not previously authorized, negative $57,000. Agreed?
Agreed.
Page 8, Public Works and Services, operations expenditures, directorate, not previously authorized, $858,000. Ms. Bisaro.
I have a question here with regard to the Procurement Shared Services Centre. We have an explanation here where there is a transfer of money in from various departments to centralize our procurement services, but we are taking in $515,000 and yet we are spending whatever $515,000 plus $165,000 is. I don’t have that number here. We are spending $680,000. If we are doing the job in the various departments and it is costing us $515,000, why is it when we bring everything in together that we can’t provide the same services for the same amount of money? Thank you.
Thank you, Ms. Bisaro. Mr. Aumond.
Mr. Chair, initial resources are required for setting up a government procurement desk, a tender desk, and also for the funding of an additional procurement officer to help out with the unit. Thank you.
I can accept that explanation, but I guess I’m still wondering. If I was doing procurement within a department previously, now I’m not doing procurement any more. We’ve now set up a procurement officer and a centralized desk, so why would there not be savings on me as an employee, because I’m not doing procurement anymore?
Can we not see savings in each department that equals the cost of providing this service in a centralized place? I’m having trouble trying to understand how we have employees who are not doing as much as they were doing before, but it is still going to cost us money to bring this service into a central location. Thank you.
Mr. Chair, in some departments the procurement function was split between or being undertaken by a finance officer, and so when the monies were allocated out, partial PY money or partial money funding was allocated from a department to the receiving Department of Public Works and Services. At the end of the day, there was a shortfall because it wasn’t dollars for one PY going for one PY over to the Procurement Shared Services Centre.
What we looked at was what the shortfall amount was and then provided an allocation for that to make up the shortfall. Like I said, the tender desk and the procurement office and also some money to top up the funding for the benefits portion in procurement shared services where we are funding the departments at 17.5 percent for benefits but the actual cost was 23 percent, so there is an allocation for that. At the end of the day, when it all shook out, there is about three-quarters of the PY money that the procurement shared services was short for, plus the additional requirement for the top-up to get to the $165,000. Thank you.
Mr. Chair, thanks to Mr. Aumond for that. I have to ask the same question I asked with regard to the financial shared services. We are spending money here, nearly not as much money, but we are spending a bit of money here. Do we have expectations that we are going to have savings through the centralization? I think the Minister alluded to it a little bit, but are we going to basically… If we are spending $165,000, are we going to gain much more than that by having these services centralized? Thank you.
Thank you, Ms. Bisaro. Minister Miltenberger.
Thank you, Mr. Chairman. On the procurement side, one of the clear areas, of course, is anticipation through volume discounts when we have more coordinated and integrated procurement processes. Those economies of scale will become more clearly evident across the board. In a number of ways we have different departments, different regions all doing their own purchasing. I believe I mentioned, in a previous sitting, using the bundled water plants as an example, where we recognized that as a government we did five water plants in a coordinated way, we had a common procurement policy, we had a common construction approach, we would save money not only in the construction and development side but in the maintenance and be able to move the common parts and those types of things. Again, we would be avoiding those costs that if we just keep doing business the way we are doing, we would be spending that extra money that we hope now we would realize through the integration of these processes. Thank you.
Thank you, Mr. Miltenberger. Mr. Dolynny.
Thank you, Mr. Chairman. I just want to continue on this path where we are trying to figure out if, really, at the end of the day of this request, are taxpayers ahead in terms of savings. Now, the deputy minister talked about a cost benefit of 23 percent versus I think he said 17.5 percent. If I could get some clarification, what does he mean by that? Are we seeing savings of a delta of possibly less than 5 percent going into a procurement shared system? Thank you.
Thank you, Mr. Dolynny. Minister Miltenberger.
Thank you, Mr. Chairman. What I understand these numbers to mean – and I will get the deputy minister to help me on this – the departments are funded for the benefits to employees at about 17.5 percent. The actual costs of those benefits are 23 percent. Normally what is expected and what we keep running into issues with costs and how people use vacancies to cover off the shortfall, that 6 percent gap is substantial. This process has closed that gap, so that deficit of 17.5 percent has been closed and they will be funded at 23 percent, so this area here won’t have that particular budgetary challenge.
I will ask the deputy minister to hopefully tell everybody that I was pretty close to the right track.
Mr. Aumond.
Thank you, Mr. Chairman. The Minister is correct.
Thank you, Mr. Aumond. Mr. Dolynny.
Thank you, Mr. Chairman. Mr. Aumond is a wise man to agree with the Minister. I am still trying to wrap my head around this. Are we seeing savings in the benefits of the employees or are we seeing benefits in that we are more centralized in our procurement? At the end of the day, we are seeing a monumental shift in the procurement shared services of the organization and we are seeing a whole shift in this financial shared services model kind of overlapping on the same framework. What is the savings predicted to be under this procurement shared services model? With us spending all this extra money on the supplementary appropriation, what are the savings to the taxpayers at the end of the day? Are we going to be seeing millions of dollars, tens of thousands of dollars? What can we expect to see in savings in doing a procurement shared model? Thank you.
Thank you, Mr. Dolynny. Minister Miltenberger.
Thank you, Mr. Chairman. What we are going to see is efficiencies in effectiveness and service delivery. We are going to see avoided costs, especially on the procurement model side. This is not a cost savings where we are going to realize, as the Member said, millions, hundreds of thousands of dollars of money. What we are looking at with the resources we have available, how do we better organize ourselves to be more responsive and effective and this is what you’re going to get, and you will have, over the long-term, the avoided costs, the realization of the coordinated approach we’re taking on buying large amounts of goods through our procurement processes and back to the example of the benefits that we realize through the bundled water plant approach. Thank you.
I’m not sure if I’m totally in agreement with that statement from the Minister. You don’t do something unless you see a cost benefit to the taxpayer. You just don’t do it because we think it’s going to save money and efficiencies where the economies of scale that tend to pop up from time to time.
I’ve got a hard time wrapping my head around what are the true targets. I know that there are bean counters out there – and I mean that in a positive way and in a positive light – that calculate by as doing this there’s savings, and I think if we’re going to be true to form and we’re going to be asking for money and say follow us, we know what we’re doing, I would hope to God that we have the ability to quantify what those net benefits are, what are the scope of savings. Why do this, then, if we don’t know that number? There’s got to be some preliminary numbers in which the department, the Minister and deputy minister should be able to share with this committee in terms of we’re doing this because we’re saving this much money, because we’re doing our procurement on a more shared and standardized basis. Why don’t we have that type of information? Why is it so secretive?
Thank you, Mr. Dolynny. Mr. Aumond.
Thank you, Mr. Chair. I believe there’s a previous commitment to share, I guess, the goals and objectives of procurement shared services with committee, and we will do that, but we’ve got to take the opportunities.
The incremental ask here is for $165,000 and what we’re trying to do here is create, I guess, for lack of a better term, a centre of excellence around procurement. As a total, the government takes hundreds of millions of dollars of procurement every year and rather than having that left to people who aren’t practiced in that area, or in some cases even hold a professional certification in that area, is to create a centre of excellence so that that hundreds of millions of dollars in procurement gets undertaken by those professionals who actually have certification in that area and have experience in that area.
The other benefit I would suggest would be is that all procurement would be undertaken in the same manner, and we’ve heard from business that, depending on which department they deal with, the experience is different, the processes are different, and to bring some consistency to that process and some certainty to that process. So when industry or business undertake a contract or compete for a contract for the Government of the Northwest Territories, they will do so in a manner that’s consistent every time they do it.
So, as I said, we will share the goals and objectives of the procurement shared services that will be used to measure the success of that in the years to come. Thank you.
I do appreciate the deputy minister’s response. I mean, I’m not going to deny creating a centre of excellence, as was mentioned here today. That should be the goal of any organization, whether it’s in government or in business. But it has to be said that if you’re going to do this, you need to quantify or at least predict what your savings are going to be and we didn’t hear that today. We heard it’s only $165,000, we’re going to be doing a whole bunch of changes, we’re going to have all these topnotch people come down and do the buying for the government, and trust us.
I would expect that in the future that the department come here armed with information that if we legitimately ask what are those savings in dollars and cents, that should be provided to committee. There should be a quantifiable reason and a scope of savings and a true cost benefit to the taxpayers by doing changes in how we do such things as procurement. I think that’s a legitimate question and a legitimate ask from committee. Thank you.
Thank you, Mr. Dolynny. Taking that as a comment, directorate, previously not authorized, $858,000.
Agreed.
Asset management, not previously authorized, $1.620 million.
Agreed.
Total department, not previously authorized, $2.478 million.
Agreed.
Page 9, Health and Social Services, operations expenditures, program delivery support, not previously authorized, $89,000.
Agreed.
Health services programs, not previously authorized, $108,000.
Agreed.
Community wellness and social services, not previously authorized, $22,000.
