Evidence of meeting #27 for National Defence in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was competition.
A recording is available from Parliament.
4:30 p.m.
former Assistant Deputy Minister (Materiel), Department of National Defence, As an Individual
I wouldn't even try to do that, because that's not the purpose of the ADM. That would not be my purpose. My job is to ascertain whether there is or is not—not to prejudge.
4:30 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
Which is why we rely on people like Michael Slack and others to make those kinds of decisions.
4:30 p.m.
former Assistant Deputy Minister (Materiel), Department of National Defence, As an Individual
Well, that's not true at all. Michael is not involved in those decisions whatsoever.
4:30 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
He gives advice based on his knowledge, and that's exactly what happens.
4:30 p.m.
Conservative
The Chair Conservative Maxime Bernier
Thank you very much.
I'll have to give the floor to Monsieur Bachand, pour cinq minutes.
4:30 p.m.
Bloc
Claude Bachand Bloc Saint-Jean, QC
Mr. Chair, do we have to place absolute trust in people with top-secret security clearance? You know I have always objected to that. Canadian taxpayers pay, and we are their representatives. When it comes time to decide what kind of plane to select, it is very important that we have as many details as possible
So I don't want someone telling me that I have to place complete trust in a guy who has a top-secret security clearance, because that isn't true at all. I want that to be very clear. Unfortunately, I am also frustrated by the fact that I don't have a very high security clearance. I am up against guys like him, and like Mr. Ross who will be coming, who have a top-secret security clearance. I am up against generals, major-generals, lieutenant-generals, who have top-secret security clearance. We ask questions that are sometimes pretty harmless. They tell us they have the truth and they know what is going on. But we have the responsibility of buying these planes or deciding what type of plan. This has to be clear, to me, having top-secret security clearance is not necessarily a guarantee of trust.
There is another thing too, and that is the question of interoperability. If I understand correctly, the fact that we all have the same plane, an F-35, doesn't meet we will be completely interoperable. That is not true. Interoperability is how it operates in a theatre of operations. Personally, I'm sure, although I have great respect for the F-35, that a Eurofighter Typhoon or a Super Hornet is capable of operating interoperationally with the other members of NATO. There is no doubt about that.
Mr. Williams, given the agreement signed by the government, I would like to know what would happen if the government decided that it now wants to solicit bids, if, for example, there were a new government. The present government has committed itself. Would there be a risk of legal action? We all remember how Mr. Chrétien's party had promised to cancel the helicopter order before it came to power. We had a rather hefty fine to pay for breach of contract. It was worse than that, because we went 10 years with no helicopters. You recall, Mr. Williams, that they said that in political terms they couldn't just the same craft, even if we needed them, because they had said they didn't want them. They invented a package where they wanted to get the chassis from one company and the body and weaponry from another company. We come back to the car example—
4:30 p.m.
Bloc
Claude Bachand Bloc Saint-Jean, QC
— that I suggested to Mr. Williams. It's like deciding to buy a chassis from Chrysler and put a Ford body on it. It took 10 years and it didn't work at all. Then the government had to start over.
Do you think, at this point, that Lockheed Martin might be able to say that because the government doesn't want its plane anymore, it is going to have to pay a fine, because on July 16, the government said it was selecting their plane?
4:30 p.m.
former Assistant Deputy Minister (Materiel), Department of National Defence, As an Individual
If you look at the agreement, there is in fact a dispute resolution clause and ways to get out that are frankly very well and very fairly stated. In other words, there are clauses that say that if you want to get out you have to pay your fair share. We paid $551 million in this.
If in fact we decide to get out of the program—which you don't have to do just because you don't buy the jet—we could. There is no link, so you could stay in the program and make it that you're not going to buy the jets. That might affect our costing, because everything is pro-rated between all the companies, and stuff like that.
There is one significant difference between the cancellation in 1993 and this, and that is, that cancellation was with a contractor in the private sector; this is a government-to-government relationship. I think before any government decides not to proceed, there are probably—this goes well beyond my capability to talk about, but they're obviously big people—little consequences here, because you will have made a commitment, by signing, to buy something government to government. Between now and then, there is nothing to preclude doing a competition, frankly.
4:35 p.m.
Conservative
The Chair Conservative Maxime Bernier
Thank you. I will have to give the floor to Monsieur Hawn for five minutes.
4:35 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
Thank you, Chair.
Mr. Williams, how many times did you issue sole-source contracts as ADM Materiel?
4:35 p.m.
former Assistant Deputy Minister (Materiel), Department of National Defence, As an Individual
I don't know. As I said, back in 2004 I know that 8.8% of the time it was sole-source money, but I can't comment beyond that.
4:35 p.m.
former Assistant Deputy Minister (Materiel), Department of National Defence, As an Individual
I've no idea. But I'll tell you one thing. It is partly because of spending five years in the Department of Public Works, which is in fact the arm responsible for the integrity of the process, that I became so focused on that. I had a special organization set up to make sure that there were never.... Before anybody wanted to sole-source something, they had to go through an extra challenge function before I would approve it.
So is 8.8% too much? I don't know, but I do know that I took non-sole-sourcing very, very seriously.
4:35 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
Well, would you be surprised if I told you that you signed sole-source contracts above $25,000 4,553 times?
4:35 p.m.
former Assistant Deputy Minister (Materiel), Department of National Defence, As an Individual
I would be. I'm not sure what they were for. They must have been fairly small amounts of money, because as I said, it was only 8.8 cents on the dollar of the total value.
4:35 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
Well, it's $7 billion there, and it's about another $3 billion there. So it's a chunk of change.
4:35 p.m.
former Assistant Deputy Minister (Materiel), Department of National Defence, As an Individual
Well, maybe. I would argue that in the last five years we have spent $40 billion on sole-sourcing. Sorry to disagree with you. I would like to see those figures—it's easy to quote them, I guess—any time.
4:35 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
They are from Public Works, PWGSC business, volume 1, April 1999 to 2010, and another document that--
4:35 p.m.
former Assistant Deputy Minister (Materiel), Department of National Defence, As an Individual
I'm not so sure what that has to do with anything.
4:35 p.m.
NDP
Jack Harris NDP St. John's East, NL
Mr. Chairman, is this fair to the witness to quote documents that are not presented to the witness or presented to the table? It just doesn't seem to be fair procedure to me.
4:35 p.m.
former Assistant Deputy Minister (Materiel), Department of National Defence, As an Individual
I'd like to answer one thing.
You talked about sole-sourcing. The biggest deal I know of that would have been sole-sourced was $3 billion for NATO flying training. That issue came up on February 17, 2000, at the standing committee when I appeared before it, along with the Auditor General. I think that issue was discussed, and I think it's important, because I think it reflects strongly what I've been talking about.
So let me take a minute and respond to your accusation.
4:35 p.m.
former Assistant Deputy Minister (Materiel), Department of National Defence, As an Individual
The issue was sole-sourcing of the NATO flying training. I'll make my comment, and then I'll get to Denis Desautels' response to it.
There's probably nobody around more committed to trying to undertake competitive procurement than I am. Both this position and my previous one were as accountable for them. However, if there ever was an occasion when a non-competitive contract should have been followed or taken, it is in this particular case. Thanks to the innovativeness and creativity of industry, we have come up with a solution that has saved the taxpayer, as of today, $56 million, with a potential to increase very shortly to over $200 million. That's point number one.
Point number two: you should be aware that this initiative was undertaken in complete compliance with the trade agreement, which is the agreement on internal trade, as well as the government's contracting regulations. In terms of the agreement on internal trade, you could look at article 506.11(a) and you'd see 'unforeseeable urgency'--
4:35 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
Mr. Williams, I'm sorry. I'm going to have to cut you off. I agree that the NATO flying training program was a great program, no question.