National Defence Committee on Oct. 7th, 2010

[Laurie Hawn, Conservative, Edmonton Centre, AB]

The estimate from Fuzzyville is in fact based on a lot of years of operating the F-18. It's in fact based on the collective experience of all of the--

[Alan Williams]

This government has said that it has no idea what the long-term costs are for the F-35. All of the reports produced by Congress, and right now all of the research done, confirmed this, that the costs right now are not under control. There are huge problems in the development of the aircraft, and nobody knows what the final cost is going to be. That's all I'm saying.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Those problems are being resolved.

Nobody knows what the cost of any program is going to be 40 years ahead. You just don't. These are estimates, these are best estimates, based on a lot of collective experience with the kind of expert people you've given praise to, like Mike Slack and others.

[Alan Williams]

If you compete this, I guarantee you they will tell you exactly what their contractual commitment is going to be when we buy these Griffons, Rafales, Typhoons, Super Hornets, and support them for the next x number of years. It won't be estimates. Things can always happen, but the government and the department can then go ahead and budget. We know what it's going to be, year by year, as per contract. We do not know that today with this aircraft. It may be that we'll know it in two to three years, and it may be that it will be 50% lower than any of the other alternatives. All I'm saying is that until we know that, I don't understand why we're committing to buy something for which we don't know the long-term costs.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

We can go around this all day long—you don't know the cost.

[Alan Williams]

But I'm saying you do, and I can prove that you do.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

To go back to the requirements, we talked about needing a fifth-generation airplane. Who sets the requirements?

[Alan Williams]

The military.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

The military?

[Alan Williams]

Yes.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

The military sets the requirements.

[Alan Williams]

Yes.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Thank you.

If the military experts who are paid and who have the experience to make those kinds of recommendations, based on their experience, say that the requirement is for a fifth-generation aircraft based on the military requirement, which they set, and this is the only aircraft that meets those requirements, then is there a lot of point in withdrawing from an MOU, suffering the penalties we would suffer, to generate a competition that you already know the result of?

[Alan Williams]

The answer is absolutely.

Why don't we have fixed-wing search and rescue planes today? In 2004 the Department of Finance came to us and said here's a billion dollars; we'll give it to you to buy anything you want. I met with the vice-chief at the time, General Macdonald, and we said we need search and rescue fixed-wing. Our Buffalos are old and our C-130s are old and we need to replace them. And everybody can understand this, right? It's an easy sell.

Why don't we have them now, six years later? We don't have them because, again, part of the military suggested that they could define their requirements in this way and thereby limit competition. Neither I nor the minister agreed with that, and that's why. You can always propose something that doesn't stand scrutiny. That's all I'm saying.

[The Chair, Conservative, Maxime Bernier]

Thank you.

We will move on to Mr. Bachand, who has five minutes.

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Williams, I would like to point out that you shouldn't say that the Maritime helicopter contract was black and white. As you know, there has been one breach of the contract already because the company did not deliver the helicopters on time. There was provision for fines in the contract, but the government decided not to charge the fines. So that is proof that it's negotiable even if it has been signed. So I urge you to use another example next time.

I would like to come back to the economic benefits, because that is very important. On September 15, Mr. Clement told me that the government was dropping the industrial regional benefits policy in exchange for the chance to access the production line, which potentially represents 5,000 planes.

But that is not how I read what it says in chapter 7. If I understand correctly, you disagree with the Minister's statement and you are saying that there is still a possibility of regional industrial benefits, the memorandum of understanding doesn't prevent that. Is that correct?

[Alan Williams]

Let me see if I understand your question.

It is absolutely correct, I think--it's what I heard the minister say--that instead of getting a guarantee, we're opening ourselves up for the potential, and the potential can be the potential to bid on $12 billion. When you bid on $12 billion, you might win 10%, 20%, 30%, 40%, 50%. If you go historically by what we've done, it could be in the 30% to 40%. And I should tell you that even when I was there, we estimated that the final contractual amount available to industry might be in the $4-billion to $6-billion range, which would be phenomenal, given the little amount we've put in.

So I think it is absolutely, absolutely correct, and there's nothing in this 2006 MOU that prevents us from continuing to reap those benefits. Having said that, as I've said, there is a risk that if you decide not to buy them, then the companies that have contracts are in a higher jeopardy position. Of course I'm not advocating not buying them, and neither am I advocating getting out of the contract; I'm simply advocating doing a competition.

Frankly, if the government thought it was at risk, it could have made the sole-source decision December 12, 2006. Why wait till now to make that commitment? There's nothing between now and then that makes any difference. Even better, on December 12, 2006, launch a competition, which would have had the results right today, in which case we might have been able to make the commitment following a competition.

[Claude Bachand, Bloc, Saint-Jean, QC]

What do you think is the reasoning of the seven CEOs of the seven big Canadian companies involved? They think the way all this is being done is perfectly adequate and is wonderful. When you tell them there are no regional industrial benefits, and instead there is the possibility of access to 5,000 platforms, they say that's perfect. Why?

[Alan Williams]

Frankly, I would say the same thing if I were them. If I was ATCO or Honeywell or L-3 or Magellan and I'd won a contract, I'd be here advocating for the continuation of the program, because that's in my best interest.

The fact that in any competition I might get other business might be true, but a bird in the hand is worth much, much more than two in the bush, and I'd be advocating as strongly as they are.

[Claude Bachand, Bloc, Saint-Jean, QC]

I yield the floor to my colleague.

[Richard Nadeau, Bloc, Gatineau, QC]

How much time do I have left, Mr. Bernier? One minute?

Mr. Williams, imagine we're playing hockey and I pass you the puck, right to your stick. Tell us what we should know from you before you leave the room.

[Alan Williams]

I think you should know that I spent 15 years in this business, and my whole focus was always doing what's best to meet the needs of the military, and do things in an open, fair, and transparent way. I don't think in the whole time I was at Public Works or National Defence ministers got castigated in public for how they did things. I can't recall. Maybe I'm wrong, and I'm sure Mr. Hawn might have examples of that. But I was always there to protect the minister, and say to the minister, “Do things the right way. Go through the front door; it's always better than going through the side door.” I found that ministers, after much discussion, very often would generally agree with that point of view.

So I'm a person who is really high on integrity, and especially when dealing with the public purse. Scandals abound all over, in every facet, when you do things contractually that are not open, fair, and transparent. The RCMP is the most recent example.

[The Chair, Conservative, Maxime Bernier]

Thank you, Mr. Williams.

Mr. Harris, you have the floor.

[Jack Harris, NDP, St. John's East, NL]

Thank you, Mr. Chairman.

Mr. Williams, you've told us something new that we didn't know before, I think, about the MOU. There's a big difference between withdrawing from the MOU and not buying planes. That's something that's new.

We do know there's no contract yet; the government has not signed the contract to buy any planes, and probably won't do so till 2013. Is that correct?

[Alan Williams]

That's my understanding, but I can't know for certain.