National Defence Committee on Nov. 6th, 2014

[Joyce Murray, Liberal, Vancouver Quadra, BC]

I appreciate your being here to help us understand your position, and through the chair, congratulations on it.

In your time as deputy minister of finance in Saskatchewan, or in other jobs, have you seen a government achieve its deficit reduction targets through the kind of deliberate non-spending, lapsing, and clawbacks that we've seen affecting this department since 2010-11? Is that a typical strategy that you've overseen, and can you tell us a bit about whether you see that as a common way to go?

[Bill Jones]

Mr. Chair, it is an interesting question. I would answer that in my experience, governments going back to the eighties and nineties and so forth, and successive governments even more recently, have approached deficit reduction in different ways. Some have focused on the expenditures; some have focused on the revenue side or the tax side of the equation, and some use a combination of these. I think there are different approaches that fit different jurisdictions and different governments, and all have been employed with varying successes.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

As a finance department official, can you comment on the accountability in a department when moneys that are approved by Parliament are not allowed to be spent and capital funds are clawed back? How does that influence accountability, and accountability to the public of that department's activities, especially when it's a question of large-scale clawbacks and underspending?

[Bill Jones]

Mr. Chair, I would approach that from two perspectives. Going back to my experience, I think there is much more accountability today for public servants than I can remember from when I was in Saskatchewan. I think there have been positive, constructive improvements to accountability and to how public servants manage money. I don't think there is any question of that. I've seen that.

The other perspective on this is that, again, we all have to make sure that it's affordable, and so forth. I think public servants work towards that.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you.

I know these are difficult questions, because this has been a major criticism of this government, especially with respect to the defence department and the inability to plan for the reductions in investment in this department. The moneys are announced and then there are barriers to spending them, so to me it seems to be a chaotic approach, but I appreciate your answer.

Another question I have is on one of your focuses, which is procurement. Can you tell me how your experience in the past will help you to meet your targets for procurement? At least half of the national procurement strategy equipment projects are behind schedule. Now there are five ministers in the mix, not three, none of whom have bottom-line accountability. How would your past experience help you get results in a situation where your minister doesn't have the final say on anything?

[Bill Jones]

Chair, to the member, thank you for that question.

Quite frankly, I'm still working out some of these relationships and so forth in practice, but from what I have observed to date, I can certainly tell you that there are a lot of eyes looking at many important initiatives going forward. In my experience, I think that certainly at the officials level, which I can speak for, there is good cooperation, and I think it's clear what the objectives are. I think that is working fairly well. But many challenges, yes—

[The Chair, Conservative, Peter Kent]

Thank you, Mr. Jones.

Time, Ms. Murray.

Mr. Jones, thank you very much for your time with us today and for sharing your vision. The committee wishes you well in the months and years ahead.

[Bill Jones]

Thank you very much, Mr. Chair.

[The Chair, Conservative, Peter Kent]

Could I call Mr. Coulter to the table, please.

Colleagues, again pursuant to Standing Orders 110 and 111 and the motion adopted by this committee on Tuesday, October 7, 2014, we are here to consider the order in council appointment of Mr. Keith Coulter to the position of special adviser to the Minister of National Defence, as referred to the committee on Friday, September 19 of this year.

Mr. Coulter, welcome. Would you make your opening remarks, please.

[Keith Coulter, Special Adviser to the Minister, Department of National Defence]

Thank you, Mr. Chairman, honourable members, and ladies and gentlemen.

I am very honoured to be here today. Thank you for the invitation to appear before you.

Three and a half months ago, on July 24, I was appointed by the Governor in Council to the position of special adviser to the Minister of National Defence. This appointment is to hold office during pleasure on a part-time basis for a period of 12 months.

My appointment is directly related to the implementation of the new defence procurement strategy which the Government of Canada announced in February. A core element of this strategy is the establishment within the Department of National Defence of an independent third party challenge function for major military procurements. I was appointed to work with the deputy minister of national defence to provide advice on the implementation of this new challenge function to the Minister of National Defence.

I understand that your interest is in my qualifications and competence to do this job, so let me say a few words about myself.

My professional career has included senior leadership experiences in the Canadian Armed Forces, the private sector and the Public Service of Canada.

During my career in the Canadian Armed Forces, I was a fighter pilot who conducted operational assignments as well as a jet trainer/instructor, and a NORAD mission commander on the AWACS aircraft. The highlights for me were my years as a Snowbird pilot and as a CF-18 squadron commander.

As a military officer, I also spent some time here in Ottawa, including two years as executive assistant to the deputy minister of national defence and two years on secondment as director of operations in the foreign and defence policy secretariat of the Privy Council Office.

I left the Canadian armed forces in 1997 to pursue other interests. My first stop was with Hill+Knowlton Canada, which I joined as a senior consultant and for which I later worked as senior vice-president and director of industrial services.

However, my heart remained in public service, and in 1999 I joined the public service of Canada as an assistant secretary at the Treasury Board Secretariat. I subsequently had the privilege of leading two important national institutions over a period of seven years: the Communications Security Establishment, now known as CSEC, from 2001 to 2005, and the Correctional Service of Canada, from 2005 to 2008.

Since retiring from the public service in 2008, I have remained professionally active with various projects and volunteer activities. These have included conducting an independent review of Veterans Affairs Canada, which I delivered to ministers in 2010, and serving more recently as a member of the independent review panel overseeing the work of the Canadian Armed Forces and the Department of National Defence to evaluate options to sustain a fighter capability once the current fleet of CF-18s is retired.

I accepted my current appointment for two reasons. First, my background and professional reference points make me confident that I can do what needs to be done to set up an affective challenge function. Second, I believe that getting this one right is incredibly important for the Canadian Armed Forces, the Department of National Defence and Canada.

In this context, for the past three months I have been working with senior leaders in the Canadian Armed Forces and the Department of National Defence, and with other government stakeholders, including the Privy Council Office, the Treasury Board Secretariat, Public Works and Government Services Canada, and Industry Canada, to develop an implementation strategy. This work, from my perspective, is moving along well toward implementation of the new challenge function into early 2015.

Mr. Chair, honourable members of the committee, this concludes my opening remarks. I would be pleased to answer any questions you may have.

[The Chair, Conservative, Peter Kent]

Thank you very much, Mr. Coulter.

We will begin our questioning with Mr. Chisu, for five minutes.

[Corneliu Chisu, Conservative, Pickering—Scarborough East, ON]

Thank you very much to the witnesses for their presentations.

First of all, I note that you have an engineering degree. I'm an engineer, too, so I think there's already a positive aspect of your appointment.

You noted in your opening statement that your appointment is directly related to the implementation of the new defence procurement strategy. Can you tell us a little bit more about the challenge function under that strategy? I see that you have outstanding experience in the military and other fields. Can you answer this question?

[Keith Coulter]

The defence procurement strategy had a number of initiatives. This one is about getting the requirements stated in a way in which everybody can have confidence and stated clearly at the front end of the process to start these major military procurements.

The strategy set out that all projects with a value of over $100 million would be challenged and certain projects with a value of less than $100 million would be as well.

The strategy also made it clear that there would be an independent review panel set up to be the centrepiece of this challenge function with independent third parties involved, which means people from outside the government.

Beyond those parameters, it was left up to the Minister of National Defence to come up with a formula on how to implement this in a way that would make sense. I was asked to come in and develop the implementation strategy.

I would like to lay out three things that have been important to me along the way.

First and foremost, this has to be set up in a way that directly supports the first objective of that defence procurement strategy, which is to get the right equipment in the hands of the men and women of the Canadian Forces in a timely manner. We all know it takes a very long time to do these major procurements and that they aren't always timely.

Second, at the front end of the process you need clarity and certainty around how requirements are framed. It's critically important that this new function be set up in a way that helps ensure that there's as much clarity and certainty around these requirements as possible.

Third, to state the obvious, these military procurements are complex undertakings that involve large sums of money and there has to be confidence and trust in how the Canadian Armed Forces and the Department of National Defence define these requirements. That's essential, so this function has to be set up in a way that is not only effective in substantively challenging these requirements, but is also done in a way that promotes confidence and trust.

Those are the three overarching things I've been doing over the last couple of months to develop this implementation strategy. I'm not there yet in having it fully developed, but I'm working very hard at it. As I said in my opening remarks, I am determined to achieve full implementation early in 2015.

[Corneliu Chisu, Conservative, Pickering—Scarborough East, ON]

Thank you very much for your answer.

I heard your intention for the request for proposal, that if a good request for proposal is made, then the project would eventually be running on time.

Can you elaborate on how your military experience combined with your extensive public service experience made you uniquely qualified to provide this required advice?

[Keith Coulter]

I have to address the premise of your question—

[The Chair, Conservative, Peter Kent]

Please be brief, Mr. Coulter.

[Keith Coulter]

The request for proposal is downstream in the procurement process. The piece I'm working on is at the front end of the procurement process where requirements are initially defined. This drives the subsequent process. I wanted to make that clear.

In terms of unique qualifications, I've run a couple of large national organizations. I think this is a lot about defining business needs and delivering business results and not just about the idiosyncrasies of military requirements. On the procurement side, I do have some experience looking at these issues and dealing with them, both at the defence department and most recently with the fighter panel I was on.

[The Chair, Conservative, Peter Kent]

Thank you very much, Mr. Coulter.

Mr. Harris, please.

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

Mr. Coulter, thank you for joining us today.

We're very interested in your qualifications and your work. Thank you for your service in the military. It sounds like you had a very interesting and exciting military career as well.

Let me ask you a question about the challenge function that you're talking about. We've been told over the years on this committee that there is a rigorous and high-level challenge function within the Department of National Defence by senior people who are very knowledgeable. That must have been inadequate, apparently. Is it?

[Keith Coulter]

I wasn't part of the analysis that went into framing the defence procurement strategy, but the conclusion of that body of work was that something more was needed.

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

All right, that's a fair answer.

Tell me, though, how can this challenge function work at the front end, as you've talked about, if we have situations such as the recent one with the AOPS program? For example, we're told that the statement of operational requirements, which is the key document as you pointed out, is no longer published and is not available. The PBO, in trying to do an analysis, was told that it's an evolving document.

How does the challenge function whether external, internal, or whatever, work in a situation like that?

[Keith Coulter]

The piece I'm working on is going to change.... It's a paradigm shift. The challenge will come initially. When a project like the one you referred to is initially conceived, before it even gets into the project definition stage, there will be this independent third party challenge. The ones that are later in the process can't be part of the new regime because they're too far along in the process.

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

Have you looked at the situation dealing with the fixed-wing SAR? The statement of requirements was obviously a big debacle and the National Research Council had to have a look at it. Is it possible for something like that to happen under the system you're putting together?

[Keith Coulter]

I'd like to tell you that it would be absolutely impossible, but the reality is that we will make judgements. We will have an independent panel with the knowledge, expertise, and independence to directly challenge what's being proposed and to draw conclusions and provide advice to the deputy minister and minister before they make decisions.

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

You're talking about an independent panel within DND, but we have three departments that are involved here, Public Works, Industry Canada and DND, and your secretariat and all of those things. How can it be both independent and within DND as well? How's that going to work?