Evidence of meeting #40 for Public Accounts in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was f-35.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Michael Ferguson  Auditor General of Canada, Office of the Auditor General of Canada
  • John Reed  Principal, Office of the Auditor General of Canada
  • Jerome Berthelette  Assistant Auditor General, Office of the Auditor General of Canada

10:15 a.m.

Principal, Office of the Auditor General of Canada

John Reed

I'm sorry, I missed part of the question.

10:15 a.m.

NDP

Mathieu Ravignat Pontiac, QC

I'm referring to the list of people you consulted to produce chapter 6 in 2010. Our real concern here is whether public funds were properly managed or not. As we see it, that is the million-dollar question. It is clear that the government lost total control of acquisitions valued at several million dollars. This goes beyond fighter jets; it involves the recent tank procurement as well.

Mr. Ferguson, in your report, you said that the Department of National Defence likely underestimated the full life-cycle costs of the F-35s. We now know that the minister was aware of the Treasury Board rules. My question is simple: why did they underestimate the costs?

10:15 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

Thank you.

Again, we can't ascribe any motive. What we did was we identified that life cycle costing was the best practice. Life cycle costing should have been used. There were certain costs that were not included, including the full life cycle, the full 36 years rather than 20 years, and then some specific cost items that should have been included in those cost estimates.

10:15 a.m.

NDP

Mathieu Ravignat Pontiac, QC

Very well. Thank you.

Did your audit take into account the correspondence between the U.S. government—the Pentagon—and the Department of National Defence?

10:15 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

Thank you.

I'll ask Mr. Reed to answer that question.

10:15 a.m.

Principal, Office of the Auditor General of Canada

John Reed

In paragraph 2.64, we make a specific reference to a letter that was received by National Defence from the Under Secretary of Defense for Acquisition, Technology and Logistics. So that was one example of correspondence between the Pentagon.

10:15 a.m.

NDP

Mathieu Ravignat Pontiac, QC

I am familiar with that example, but did you take a comprehensive look at all the correspondence?

10:20 a.m.

Principal, Office of the Auditor General of Canada

John Reed

I would have to say that we looked at a lot of correspondence that was transferred between the U.S. joint program office and National Defence, but not specifically between the Pentagon and National Defence.

10:20 a.m.

NDP

Mathieu Ravignat Pontiac, QC

Did you request it?

10:20 a.m.

Principal, Office of the Auditor General of Canada

John Reed

No. We didn't feel the need to request any correspondence.

10:20 a.m.

NDP

Mathieu Ravignat Pontiac, QC

Now I want to ask you about industrial benefits.

You said that the industrial benefits are based on assumptions. Can you confirm whether an open and transparent procurement process would guarantee that every dollar invested would yield a dollar in benefits?

10:20 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

One of the unique aspects of this particular arrangement was the fact that for industrial benefits, companies from partner countries could participate in industrial benefits but would have to compete for those industrial benefits rather than being guaranteed industrial benefits—for example, on a dollar-for-dollar basis.

10:20 a.m.

NDP

Mathieu Ravignat Pontiac, QC

Very well. Thank you.

In light of the estimated cost of the F-35s, would you agree that these benefits would be greater than those referred to in your report?

10:20 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

Thank you.

I'll ask Mr. Berthelette to answer the question.

April 26th, 2012 / 10:20 a.m.

Jerome Berthelette Assistant Auditor General, Office of the Auditor General of Canada

Mr. Chair, we did not actually sit down and examine the difference that would apply if we used the industrial regional benefits policy versus what may result from the industrial participation under the F-35 program.