Evidence of meeting #41 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 costs.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Robert Fonberg  Deputy Minister, Department of National Defence
  • André Deschamps  Commander, Royal Canadian Air Force, Department of National Defence
  • François Guimont  Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services
  • Simon Kennedy  Senior Associate Deputy Minister, Department of Industry
  • Michelle d'Auray  Secretary of the Treasury Board of Canada, Treasury Board Secretariat
  • Kevin Lindsey  Assistant Deputy Minister, Chief Financial Officer, Finance and Corporate Services, Department of National Defence
  • Dan Ross  Assistant Deputy Minister, Materiel, Department of National Defence
  • Tom Ring  Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services

9:55 a.m.

NDP

Lysane Blanchette-Lamothe Pierrefonds—Dollard, QC

And yet, the Auditor General expressed some concerns with regard to benefit projections for industry. He said this: “We found that briefing materials prepared by the departments for decision makers and ministers did not explain the basis for the projections, or the consequent limitations involved in relying on those projections for decision making.”

Was there indeed a lack of information or transparency regarding these benefit forecasts?

9:55 a.m.

Senior Associate Deputy Minister, Department of Industry

Simon Kennedy

A good deal of work actually goes into the development of the estimates you're talking about.

Very briefly, the government receives, twice a year, from the prime contractors a very detailed list of all their requirements for the manufacture of the aircraft and a detailed list of all the Canadian companies that they believe can play a role. We sit down with the prime contractors twice a year to go through that list, discuss it, and validate it. In addition to that, we have site visits with many Canadian companies that are interested in the program or are part of the program to, in effect, do triangulation. We actually discuss with the Canadian firms their view of what the prime contractors are saying. All of that, which is actually a fairly significant amount of work, goes into the numbers you see in the documents.

9:55 a.m.

NDP

Lysane Blanchette-Lamothe Pierrefonds—Dollard, QC

Thank you.

You say that a lot of work is done and you explain what it is, but that does not at all answer my question.

In his report, the Auditor General says: “ We found that briefing materials prepared by the departments for decision makers and ministers did not explain the basis for the projections, or the consequent limitations involved in relying on those projections for decision making.”

Do you agree, yes or no, that decision makers lacked information on the projections regarding industrial benefits?

9:55 a.m.

Senior Associate Deputy Minister, Department of Industry

Simon Kennedy

I think we would agree, certainly in hindsight, that we probably could have provided more detailed information and perhaps presented the information differently.

Having said that, I think it's been very clear since the outset of this program that this is a very different approach, that the nature of the opportunities was contingent, and that we would do our best to provide estimates to the government of what the potential total amount could be. But it's been very clear in our discussions with the industry over the last 10 years. In fact we were doing road shows with the industry as far back as 10 years ago to discuss the very different nature of this procurement and the fact that companies would have to compete on a best-value basis.

I think if one were to look at the testimony of ministers, both before committees of the House of Commons and from when the announcement of the MOU with the companies was made in 2006, it would be quite clear that the basis of this approach was one of best value and that companies had to compete.

I think it's been very clear that this is not a standard procurement, that there is uncertainty in terms of the total value, and that we've done our best to try to provide projections to the government of what the maximum amount of the opportunities might be. Could we have perhaps given a better breakdown or provided more detailed information? We certainly take that to heart.

9:55 a.m.

NDP

Lysane Blanchette-Lamothe Pierrefonds—Dollard, QC

You are saying “maybe”, but you nevertheless recognize the appropriateness of doing more, given the context of the concerns expressed by the Auditor General. Is one “maybe” equivalent to saying “if it is possible to do better, we will do that the next time”?

10 a.m.

Senior Associate Deputy Minister, Department of Industry

Simon Kennedy

Absolutely. We've been looking very carefully at his recommendations and at ways we can provide a fuller picture of the potential opportunities going forward.

10 a.m.

NDP

Lysane Blanchette-Lamothe Pierrefonds—Dollard, QC

In fact, it is not a formal recommendation and that is why I am raising it again. There is something else that has been emphasized and relates to projections. It has been said that only one optimal scenario was presented, rather than introducing some nuances and presenting other scenarios aside from the most optimistic one. Can things be done differently? Could they present different scenarios that would help the decision-makers make decisions based on an array of possibilities rather than on the most optimistic scenario alone?

10 a.m.

Senior Associate Deputy Minister, Department of Industry

Simon Kennedy

We'll certainly take a look at that. We're well aware of the comments the Auditor General has made in that area.

We know that at the very earliest development of this project, ranges were developed. When we actually had a prime contractor selected and we had gone further along, we felt we had good information to provide kind of the upper bound, but really there wasn't necessarily the same basis of information to start making projections of what a lower bound could be. We'll have to go back and take a look at that.

As I say, I think the concern about ranges is tempered by the fact that it's been common knowledge in the industry and within government circles for many years now that this is a project for which people have to compete and compete to win. There's been no uncertainty about the fact that there is some contingency to the opportunities.

10 a.m.

NDP

The Chair David Christopherson

Thank you very much. Time has well expired.

We go now to Madame Bateman.

May 1st, 2012 / 10 a.m.

Conservative

Joyce Bateman Winnipeg South Centre, MB

Thank you, Mr. Chair.

I would like to share my time with my colleague Mr. Laurie Hawn.

10 a.m.

NDP

The Chair David Christopherson

Very good. Do you mean share or...?

10 a.m.

Conservative

Joyce Bateman Winnipeg South Centre, MB

He may use my speaking time as he wishes.

10 a.m.

NDP

The Chair David Christopherson

You're giving him the full five minutes. Very good. Thank you, Madame.

Again, welcome, Mr. Hawn. You now have the floor, sir.

10 a.m.

Conservative

Laurie Hawn Edmonton Centre, AB

Thank you, Mr. Chair.

Thank you to our witnesses.

I have a number of questions. The first one is for Mr. Fonberg, and it will have a brief answer.

It's been suggested—and this is just for the record—that DND kept two sets of books on the F-35. Could you comment on that very briefly?

10 a.m.

Deputy Minister, Department of National Defence

Robert Fonberg

No, we just had one set of books, Mr. Hawn.