Evidence of meeting #42 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

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

10:25 a.m.

Deputy Minister, Department of National Defence

Robert Fonberg

Sorry, Mr. Chairman, just to clarify, there were no different accounts.

As I said on Tuesday, our last four major asset acquisitions have spoken to sustainment costs and acquisition costs, which is exactly what we did in the case of the F–35 and how we responded. Operating costs are within our departmental budget.

In fact, if you go back and look at the press releases for the last four major asset acquisitions, they all refer to sustainment costs and acquisition costs. So we communicated exactly the same way we've communicated over the last four major asset acquisitions.

10:25 a.m.

Liberal

Bob Rae Toronto Centre, ON

Well, with great respect, sir, you did not, because the number you gave to cabinet and the number given to the government included the operating costs as well as the personnel costs—that was the $25 billion number. That was also the basis for the number of the Parliamentary Budget Officer. But instead of admitting that, what happened was the government attacked the Parliamentary Budget Officer, saying that his numbers were out by a factor of 100%, when in fact there was a relatively minor difference of opinion between the internal numbers that the department had and the numbers that the Parliamentary Budget Officer proposed.

Why was the number on the website so different from the internal numbers that the government in fact had and that were the basis of the cabinet decision?

10:25 a.m.

Deputy Minister, Department of National Defence

Robert Fonberg

Thank you.

I may ask the CFO speak to it, but I would say this. Our understanding at the time, and frankly it continues to be so, notwithstanding the comments of the PBO, is that operating costs were not included. We can find no evidence of operating costs. We asked them to clarify that issue two weeks ago—

10:25 a.m.

Liberal

Bob Rae Toronto Centre, ON

That's completely contrary—

10:25 a.m.

NDP

The Chair David Christopherson

Sorry, Mr. Rae.

10:25 a.m.

Liberal

Bob Rae Toronto Centre, ON

That's completely contrary to what he said today.

10:25 a.m.

NDP

The Chair David Christopherson

Mr. Rae, please.

Thank you.

Over now to Mr. Aspin. You have the floor, sir.

10:25 a.m.

Conservative

Jay Aspin Nipissing—Timiskaming, ON

Thank you, Chairman.

And welcome, everybody.

Much has been made of the sole-source argument. Before you leave, gentlemen and lady, I'd like you to explain the process that led to the sole-source decision—I know it has a history of several governments, at least two—and how it played out here.

Mr. Guimont, can you address that for me, please?

10:30 a.m.

Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services

François Guimont

Yes. I'll say a few words and then I'll turn to Mr. Ring, who actually administers the acquisition program.

The only point I would make is that sole source is a legitimate procurement strategy under certain conditions.

Mr. Ring will explain the general approach to sole-sourcing, and specifically in this case how it applies.

May 3rd, 2012 / 10:30 a.m.

Tom Ring Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services

Thank you very much for the question.

I will at some point turn to my colleague Mr. Ross, because he and I have worked together on this operation for some time and we share both elements of the decision-making process, if you will.

If you look at a government considering an acquisition, in the first instance one of the things we'll do is look at what is either the capability that you're trying to replace or new capability that you would look to acquire. We would then together look at what was the policy rationale for either buying a new capability or replacing an existing capability. I don't think there's been any debate on that particular issue with respect to the need to replace the CF-18 fleet.

We then go to a third phase of the procurement process. The Auditor General in some of his work has actually laid out quite extensively what the phases in the procurement process and the phases in the acquisition process are.

The next phase of the process is needs and options identification, and there are four or five different steps in that process that we went through. We worked collectively with our colleagues in the Department of National Defence.

Here I would ask Mr. Ross to speak to some of the preliminary work that was done in those phases that eventually gets you to a point where you ask if there is a competitive field that is available to you, and should you then seek a competitive procurement, as the Treasury Board guidelines suggest you should do, if one exists?

Dan, do you want to talk about the options there?

10:30 a.m.

Assistant Deputy Minister, Materiel, Department of National Defence

Dan Ross

Thank you.

Effectively, in that early options analysis piece, before you go to government for approval in principle to begin a project, we ask, in this case the air force, to identify their high-level mandatory requirements, what they really need that particular platform to be able to do. We take that and we look out at the market, with our colleagues in Public Works, and identify reasonable solutions, and have preliminary estimates of cost, performance, availability, etc.

In this case, that examination came back with a view that in terms of technology, looking forward 30 years, there was only one solution.

10:30 a.m.

Conservative

Jay Aspin Nipissing—Timiskaming, ON

When did this whole process start, under which government?

10:30 a.m.

Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services

Tom Ring

The joint strike fighter project started with the signing of the first MOU in 1997.

10:30 a.m.

Conservative

Jay Aspin Nipissing—Timiskaming, ON

Under which government?

10:30 a.m.

Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services

Tom Ring

A previous government.