Evidence of meeting #23 for Government Operations and Estimates in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was contracts.
A recording is available from Parliament.
9:20 a.m.
Minister of Public Works and Government Services
Are you talking about the acquisition of military materiel as such or about the information technologies supporting the military field?
9:20 a.m.
Minister of Public Works and Government Services
We're talking about military equipment.
9:20 a.m.
Minister of Public Works and Government Services
During the year just ended—
9:20 a.m.
Bloc
Diane Bourgeois Bloc Terrebonne—Blainville, QC
How many millions or billions of dollars do the contracts handled by your department represent?
9:20 a.m.
Minister of Public Works and Government Services
We're talking about billions of dollars since, as you know, we signed the contract for the Hercules aircraft.
9:20 a.m.
Minister of Public Works and Government Services
We'll get the exact figure for you.
9:20 a.m.
Bloc
Diane Bourgeois Bloc Terrebonne—Blainville, QC
I'm asking you the question simply because the Auditor General of Canada has previously talked about contracts that were let by contract award notice. That's also why I asked the question about information technologies earlier. In previous years, many contracts have been let by contract award notice. That's apparently not quite right because, in this case, it's said to prevent competition.
I wanted to know whether, under the Accountability Act, you had considered putting a mechanism in place that could reassure small and medium enterprises and the Auditor General of Canada about the contracting process.
9:20 a.m.
Minister of Public Works and Government Services
The contract award notice process is an exceptional process. I wouldn't want you to believe that a lot of contracts are awarded that way; that's false. A few military contracts have been let by contract award notice. Fortunately, National Defence had clearly identified the type of materiel it required.
9:25 a.m.
Bloc
Diane Bourgeois Bloc Terrebonne—Blainville, QC
Are you talking about Boeing, for example, or anyone, in general?
9:25 a.m.
Minister of Public Works and Government Services
We can talk about the C-17s and Hercules aircraft, since those contracts have been signed. In those two cases, National Defence had clearly identified what materiel it wanted to have, which is to taxpayers' benefit. In the past, what I've seen is that it could take years and years to try to develop a device or object that we wanted to buy. Years could go by between the time it was conceived, the time it was developed and the time it was acquired.
We determined that the armed forces needed equipment quickly. When National Defence identified the goods it needed, knowing the market, we issued a call, saying that we believed that one or two companies could produce that aircraft. However, we gave third parties a chance. Ms. Bourgeois, some people raised their hand to say that we were wrong and that they thought they could manufacture the aircraft in question.
It's a transparent process that enables those who believe they have been hurt to be heard. That's why it's not an irregular process. It's exceptional, but it's a process that enables third parties to assert their rights.
9:25 a.m.
Liberal
The Chair Liberal Diane Marleau
Thank you, Ms. Bourgeois. Your time is up.
Mr. Kramp, go ahead, please.
April 10th, 2008 / 9:25 a.m.
Conservative
Daryl Kramp Conservative Prince Edward—Hastings, ON
Thank you, Madam Chair.
Welcome again, Minister, and officials from the department. Might I thank you in advance; no minister and staff have appeared more before this committee than you have. We thank you for your cooperation in the past and we are happy to see you here again today as you help us delve through the levels of accountability and responsibility of the government operations committee.
I'm actually very fortunate, in a way. I live in the riding of Prince Edward—Hastings, right adjacent to Trenton CFB, the now-proclaimed air transport capital of Canada, and as such I had the privilege to actually see the inaugural flight of the first C-17. After that flight, I had the opportunity to tour the aircraft and talk with all of the people involved in the operation of the aircraft. Honestly, I was just blown away by the capacity and the capability--everything from the short-field takeoff, and on and on.
I understand we're in the process of completing the timeline to finish up the acquisition of the C-17 program. Could you give us some details on when we might expect the last deliveries, or give us the timetable to be expected on the C-17 implementation?
9:25 a.m.
Minister of Public Works and Government Services
The C-17 is a nice segue from the question from Madame Bourgeois. It's a good example of smart procurement. National Defence identified what it needed, and we were able to zero in on that aircraft once it was obvious there were no similar types of aircraft available for us to purchase.
We launched the process in the summer of 2006, and we signed the contract with Boeing less than 18 months later. We took delivery of the first aircraft last summer. We have since received a second aircraft, a third aircraft is on its way, and a fourth is expected shortly. We will have received all four aircraft almost within 12 to 15 months of contract signing.
9:25 a.m.
Conservative
Daryl Kramp Conservative Prince Edward—Hastings, ON
As we've seen in the past, regrettably, some of these processes run 10 or 15 years in purchase, design, thought process, delivery. This is quite a refreshing change. I guess there are pluses and minuses with everything.
From talking to the people on the ground, the people who fly these things and maintain them, I can tell you that they are absolutely delighted with the performance of this aircraft. I thank you.
In the same area—and I don't want to go back to a local situation only—I think there are similarities with the SMEs. Looking at the infrastructure, the requirements at CFB Trenton, it literally will be hundreds of millions of dollars, everything from airport reconstruction, to hangar, to maintenance, to storage, to warehouses, everything like this. As always, there are a lot of concerns raised from the small and medium enterprises. Will they have the capacity and the ability to bid on contracts? Is it a closed shop? Is it open? Can they be competitive?
Could you give me an illustration of what your department has done to ensure that the SMEs can compete fairly and openly in contracts such as this?
9:30 a.m.
Minister of Public Works and Government Services
On the military side, the potential for SMEs on these contracts is in the offsets coming from foreign manufacturers. We've insisted that for every dollar we give a foreign manufacturer, the manufacturer has to reinvest a dollar in the aerospace and defence industry. This is important—aerospace and defence, not any industry, not any investment. Boeing and Lockheed Martin have already announced nearly $2 billion in investments in Canada as a result of these obligations. These are real contracts, and some of them have been handed to the small and medium enterprises.
More generally, since we launched the office of small and medium enterprises in the spring of 2006, we've opened six offices. I've had round tables with business folks in those six cities. Not everybody's happy, let us be clear about this. People want the MERX system, our electronic tendering system, to be improved. Some people fear that there's an advantage given to Ottawa, Montreal, Toronto--the triangle. Some people believe that if you're outside the triangle you're at a disadvantage.
We're fixing all these things because we want more of these SMEs to be potential suppliers to the government. We think everybody wins, the economy wins, but we as a client win by having more people interested in bidding for our business.
9:30 a.m.
Conservative
Daryl Kramp Conservative Prince Edward—Hastings, ON
There's one report we're working on that I'd like to make the minister aware of. I know it's an issue that the chair feels strongly about too. I'm talking about pay modernization and the difficulties with compensation. I'd like to inform the minister that we're currently in the draft stage of this report. We hope to be able to present a copy of it to your department in due course.
We ask that you take a close look at the recommendations coming out of this report and at your earliest convenience provide a response to the committee. We're highlighting this as one of our to-do projects.
9:30 a.m.
Liberal
The Chair Liberal Diane Marleau
I thank you, Mr. Kramp, for doing this. You know how near and dear it is to my heart, this particular issue.
We will now move to Mr. Angus.
9:30 a.m.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Thank you, Madam Chair.
Thank you, Minister, for appearing before us again. My colleague Mr. Kramp congratulates your frequent appearances before committee. I would prefer to speak to you in the House sometimes about it, but again, you are in the unelected Senate and not in the House of Commons. But needless to say, I am very pleased to have you here today.
One of the issues surrounding your role in government is to ensure transparency and accountability in the very expensive contracts awarded by the federal government. That's why I'm interested in your 2007 decision not to take up the media's call for an investigation into the CGI-TPG contract controversy. I wonder why you chose not to review it, at least, and why it went ahead. Was there any particular reason for that decision?