Government Operations Committee on June 5th, 2008

[Terry Williston]

I would say, on average--in the run of a year--the Department of National Defence would probably provide us with somewhere between $10 million and $12 million to provide that supplementary capability for them. We also would have our own in-house budgets that would be about the same--$10 million, $12 million, $15 million--depending on the year and the number of projects that are being managed in that particular year.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

That means that you would have to add between 20 and $30 million for that supplementary capability to the National Defence acquisition costs.

[Dan Ross]

The budget for Public Works services is approximately $5 billion a year.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Five billion. For what? Could you repeat that?

[Dan Ross]

We have a budget of $5 billion per year to equip Defence; this includes Public Works services, a group of 400 personnel and salaries the equivalent of some $30 million.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

All right. I have two more short questions.

Ms. saint pierre, we've often heard that PWGSC's project team is not stable. In any case, the lack of stability was mentioned in a report a few years ago.

This time, is the PWGSC project team that is working within the department stable, or are you going to be looking all over the map for people?

[Liliane saint pierre]

Mr. Chairman and Madam Bourgeois, it is true that on the human resources front, the Department of Public Works like all of the departments is facing certain challenges, because a certain percentage of our procurement experts will be retiring.

Having said that, many efforts have been made to recruit both internally and externally over the last two years, in the private sector, in order to bring the expertise to the department. There have been major competitions. We have posted almost 300 jobs over the last year. Rest assured that the recruitment of qualified personnel is now part of our daily responsibilities and activities. This is a priority.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

That is a good thing.

My final question is for Mr. Ross. The Auditor General of Canada discovered a problem: when we have material, we sent it to Afghanistan and, it just so happens that pieces of equipment are missing when everything arrives there, and we are not able to get an exact inventory of what is there.

What are we to do? Is another project set up to buy more pieces of equipment or do we ensure that we find the missing ones?

[Dan Ross]

Merci, Madame.

The Auditor General did a very good and very rigorous report. She described not the loss of equipment, but the ability to track where it is, when it has been issued, when it has come back to be repaired, and so on. That picture at that moment was accurate.

I have visited Afghanistan a number of times. I've been to the field and have talked to the soldiers who are doing that. Obviously, I have responsibility for the supply system, from the builder to the delivery.

The challenge we had was during the initial setup, the urgency of it.... And the mass of equipment—all the pieces, the spare parts and tires and ammunition entailed—is shipped in sea containers internationally and has to be disassembled, and stocktaking has to be done, etc., etc. It wasn't a question that we hadn't sent the right materiel or the right spare pieces, but the inability of the soldiers on the ground to have the time to inventory it and to make sure that it was issued at the right place, and so on.

Since the first rotation, that process has progressively become better and better and better and better. We have put in what's called RFID, radio frequency identification tracking by satellite. So now when a sea container leaves Montreal, we know exactly where it is in the world. We know when it arrives in Afghanistan, and we know now when it has been unpacked and when all of those pieces have been put on the shelf or have been issued to an infantry company in the field.

We have reinforced the capacity of the soldiers to do that infantry management of spare parts. It was very difficult for the first battalion in Kandahar to deal with that initial mass of things they had to control, and inventory and issue and so on. They had rows of sea containers, just hundreds of sea containers full of all the materiel that the soldiers and vehicles needed, and so on. So initially it was fairly challenging.

I was in Afghanistan six weeks ago. I spent almost a week there, travelling throughout all of the fire bases and the routes, and spending time with the logistics organization, and it's a very well-functioning organization now.

[The Vice-Chair, Conservative, Daryl Kramp]

Thank you, Mr. Ross.

We went a little over our time, so if Madame Bourgeois has another question, she can save it for another round. Thank you very kindly. We had a little touch of latitude there.

Now we will go to Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you very much.

Madame Saint Pierre, when you were talking earlier, you spoke in your opening remarks about openness and transparency in terms of deliverables, and yet, as I said in my first round of questioning, there's a sense of increasing secrecy. A headline reads, “DND's cloak of secrecy...'excessively secretive'”.

Last year we had audits of 12 military projects totalling $7.3 billion that were considered high risk, over budget, two years behind schedule, etc., and of another 52 projects totalling $1 billion that were considered high risk, and yet we have no information on these projects and what the problems were.

My question is, how are we to differentiate between the fair need, obviously, to have some confidentiality agreements in terms of deliverables and contracts but also transparency so that the taxpayer knows we're not getting ourselves into boondoggles when we're trying to follow various procurement practices yet don't really know what's happening? Certainly red flags are rising.

[Liliane saint pierre]

Mr. Chairman, before turning the question over, I want simply like to clarify that—

I want to confirm that the audit you are referring to is an audit of 12 projects that was done by the chief of review services at DND. As such, I'd like to turn to my colleague, Dan Ross.

[Dan Ross]

Merci.

This is an ongoing requirement of good stewardship, where we regularly go in and look at higher-risk projects, because some projects are very difficult. They are complex repair and overhauls and service support contracts and they go on for a number of years. So the chief of review services regularly and independently, in a very close relationship with the Auditor General, reviews those higher-risk projects and gives me feedback on improvements to management. We post those on the Internet. All of the information available on those is posted openly on the Internet. You can go to a chief of review services website and download the reports from those reviews.

There are detailed action plans as a result of those reviews that I am responsible to report to my deputy minister and to the review and audit committee of the Department of National Defence. I welcome the chief of review services' work. It's very helpful to improve our management skills and our accountability.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I'm looking at a May 7 article talking about the $7.3 billion high risk. It says that the department declined to release further details, other than the fact that our $7.3 billion is considered high risk. The other report on the $1 billion says, again, that no further details about the actual programs were released. So what's being put on the website, if our media are going there and finding no details?

[Dan Ross]

If I may, there is actually quite a bit of specific detail on the website on each one of those reports.

The $7.3 billion is a total contract value over a number of years, mostly for repair and overhaul, and only a small portion of that is actually being used, because these are incremental maintenance contracts, largely, that are higher risk.

We provide significant additional information through access to information. Now, we will take out attributions to civilians' names, or names of those who are not public servants, and that sort of thing, but a great amount of additional information is provided to journalists, or any Canadians, if they ask for it through access to information.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I don't have much time left, but I wanted to ask about the search and rescue planes. The Buffalos were supposed to be replaced. In September 2003 you talked about $1.3 billion for search and rescue, a fast-track promise in September 2004. Nothing has really happened since then, and now we're told that the Buffalos are going to be cobbled together until 2015, which is five years past their retirement date.

I want to ask about that, but I also want to ask it in conjunction with what we were talking about earlier, the need for heavy tanks that we're having brought into Afghanistan. We've had a lot of issues in the media, any time an RPG or roadside bomb hits one of our vehicles, as to whether or not we have to replace them.

I think it would be fair to say that when we went into Afghanistan we went in for one role, and then we moved into the counter-insurgency, and we've had to respond fairly quickly, because lives are at stake. We've had to change tack in terms of what kinds of machines are put in the field, whether troop transport, supplies for helicopters, and certainly the issue of tanks. We were initially told that tanks wouldn't be put in, and now we obviously need heavy tanks.

When those decisions have to be made, that we are having problems in the field and we're recognizing.... I mean, you said a metre of steel to withstand an RPG. That's a big big-ticket item and we're going to have to move that fast. Does that mean projects like the Buffalos get put on hold? How do you balance the need to quickly respond in Afghanistan with previous commitments made for domestic purchases?

[The Vice-Chair, Conservative, Daryl Kramp]

A brief response, please, Mr. Ross.

[Dan Ross]

Thank you.

The search and rescue project is progressing. Option analysis is ongoing, revised costings are being done. The Buffalo is easily serviceable to 2015. Structurally, it had been reinforced a number of years ago, and an avionics upgrade is being done to the cockpits, because it's basically a cargo airplane. The only maintenance and spare parts issues are related to engines. They are sustainable for a significant number of years, but the Buffalo will be replaced, and a SAR project will be coming forward.

In terms of Afghanistan, it is a capacity issue. You can't do everything at once, and the capacity of contracting and Treasury Board and so on is a challenge. The town and ministers have been very supportive, and we've done the right thing and delivered the right equipment to our troops in Afghanistan. As I said, I spend half my time on that. I personally drive it, and I chair meetings every six weeks on the status of improvements and delivery and implementation and modification of vehicles. We have done everything we could do.

Was the army largely prepared to be in Bosnia, where you were in a very low-threat environment, and you were not being engaged or bombed? Most western armies were in that place and had to change.

[The Vice-Chair, Conservative, Daryl Kramp]

Thank you, Mr. Ross.

Next is Mr. Warkentin.

[Chris Warkentin, Conservative, Peace River, AB]

I appreciate the opportunity to speak with you this morning. We appreciate your coming and giving us some clarity with regard to the procurement of military equipment specifically.

I have a number of questions, and I'm going to go down a number of different avenues with you this morning, if I have the time.

I'd like to start with an overview or brief summary from you in terms of the current status of the fairness monitoring program in terms of ensuring transparency and fairness for procurement. I'm wondering if you could give us an idea as to where that stands and how that is proceeding.

[Liliane Saint Pierre]

Mr. Chairman, thank you for this question.

The fairness monitoring policy framework was adopted by the Department of Public Works nearly three years ago, in mid-summer 2005. It's a framework that helps guide us to determine when additional assurance might be required for some of those complex procurements. It provides some criteria that we need to assess, such as the complexity of the requirement, the sensitivity, the value of the requirement, if it's a large requirement.

Since the implementation of that policy framework, we have had 23 requirement processes that were subject to the hiring of a fairness monitor, and the final decision related to this is made with another group within the Department of Public Works that deals with risk.

[Chris Warkentin, Conservative, Peace River, AB]

Once the process is undertaken, is that information available to the public or to other folks who would be interested in the outcome of the fairness monitor?

[Liliane Saint Pierre]

Fairness monitor reports are accessible.

[Chris Warkentin, Conservative, Peace River, AB]

I think that's one of the important things.

Mr. Angus was talking about transparency, and of course you're in an interesting situation. Obviously there's the whole issue of commercial protection to ensure the protection of competition. I'm thinking specifically of sensitive documents when it comes to the different companies that are bidding on these things. Of course, when the military is looking for some of its equipment you have issues of national security as well when it comes to some of the criteria.

In terms of these high-risk procurement items we were speaking about a bit earlier, I'm imagining a number of things would be considered high risk. I'm wondering if you would include used items in that list. I'm thinking of past situations where we, as a government, have purchased used equipment, and I'm wondering if they would fall under the high-risk group, or if we consider used equipment something different?

[Dan Ross]

I don't believe that I would find previously used or surplus equipment to be in the high-risk category. Actually, it's normally a lower risk because it is a proven solution. Spare parts, maintenance procedures, and all those things are already in place and don't have to be developed.

Most of our high-risk projects involve development of technology that doesn't exist, and that drives costs, schedules, operational risk. Also, we would add a significant contingency to cover a developmental project.