Government Operations Committee on June 5th, 2008

[Mario Silva, Liberal, Davenport, ON]

Thank you very much.

Thank you for coming before the committee.

I just want to ask some questions about the procurement aspect. Is the model we're using in Canada similar to, for example, that of some of our allies? For example, do the U.K. and France have a different model for the procurement process for defence? Are we using a very unique model here in Canada?

[Dan Ross]

The aspect that's somewhat unique in Canada is the separation of the function of contracting from defence materiel in general. It works well here. The Australians have a combined defence materiel organization. The United States has four or five, although my counterpart has sort of a strategic role of coordination in the Pentagon.

Many other countries are going to performance-based procurement and performance-based logistics support. We are somewhat ahead of other countries, but others are further ahead, for example the Danes and some Scandinavian countries.

We procure a lot more competitively than most other countries do. The United States is about 46% sole-source. We are 20% or less, and that 20% is driven by intellectual property rights in government-mandated programs and so on. So there are some differences in execution, but most of the western countries are going the same direction in terms of performance-based logistics and performance-based procurement.

[Liliane saint pierre]

Mr. Chairman, I would like to add that in Canada, there is more competition. A study done over the last five years shows that close to 80% of our procedures are competitive. The fact that there are more redress mechanisms in Canada is very important. That is because of the free trade agreements.

We have the famous Canadian International Trade Tribunal. I think the committee had a presentation on this last year. That is a very important factor in our approach to procurement.

[Mario Silva, Liberal, Davenport, ON]

Thank you.

As regards benchmarks and best practices, how do we compare with our European allies in implementing them? What are we learning from each other, and how are we putting that into place?

[Dan Ross]

I meet on several occasions during the year with my counterparts in EU countries in a NATO forum, in the national armaments directors forum, and with the partners of the joint strike fighter program. I participate in the CEO meeting for the joint strike fighter program every six months, and we have very frank conversations about exactly these issues.

It's difficult to make exact comparisons. The European Union is a very cohesive organization, and its defence procurement often has a strong economic dimension of developing the technology in the European Union. The United States spends over $600 billion annually on defence technology development. They are capable of spending and are prepared to spend the money to develop complete new platforms, littoral combat ships, and unarmed combat UAVs to fly off navy ships and so on. Their world is so massive that it is a different world. My European counterparts have a somewhat different focus, but the procurement procedures, such as competitively going to performance-based specifications, etc., are on a common path. There's a lot of exchange.

[Mario Silva, Liberal, Davenport, ON]

Thank you.

[The Vice-Chair, Conservative, Daryl Kramp]

You have another minute if you'd like.

[Liliane Saint Pierre]

Could I add on to this?

I would just like to say that from a public works department perspective, we have ongoing discussions mainly with GSA in the States, and with their Department of Defense, and at the same time we do have exchanges with European countries. It's very interesting to note that they now have some common challenges and are taking some common approaches. One of the common challenges is related to time. There's quite an effort all over to try to reduce the time it takes to get to a contract and the delivery of the goods and services.

[The Vice-Chair, Conservative, Daryl Kramp]

Mr. Brown.

[Patrick Brown, Conservative, Barrie, ON]

Thank you, Mr. Chair.

In Madam Saint Pierre's remarks, one thing that caught my attention was that on average it takes 107 months from the time of the identification of a need to the awarding of a contract for large military projects. The goal is to reduce that period to 48 months. These are all lengthy periods. What defines a large project? And what would the timeline be for smaller orders? Would it be dramatically less?

[Liliane Saint Pierre]

There are two questions: what defines a large project, and how long might it take for small procurements.

The Government of Canada, through Treasury Board, has a policy that details what makes a major crown project or not. One of the key criteria is that it's over $100 million.

That being said, depending on their nature, there are certain projects that one would decide are major projects. So there is some variation related to that.

Regarding other types of procurement, of course you could procure in a day. Our aim is that all the off-the-shelf goods and services that the government has a need for on a daily basis could be accessible within 24 to 48 hours. We have a whole series of instruments--standing offers, contracts--that allow that now, and we do have the intention to do much more.

[Patrick Brown, Conservative, Barrie, ON]

How do our timelines compare to those in other countries? Have you done any comparison with the U.S., the U.K., Germany, or France on the length of time for large projects?

[Liliane Saint Pierre]

I don't have precise statistics to make a comparison with other countries. I can say, though, through our exchange of information and discussion, that it takes quite a long time everywhere, mainly when you deal with customized specification.

[Patrick Brown, Conservative, Barrie, ON]

This is another area of interest. When you compare the U.S. and Canada in regard to the use of sole-source contracting in defence procurements, have you noticed any differences or similarities?

[Liliane Saint Pierre]

Mr. Chair, one of the big differences, and I think my colleague from the Department of National Defence hinted at it, is that if you compare us with the Americans, you'll see they do much more sole-sourcing than we do.

A study of the procurements we did for National Defence in the last five years, looking at all the statistics, demonstrated that we do close to 80% at the competitive level. The Americans are very far behind that.

[Dan Ross]

If I could just elaborate, the Americans pull through R and D investment. They will spend billions of dollars investing in a platform--a strike fighter, for example, from Lockheed Martin, and then they pull through and actually acquire it from Lockheed Martin. Technically, was that a competitive process in acquisition or not? Technically, no. But they did compete the initial selection of a prototype between Boeing and Lockheed Martin. So we have to be careful about the comparisons.

They are prepared to develop a major platform themselves and spend a billion dollars on the R and D. It would not make sense, then, to go buy a European Union solution after having spent the billions of dollars.

So it truly is like apples and oranges to some degree.

[The Vice-Chair, Conservative, Daryl Kramp]

Madam Bourgeois.

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

Thank you, Mr. Chairman.

My first series of questions will be to Ms. saint pierre.

You have a project team or you are part of a project team, to ensure that the fundamentals of the procurement process are done correctly. How many people at PWGSC are part of the project team?

[Liliane saint pierre]

Mr. Chairman, Ms. Bourgeois: we mention that we have project teams in the following context. Let us take the example of a major project for the Department of National Defence. We talked about a number of them today. In order to conduct the procurement process properly, it goes without saying that we need the expertise of the Department of National Defence and of the Department of Public Works and Government Service.

So we have some technical experts who identify the needs, and for PWGSC's part, we have procurement experts, lawyers—because these procedures are really quite complex—and we have financial analysts as well. The improvement we introduced was to bring people together into one group. The number of people on a project team may vary between 10 and 15 depending on the type of project. However, there may be more people at certain times, particularly when the needs are being defined.

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

Yes. I do indeed understand that the project team, as was stated here, includes personnel from National Defence, Public Works and Industry Canada.

I would like to know how many people can be delegated by the Department of Public Works to work on this project team?

[Liliane saint pierre]

I understand. As far as National Defence projects are concerned, I have beside me Mr. Terry Williston who is the director general responsible for departmental staff who are part of this project team on behalf of the Department of Public Works. Over 400 people report to him and are assigned to the Department of National Defence.

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

So how much of the budget would those approximately 400 people represent? How much does it cost Public Works to send those 400 staff to help the Department of National Defence?

[Liliane saint pierre]

Mr. Chairman, I would like to refer the question to Mr. Williston, who thus will have the opportunity to give you more specific details on his budgetary envelope to provide services to National Defence.

[Terry Williston, Director General, Land, Aerospace and Marine Systems and Major Projects Sector, Department of Public Works and Government Services]

What I would say is we have a pool of about 400 professionals, as Madame Saint Pierre indicated, who are available to work on National Defence projects. But in any given project, we may have a small component--it could be three people, it could be up to ten people, for example--depending on the complexity and the size of that particular program. In those instances where we're providing members for that team, the Department of National Defence actually costs that as part of their project costs, and provides us with the revenue in order to supply them with that capability.

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

Yes, I understand. However, you will understand in turn that we have heard that National Defence spent $30 million this year on a number of acquisitions.

Does Public Works, in its budget, allocate $2, $4 or $10 million for support staff for the acquisition's process?