Government Operations Committee on Nov. 28th, 2017

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I have one more question on Phoenix. The Auditor General stated that it took PSPC too long to acknowledge the vastness and severity of the issue. Knowing what we know today, to ensure that we don't repeat the same mistakes, what could we do differently?

[Carla Qualtrough, Liberal, Delta, BC]

Wow—

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

That's a loaded question.

[Carla Qualtrough, Liberal, Delta, BC]

That's a great question. We as a government, a small-g government of of whatever party, need to see these massive IT projects as the business transformations they are. I think we could have put in place the people, the tools, the policies, and the processes that would have set us up for success.

With respect to PSPC, as this was rolled out, it took a while to understand the depth and complexity of this issue. In the meantime, as problems were being identified, we were doing our very best to solve them, but it did take some time to understand the massive, enterprise-wide nature of these problems.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Minister, I want to ask you about prompt payment. We're embarking on a procurement study of small and medium-sized businesses, and I know the issue of prompt payment was important for many SMEs in my constituency. In my previous life, I worked on an issue like this, which was that the government would pay the prime, but the prime was a little slower to pay the subcontractor. Could you give us an update on prompt payment?

[Carla Qualtrough, Liberal, Delta, BC]

I was pleased to see that prompt payment made it into my mandate letter, because it shows our government's commitment to addressing this issue.

While 96% of our invoices from PSPC are paid within 30 days, we can always do better. We need to put in place structures that will make sure our subs are paid properly and promptly, not just properly. That's a lesson from Phoenix—we have to pay people accurately and on time. We have to make sure there are mechanisms in the federal government to ensure that people are paid promptly.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you. Merci.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

I'd like to welcome Mr. Clement and Mr. Diotte to our committee. Thank you for being here. My understanding is that Mr. McCauley and Mr. Shipley have ceded their time.

Mr. Clement, you would be up first.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Thank you.

I'm Tony Clement, Parry Sound—Muskoka. Thank you, Minister, for attending the committee.

I wanted to turn to shipbuilding, if I might. You referenced it in your remarks.

Construction on the joint support ships was supposed to begin by the end of the year. That was the original plan by the former government, but according to documents provided by the Department of Fisheries and Oceans, the delivery schedules for the supply ships and the icebreaker are currently unavailable. When do you expect construction to begin on the joint support ships?

[Carla Qualtrough, Liberal, Delta, BC]

Thank you.

I'm going to ask Lisa Campbell, who is here, to give us the dates, because she is much better versed on these details.

[Lisa Campbell, Assistant Deputy Minister, Defence and Marine Procurement, Department of Public Works and Government Services]

Thank you, Minister, and thank you for the question.

I'm happy to report that the construction of large ships for the navy and the Canadian Coast Guard is under way at both Irving Shipbuilding's Halifax shipyard and at Seaspan's Vancouver shipyard.

Suffice it to say that both the budgets and the schedules for the shipbuilding strategy were done many years ago, before blocks of ships had actually been constructed in these yards. We now have a much better idea of what a realistic schedule is, what challenges they'll encounter, and what efficiencies they're going to be able to achieve.

We have received an integrated program schedule for Vancouver for their whole program of work. We're currently analyzing it to see whether we have any questions about it, whether it works for us, and what the schedule will be.

As I believe the committee is aware, the Royal Canadian Navy has an urgent requirement for interim capability to refuel its ships at sea, and in November 2015, Federal Fleet Services was awarded a contract for the provision of interim auxiliary oil replenishment capability for the navy. The conversion of an existing vessel in Quebec remains on track. It's expected to begin service in January 2018 and will bridge the gap until the joint support ships are delivered.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Thank you.

I just want to state for the record that we really didn't get a date there. It is important for this committee and for parliamentarians to get dates as soon as possible so that we can do our job to hold you accountable.

Speaking about construction of the interim supply ships, then, because you did mention it, that was as a result of action taken by the previous government in the construction of the MV Asterix, a project that the government originally opposed for political reasons. We don't now know when the next supply ships will be built or when the construction will begin. Based on the testimony of officials, it won't happen until at least 2021, four years later than originally planned.

Numerous experts have said that we need to award another contract to the Davie shipyard to get these supply ships in motion; otherwise, our capabilities as a navy are going to be, quite frankly, a joke.

Will you award a second contract to Davie, and if not, why not?

[Carla Qualtrough, Liberal, Delta, BC]

Thank you.

Lisa, in a second I'll ask you to pipe in.

My understanding is based on a substantive look at operational capabilities by the Department of National Defence and the Coast Guard. They came to the conclusion that we did not need to continue with the existing lease of the existing ship or in fact award a contract for the building of a second ship.

Lisa, can you add to that?

[Lisa Campbell]

Yes, I'm happy to. Thank you, Minister.

Thank you for the question.

As I believe committee members are aware, two packages of work were competitively awarded to yards on the east and west coasts, and other opportunities for the construction of smaller vessels under 1,000 tonnes can be, and are, competed for across Canada, as well as ship repair and refit work.

This summer we put out to competition a contract for in-service support of Arctic and offshore patrol ships and joint supply ships. The contract was awarded for $5.2 billion. It's an example of how competition spreads work around.

We are committed to consulting with industry on other requirements that may arise following open and competitive procurement processes, so we regularly engage all Canadian yards as we look at the shipbuilding strategy's existing requirements and any new requirements.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Thank you.

I'd like to state again for the record that we are now a navy that has one interim supply ship and three oceans. That's not acceptable.

Turning to the surface combatants for a second, yesterday we learned from the department that the completion date for the first warship for the navy is, as you may have mentioned, highly speculative. It may be sometime next year. The deadline has been pushed back numerous times. The request for proposal has been amended more than 50 times already, and it's more likely than ever that delays will cause shipyard construction gaps and massive layoffs in the shipyards as a result.

When will the RFP for the ships be final, and would you be willing to provide the committee in writing with the delivery schedule?

[Lisa Campbell]

Thank you for the question.

We were pleased to announce yesterday that the request for proposal closes November 30. It was extended, sometimes at industry's request, for a couple of reasons. One, we want to make sure that industry had a chance to put their best foot forward, and we take into account their feedback. It really is an example, as the minister said, of procurement modernization.

As well, we still anticipate the start of construction in the early 2020s. This is a streamlined procurement strategy for one warship design and the combat systems integration that comes with it, which from our perspective should achieve efficiencies.

With respect to production slowdowns, it is a common feature of modern shipbuilding, and a number of things will play into this. The contract that we have for Arctic offshore patrol ships on the east coast has a guarantee of five ships, with an incentive for six. When we know the sixth ship will be built, that will tell us when the gap will start. We do expect the production slowdown. We've hired a third party to help us analyze the start of that gap, the nature of it, and its timing and duration—

[The Chair, Conservative, Tom Lukiwski]

I'm sorry, Madam Campbell; we'll have to stop your testimony.

Mr. Ayoub, you have five minutes.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Thank you, Mr. Chair.

Thank you for being here, Ms. Qualtrough. I feel for the government employees in this predicament and congratulate you on your leadership. Your task is not an easy one, but as a team we will find solutions. This is apparent already.

The pay system and its rules are extremely complicated. There are apparently 80,000 rules that have to be consolidated or corrected in order to simplify the system.

What is your schedule for reducing the number of rules and ensuring that the pay system properly serves our employees and Public Services and Procurement Canada?

[Carla Qualtrough, Liberal, Delta, BC]

Thank you for your question.

The 80,000 rules are of course related to the collective agreements.

The opportunity exists...and be clear that it is not PSPC that negotiates collective agreements with unions; it is in fact Treasury Board Secretariat, so they would be the lead.

The idea that we can in some ways simplify the rules that result from the negotiation of collective agreements would indeed impact the complexity of the customization of Phoenix. As Treasury Board embarks on their next wave, if you will, of collective agreement negotiation, they could be in a position—certainly we've heard from at least one union that they're open to it—to at least have a discussion on how we can simplify these rules. That's the customization.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Thank you.

Obviously, there is nothing simple about this system, but we have to deal with the situation. I would like to know more about the work being done in Ms. Lemay's group.

Mr. Linklater, how will the new plan address the backlog, that is, the delays that could persist?

Can we anticipate what the backlog will be in the near future?

As you said, you have to catch up on the implementation of the collective agreements. There is also the next tax season, which is fast approaching. Some things can be anticipated.

How can you get it done, even though the system is imperfect right now? What is your plan?

[Les Linklater]

Thank you for your question.

Right now, we are focusing on a number of waves of activities. We just tabled before the public accounts committee our action and management plan, through which we will implement initiatives to reduce the pressure on employees.

As you said, Mr. Ayoub, tax season is nearly upon us. In addition, we are processing the transactions related to the implementation of collective agreements and are preparing to issue employee T4 and relevé 1 slips. Further, we are in the process of hiring additional staff to join the workers in Miramichi and satellite offices right across the country.

Once we have finished implementing the collective agreements and issuing the T4 slips for 2017, we will concentrate on resolving the outstanding transactions, with the help of those resources. According to the action plan we have just tabled, we will have dealt with the most serious pressure by the end of 2018.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Is it true that in the past year there have been periods when you were able to keep your heads above water, get ahead, and contain delays, which ultimately allowed you to plan ahead?

Will this new plan and the rules that you want to change mean that we will finally see a bit of light at the end of the tunnel?

Are the Lego pieces fitting into place so that we will see some very tangible results?

[Les Linklater]

Yes, the auditor general pointed out that we have been able to process more files than we receive, in a sense. This is what is happening right now, thanks to the resources we have and despite the implementation of the collective agreements.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Mr. Diotte, you have five minutes.

[Kerry Diotte, Conservative, Edmonton Griesbach, AB]

Madam Minister, getting back to Phoenix, you said in your opening statements that when Phoenix was launched, the existing pay system slated for decommissioning was in poor shape and at high risk of failure. We know that Phoenix right now is not paying half of the civil servants correctly. What was the failure rate of the existing system?