Government Operations Committee on May 10th, 2018

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

Thank you, Madam Chair.

I would like to talk more about the national shipbuilding strategy. As members know, we are at the planning stage on a number of orders.

According to the minister's message on page 2 of the 2018-19 departmental plan, Shared Services Canada will select a preferred bidder for the construction or procurement of Canadian surface combatant vessels.

I would like to know what approach you intend to take. Is it a new approach? What are the differences between your approach and the approach that was taken in the past? Can you tell us how the process for future orders will be improved based on lessons learned?

[Michael Vandergrift]

As you mentioned, we are in the process of selecting a new design for the surface combatants, to be built at the Irving shipyards in Halifax. This is a new process, undertaken to try to accelerate the build. It is to take an existing design and work from that, as opposed to starting fresh with totally new requirements and trying to build the design from scratch. The objective here is to take an existing design and work from that to produce the final design, to be built at Halifax shipyards. Our objective is to speed up the process so we can get to construction more quickly by using an existing design.

That competition is under way right now. Officials are working very hard to assess the bids that have come in to produce an existing design from which we can work to build the new surface combatants. Our objective is to have the bidder selected in 2018, and we are on track to do that. A lot of work is going on right now to assess these bids, with the objective of having an existing design to work from, as opposed to starting new with the design.

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

I did not really understand the challenges. Could you provide more details on that?

More specifically, what are the challenges associated with getting the best proposals from the best Canadian shipyards? The construction of these specialized vessels requires particular expertise, but we must also ensure that the procurement process takes into account the best value for money. We also need to ensure that all of Canada benefits. It would not do to have just one shipyard benefit by default because the call for tenders is too specific and deliberately aligns with that shipyard's expertise. The process must not target a single shipyard.

What is being done to ensure pan-Canadian representation of expertise?

[Marie Lemay]

This gives me an opportunity to talk a little bit about the shipbuilding strategy.

Obviously, there are major contracts and projects, but the shipbuilding strategy must be assessed in its entirety, not on a project-by-project basis. That is the beauty of it.

Part of the strategy involves a competition for contracts to maintain the smallest vessels in the country, while creating a sustainable shipbuilding industry and expertise here in Canada. We need to find that balance. I do not want you to think that this is easy. Obviously, we are talking about major contracts that are very complex. We need to ensure that we create jobs and develop the industry and our expertise while ensuring that our small businesses can also participate in the value chain and in the strategy.

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

I always get the impression that, when it comes to building this type of large warship, we are not managing to take advantage of all of Canada's shipyards and have them work together. They work in silos and then we have to try to re-create a balance by handing out funding here and there. For example, the Davie shipyard in Quebec is well equipped to fill certain orders. I am not talking about warships in this case but about icebreakers and other types of ships.

Can you tell us how we can strike such a balance, but also how we can obtain the best value for money since building this type of ship costs a fortune?

As you said earlier, SMEs need to be able to participate in these contracts, but in a way that is not too complex.

[Marie Lemay]

Thank you for your question.

We often tend to talk about our big projects, but the fact is that these projects require dealings with a whole host of subcontractors. This creates a lot of spin-offs for the industry and we want to ensure that Canada benefits from that.

With regard to ensuring that small and medium-sized businesses have access to those contracts, that is something that we at Public Services and Procurement Canada are looking into in co-operation with our colleagues from National Defence and the Canadian Coast Guard. We want to ensure that companies across Canada benefit from these opportunities. It is surprising to see that the economic spin-offs do not necessarily come from the large shipyards.

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

Could more information be provided in that regard?

As you said, and I agree, we are talking about billions of dollars for one ship, but nothing is said about what goes along with that.

I'm not an expert and if you have that information, I would appreciate if you would send it to the committee. I would like more information and I'm sure Canadians would too.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Thank you for your passion, but we have to move on.

We will have three rounds of five minutes. That will give us five minutes to do the votes.

We will go to the first five minutes. Mr. McCauley.

[Kelly McCauley, Conservative, Edmonton West, AB]

Who did the final proof of the departmental plan?

I'm laughing because I look at page 29 and see the Speaker of the House with a massive, full head of hair.

[Marie Lemay]

You are very observant. We do have a quality check process; that version was corrected in 24 hours. We caught that, but not on time for the first take. We apologize.

[Kelly McCauley, Conservative, Edmonton West, AB]

That's okay. I'm sure the Speaker is happy.

On page 46 there is a decrease in funding for federal buildings. Is that because projects are done? Can you explain why that might be?

While I'm at it, maybe someone can look at the next question. On page 48 you talked—

[Marty Muldoon]

The key driver there is a program integrity reduction that we were just talking about when you asked about the budget renewal of the $275 million that will offset that once we're successfully able to procure it.

[Kelly McCauley, Conservative, Edmonton West, AB]

I have the same question about page 48 where there is a reduction in the build in canada innovation fund. That's come up in this committee repeatedly; it's a highly lauded program.

[Marie Lemay]

This is a program that we are very proud of. You would have seen in the budget that there's an intent to include it in innovative solutions from the industry portfolio, so we're working with them.

The funding is not disappearing. The program is going to take place. It's just a matter of where—

[Kelly McCauley, Conservative, Edmonton West, AB]

It's just getting transferred over.

[Marie Lemay]

It will either go over, or we might fund it for another year and transfer it. We're working out with them as to when the transfer will happen, but the program is a successful one and money will be there.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay.

It's wonderful we're getting the departmental plan at the same time the estimates come out, but I've gone through it and there are a lot of—I don't want to call them errors, but—inconsistencies with the goals. We see the goals here, but we don't have any matrix to compare them to the past. We hear about the Phoenix goal. Well, it's really not a goal to compare, like everything else.

If you were someone from the public reading this information—and the intent was to have a departmental plan that anyone can just pick up and read.... Why does it not just say “it's a great program, we will try to fund it”, or “it's going to be transferred to another department”, so it doesn't leave us thinking it's getting cut? Again, it's about transparency and having the information correct.

[Marie Lemay]

I take your point. I think, again, it's a question of transition this year. We could have included the budget lens on it and it would have been helpful.

[Kelly McCauley, Conservative, Edmonton West, AB]

Page 20 of the DP talks about land that the government owns that's going to be transitioned or perhaps made available for social housing. You've done an inventory. Will you provide that inventory to this committee? I'm curious, who will have the final say about getting that transferred over? That has come up in this committee before. Some of it belongs to Canada Lands, and it was approached with the question, “Well, how much of this land...?” and Canada Lands just chortled and said, “No, that's our property and we're not giving it up.”

[Marie Lemay]

I believe you're referring to the partnership that we have with ESDC and that list—

[Kelly McCauley, Conservative, Edmonton West, AB]

It's what's listed on page 20.

[Marie Lemay]

It's the community housing. Is that the one?

[Kelly McCauley, Conservative, Edmonton West, AB]

That's what's on page 20. Can you just provide the inventory?

[Marie Lemay]

We can give you the list, yes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Perhaps you could provide it to the committee because that has come up in the past.

How much time do I have?