Government Operations Committee on Dec. 6th, 2018

[Les Linklater]

We have two more waves of deployment. The next will be in February, and the final one will be in May.

As you can imagine, as we staff up and build human resources capacity, we also need to ensure that we have appropriately trained senior staff who are able to act as team leads, coaches, and data analysis support workers within the pod to help direct the work. We are now going through a number of processes to ensure that we have the qualified staff available to take those leadership positions as we staff up with more junior compensation staff who would help with the pods.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Would that imply using staff who are currently in the pods to train the new ones coming into pods, or transferring those who have already been working in the pods to leadership positions in the new pods, or a mix of both?

[Les Linklater]

It's more the second, but we would be doing so very judiciously. We don't want to disadvantage them or see any recul—

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

—or dilution.

[Les Linklater]

—by moving qualified staff too soon out of a pod that is functioning well.

There is some exchange of skills, but one of the exceptional innovations from the pod is the cross-training that happens with the staff who are brought in. We've seen, over the course of the last year, that staff who were recruited at fairly junior levels are able to double if not triple their competency within about six to eight months. The cross-training and the support of the pod through the mentors and the data analysis is helping to broaden the skill sets.

[The Chair, Conservative, Tom Lukiwski]

Monsieur Deltell, go ahead.

[Gérard Deltell]

Thank you so much, Mr. Chair.

Mr. Fillion, I would like to come back to the Diefenbaker, which we discussed earlier. According to what you said, you're correcting as you go along. Can you elaborate on that?

When we talked about the Diefenbaker, we were told that it would now cost twice as much as the original estimates and that it would take longer than expected to complete.

What do you mean when you say correcting as you go along?

[André Fillion]

What I was saying is that under the national shipbuilding strategy approved eight years ago, in 2010, contracts have been awarded to the tune of about $8.8 billion since then. I talked specifically about the estimation of costs and schedules that took place in preparation for the announcement of the national shipbuilding strategy, and the initial estimates that were made.

Since then, as I said, many of the risks have been put behind us as the shipyards have stood up their workforce and have invested. Ships are now being produced: There are three offshore Fisheries science vessels in construction, and one launched on the west coast; there are three Arctic offshore patrol ships in construction on the east coast with Irving Shipbuilding.

As this experience is obtained and gained, and as the Government of Canada experience is also improved, I think it's fair for me to say, having been in this business for several decades, that there's a lot more sophistication and a lot more accounting of risk in estimations that are now done for the future.

That's not to say that they're without risk going forward. When we're talking about warships, there aren't very many things that anybody can undertake that are more complex than building a warship. As much as we factor in risk, there are the unknown unknowns that we will continue to face in the future. I would say, however, that the level of sophistication has improved significantly. That's what I meant by the corrections that are being made as we go forward.

[Gérard Deltell]

Do we expect any other “corrections”, as you say?

[André Fillion]

I think you can never say never in this business. When we talk about the complexity and size of a project such as the Canadian surface combatant project, I don't think that anyone I've ever met, working internationally or in Canada, can actually predict all of the risks that will exist or will materialize or not materialize in the future. We do factor them into the estimates, but we are facing issues as we go.

For example, some of the projects we have delivered over the years.... A failure of a system during testing can set you back financially and schedule-wise. Some things cannot be predicted per se. That's why you do testing.

[Gérard Deltell]

It could be a never-ending story. Public money is not a buffet; it's not a blank cheque. We're talking about a real project. I know and I recognize that it's huge and involves extra security. We're talking about warships; I recognize that.

But we're talking about doubling the price, from $700 million to $1.4 billion. It's too much. What you're saying to us is not good insurance for us, talking about “never say never”. Well, I'm sorry, sir, but I'm afraid.

[André Fillion]

Again, having been in the business for several decades and having successfully delivered many projects, I will say that every day we work in this business.... There are hundreds, thousands of projects nobody hears about that are delivered successfully.

What I was trying to say is that, as you go along with developing new weapons systems, there are things that can happen. I have given the example of an armoured vehicle project that occurred a few years ago, where a steering system issue appeared and set the project back for several months. There are those kinds of things, so I cannot stand here and tell you for sure that everything will unfold exactly as has been planned. However, as I said, the sophistication in the planning has improved to factor in some of these unknowns.

[Gérard Deltell]

My main concern is that this is not a blank cheque. After hearing what you said, if I were the shipyard builder, I would say, “Well, it's party time”, because it's “never say never” and “correcting as we go”, and this is an open door to a blank cheque. I am very concerned, but I have some other issues to address on that.

Mr. Vandergrift, maybe you can join the conversation.

I talked a few minutes ago about the fact that there are some rumours that maybe we could do it somewhere else. Well, now I'm not talking about rumours. I will just ask you a clear question. Did you have any conversations with Seaspan or someone else about building the Diefenbaker elsewhere?

[André Fillion]

We are in conversations with Seaspan on a weekly basis. Again, we want to go back to the umbrella agreement that we have signed with Seaspan, which does include the Diefenbaker, or the polar icebreaker, as we call it. It is part of a program of work that the Coast Guard is planning to do, so it is part of the program. This is a signed agreement that we have with the yard, and we are moving forward so that they can do the planning in the long term for it.

To go back to the issue of—

[Gérard Deltell]

Mr. Fillion, just as a clarification, did you have any conversations to move the Diefenbaker elsewhere, yes or no?

[André Fillion]

No. Again, we have a signed agreement.

I just want to go back to the cost, if I may.

[Gérard Deltell]

Sure.

[André Fillion]

There's one issue of costing, the precision of costing, but there's also another issue, the issue of affordability, which we constantly have. Those are two things. First of all, you have to have the discipline, the mechanisms and the processes to come to the appropriate costing, and then what comes out of that in some cases is cost increase. I talked about some of the earlier optimism.

With that always comes a question of affordability. We have these conversations between departments, and we have conversations obviously within the Government of Canada. At the end of the day, the Coast Guard, National Defence and the Royal Canadian Navy have to be able to afford these ships and to make sure they are getting them at a price that constitutes value for money.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

Mr. Blaikie, you're up for seven minutes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Public sector unions recently have started talking about an offer the government has put on the table that amounts to an effective two-year wage freeze, which has upset some, particularly in light of the troubles with Phoenix over the past couple of years. Is a lack of confidence in Phoenix being able to deliver on pay increases affecting the kinds of offers that the government is prepared to make?

[Les Linklater]

Well, we certainly have a lot of learned experience from our efforts to implement the 2014 round of collective agreements. We are providing that advice to the Treasury Board Secretariat and clearly through the governance structures that we have set up over the course of the last 24 months, which does include the unions. I meet with them every six weeks. Their views on trust in the system are well known to us. What's happening at the negotiating table I'm not at liberty to discuss. I'm not privy to those conversations.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

How many new cases is Phoenix generating each month, notwithstanding whatever might be in the backlog? How many new pay issues arise each month?

[Les Linklater]

I would say that, on average, we're seeing about 80,000 new transactions entering into the system at the pay centre every month. Outside of the pay centre, I would have to verify those numbers.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Those would be 80,000 transactions where there's a problem or difficulty with pay—

[Les Linklater]

It's not necessarily a difficulty with pay. It could be flagging an HR event such as someone going on leave or taking an acting assignment, but it's something that would have an impact on compensation.