Evidence of meeting #21 for Government Operations and Estimates in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was procurement.
A recording is available from Parliament.
4:05 p.m.
Conservative
Steven Blaney Conservative Bellechasse—Les Etchemins—Lévis, QC
I'm getting a bit carried away, Mr. Chair.
4:10 p.m.
Conservative
The Chair Conservative Tom Lukiwski
Mr. Blaney, order.
I think we should at least allow Madam Campbell a bit of a chance to answer. Would you mind?
4:10 p.m.
Conservative
Steven Blaney Conservative Bellechasse—Les Etchemins—Lévis, QC
I will let Ms. Campbell finish. I apologize, Mr. Chair. Like the government, I really like the naval strategy.
4:10 p.m.
Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services
I really like debates. In a former life, I was a litigator. It's not a problem. I'm used to it.
4:10 p.m.
Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services
I will continue, if I may.
The process was competitive, and the then auditor general said that it was fair, transparent and open.
4:10 p.m.
Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services
It's important to note that two shipyards were selected to build large vessels. However, the building of small vessels remains competitive, and....
4:10 p.m.
Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services
Allow me to finish.
Vessel maintenance is also competitive, and that means....
4:10 p.m.
Conservative
Steven Blaney Conservative Bellechasse—Les Etchemins—Lévis, QC
Yes, but the government was not supposed to pay to increase capacity. The awarding was competitive, but five or six years later, money is being given to a shipyard to increase its production. That's no longer competitive, and what was agreed upon is not being respected.
Here is my question for you. Why do you have a horizontal plan that is a subterfuge to increase a shipyard's capacity?
I would like you or Mr. Finn to answer my question.
4:10 p.m.
Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services
Thank you. I will say once again that that does not in any way constitute an investment in shipyard infrastructure.
As I have said, the fact that these elements are competitive helps expand the marine industry in Canada. We currently have a commitment with the industry to maintain offshore and Arctic patrol ships, the first of which is being built at the shipyard, while the joint support ships are slated for construction soon in Vancouver.
4:10 p.m.
Conservative
Steven Blaney Conservative Bellechasse—Les Etchemins—Lévis, QC
Exactly, let's get back to the joint support ships. There should be two of them, but they haven't yet been built. Three more ships are supposed to be built in Vancouver. There are delays. Now you are saying that, in 2021, we will all of a sudden have a polar class icebreaker.
Do you realize that the Russians have 40 nuclear ships in service and that we have to protect the Northwest Passage and Arctic sovereignty? The timelines you are giving us are the stuff of fairy tales. This is a conspiracy of optimism, as was mentioned earlier.
Can you provide revised and realistic estimates that reflect the fact that the next icebreakers will probably not be in service until 10 years from now, that we will have a gap to make up in the meantime and that surplus capacity is available in Canada to meet this need?
4:10 p.m.
Conservative
The Chair Conservative Tom Lukiwski
Unfortunately, Madam Campbell, Mr. Blaney has taken up all of his allotted time. Perhaps you can get an answer in with someone else's intervention.
Ms. Ratansi, for five minutes.
4:10 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
Thank you very much, and I'll continue with that question, but in a gentle way.
4:10 p.m.
Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services
Thank you.
4:10 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
The horizontal engineering program plan was awarded by the Conservative government in 2014, so when Mr. Blaney speaks of governance structure or blames you for bureaucracy, we should understand that the governance should have been in place.
With respect to defence procurement, you talked about how you would like to modernize it, make it efficient. The Auditor General talked about the governance and accountability structures as they affect the different departments. There's National Defence, PWGSC at that time, Treasury Board, and now Innovation, Science and Economic Development.
What are some of the global best practices? As MPs, we need to ensure there are no cost overruns on contracts. The AG was hard-hitting on the F-35 and how that was mismanaged: lack of expertise, lack of consultation, things done outside a proper procurement process.
What are some of the good global practices you would like to incorporate? Moving forward, how can we make procurement more efficient? What is required? What is the political will required to push this?
4:10 p.m.
Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services
We spend a fair bit of time learning from and sharing best practices with like jurisdictions. In some cases, they look to us, and in others, we look to them.
I think our e-procurement solution is going to do a lot for us. It's going to mean that a lot of things we are now paying people to do will be automated, and we'll be able to look at data in the aggregate to leverage the federal spend.
A little-known fact is that PSPC handles 12% of the contracts but 80% of the money volume. That's appropriate. It means that our workforce is focused on the really complex procurements.
As to your question about defence procurement, I would say that it's more similar than we would think to complex procurement. Buying a nuclear facility, vaccines, building bridges, many of these complex procurements have similar features in that there are unknowns. There are risks, and you have to plan for them. There are complex global supply chains. Managing that is the kind of work that we do.
As well, we're noticing that procurement life cycles are getting shorter and shorter. We're finding that more of the money we invest goes into in-service support rather than the original acquisition. Managing that aspect of procurement is increasingly important. In respect of the prime contractors we hire, we're noticing that keeping an eye on how their supply chain functions is as much interest to us as it is to them.
In regard to best practices, you're right that Canada has a bit of a distributed decision-making model. However, both our minister and the President of the Treasury Board have modernizing procurement in their mandate letters, and we are working closely with them on just that.
I've talked with you about our e-procurement solution. The other thing we're doing is streamlining our contracts. I am a lawyer by training, and I know that my profession can sometimes say that something is risk averse and that we therefore need to add a contract term or clause. The result, quite frankly, is that some of our contracts are a bit unwieldy. We hear this from business as well. Interestingly, they are also sometimes risk averse and will ask for long contracts. Increasingly, however, we're working with them to streamline where we need to and then agree on certain terms. Intellectual property is a thorny issue. Sometimes it can be used for competitive purposes by big incumbents. In other circumstances, the government needs to own some of it so that it can re-compete down the road and benefit from innovations.
We're doing a lot to modernize, to collaborate, and to really make this procurement function the most streamlined as possible so that the government of the day, whatever its policy priorities are, can leverage procurement for socio-economic benefit, whether it's green procurement, benefiting aboriginal communities, or leveraging the Canadian industrial base.
Thank you.
4:15 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
Thank you.
There is a paper that I was reading, “Fixing the defence procurement fundamentals” . It said that the 2014 defence procurement strategy ignored international best practices and increased the risk of poor outcomes. I'm trying to figure out whether that strategy is still in existence or whether it's been changed. Is it a push strategy or a pull strategy, and what can be done?
4:15 p.m.
RAdm Patrick Finn
Thank you very much for the question.
The strategy is still unfolding, and it was consulted internationally. I'm not sure of the origin of the paper you're describing, but we certainly engaged with our international allies, and we do that on a continuous basis. It had a number of steps in it, and it continues to be rolled out. Many of the items we've talked about today, such as the independent review panel for defence acquisition, defence acquisition guides, the two-step process, how we do costing, all come from that strategy.
We have been rolling it out. Many of the components are now in place. The whole issue of value propositions, industrial and technological benefits, that shift all comes from that strategy. It continues to roll forward. It was heavily consulted with industry to make sure that we got their input and feedback, and it continues to unfold as we speak.
4:15 p.m.
Conservative
4:15 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Thank you.
Sorry, Ms. Campbell, but I want to get back to the ships. Mr. Muldoon states that in giving money “what we're doing is investing in the shipyard's capability”, but you mentioned earlier that it's at no cost to the Canadian taxpayer.
How is investing in this program, where it very clearly states that no Canadian money is supposed to be going for infrastructure-related things, and then our giving the money.... How is that not costing us money? Also, why are we investing in their capability to get the ships built?
June 9th, 2016 / 4:15 p.m.
RAdm Patrick Finn
Thank you very much for the question.
Perhaps I can give you the perspective as viewed from the projects. The point of the strategy was to move away from a stovepipe project by project—
4:15 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
I realize that. I don't want to be rude, and I don't want to get to perspective.... It's a simple thing. There is not supposed to be taxpayers' money put into that for the infrastructure, etc., but here we have Mr. Muldoon very clearly stating that millions of taxpayers' dollars are being invested—