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.
4:50 p.m.
NDP
4:50 p.m.
RAdm Patrick Finn
We can do that, if you would prefer.
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NDP
June 9th, 2016 / 4:50 p.m.
RAdm Patrick Finn
I'm sorry, I can't remember under which government it started. It's about $300 million that we have invested. With the returns, as I've indicated, it's about $800 million of industrial offsets.
4:50 p.m.
Conservative
4:50 p.m.
Liberal
Brenda Shanahan Liberal Châteauguay—Lacolle, QC
Thank you very much, Mr. Chair.
Thank you very much to the witnesses for your testimony here today.
It's quite daunting for a new MP to be learning about different areas of our government. Certainly, the procurement approach we have is one that is of great interest to me. I was particularly interested in the industrial benefits our industry is able to enjoy with ensuring that we have this open and transparent process.
It is my understanding that Lockheed Martin actually did have the chance to meet with the Minister of Public Services and Procurement. Is that something you're aware of?
4:50 p.m.
Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services
I'm not aware of meetings that been held at the political level, but I can tell you that I have met with Lockheed Martin and other major suppliers as part of my daily job. I meet with the AIC industry associations. I should say that most of the major suppliers that are here in Canada are interested in a number of projects, both military and non-military. They're also interested in being in Canada because of our workforce and the industrial base they find here.
To your question about value proposition and how that works, what I say to companies when they want to know about the rules for doing business in Canada, my message to them is, any company that can figure out that magic formula of providing robust industrial offsets.... As we said at the outset, these are now weighted and rated. It's quality value proposition, good work, and lasting industrial benefits that help Canadian small and medium-sized enterprises export globally that will help them demarcate themselves. This is particularly important in complex procurements where that can be the distinguishing factor. The companies are, for the most part, pretty much the same, and what can help them distinguish themselves is the package they will offer to Canada.
I think we are actually—and I've said this at meetings with industry associations—helping them hone what is a good business practice, because every country around the world is going to want to achieve industrial offsets by leveraging its federal procurement. If companies can get good at that, they can actually market the model elsewhere. I've had several companies say to me, when we've pushed them in negotiations, that they're grateful afterwards because they have then put those kinds of offers to other countries.
4:55 p.m.
Liberal
Brenda Shanahan Liberal Châteauguay—Lacolle, QC
That's very interesting. Thank you.
On that note, I heard you say earlier that we want to streamline our procurement process. Can you talk to us about the e-procurement solution and what it entails? There's an RFP out there. Where is that at, and when can we expect that to be up and running?
4:55 p.m.
Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services
Canada is a little bit late to the game on this one. The benefit of that, though, is that we get to look at models that have been tried, tested, and not done so well. There are now models on the market for electronic procurement buying. There are several at the municipal, territorial, and provincial levels in Canada. We've met with provinces and territories and heard about their experiences and what the flaws are. Following intensive industry engagement, we launched an RFP. It is out on the street now. We expect really robust responses back, because we talk to industry a lot and we know there are several companies that will have offers for us.
What it's going to do is take away many of the rote processes. You heard me say earlier that PSPC focuses on 12% of contracts that represent 80% of the money. That's where we want our people to focus. That's where we want the judgment and the analytics to be. For all the rest of it—the repetitive tasks, the ones where you could have, quite frankly, an algorithm to give you an alert if something's not working or if there's a payment due—those could be handled by software, artificial intelligence. It's where companies are going as well.
For the first time in Canada, it's going to give us aggregate data about the federal spend. As we've analyzed the way standing offers and supply arrangements are used, we know there are variances, and that doesn't make any sense. If a supplier is selling to the Government of Canada, it should offer one price and the best price. The government should also be able to leverage its buy for its own benefit in negotiations. We think the e-procurement solution is going to do a lot for us.
The other thing is that we're buying something off the shelf. We're not creating a custom system that will then match our existing processes. We are adapting to it. It's happening at a really good time in our business operations, because we wanted to do that anyway. We wanted to refresh and review our policies and processes. It was time to do it.
I do want to say that doesn't mean we're throwing out a lot of good tools that we have; we're just refreshing the set of tools. There are many tools that we have. I was looking at one yesterday in the Defence Production Act. There's a provision that says no matter how a corporation is structured, the government as a buyer can go after liabilities or assets. No matter if it's a joint venture, if it merges or acquires, or if it puts its headquarters in another country, the government as the buyer can access liabilities, debts owing, or excess profits. That's particularly important in the defence context, I would say.
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Liberal
Brenda Shanahan Liberal Châteauguay—Lacolle, QC
That's interesting. Is that program also going to help you with general data collection, just being able to keep track and analysis?
4:55 p.m.
Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services
Exactly. Quite frankly, it will force a rigour and discipline that we don't see right now. We have delegated to other departments the ability to contract for 80%. They do the high volume but lower value contracting, and that's appropriate. They should do it. We are going to try the procurement system first on ourselves. We'll pilot it and then offer it to the rest of government.
Treasury Board is pretty excited about this because it will have templates. It will force good information in, and then give all of us in central agencies a level of reporting that we won't have seen before.
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Liberal
4:55 p.m.
Conservative
The Chair Conservative Tom Lukiwski
That's excellent.
Colleagues, it's just about five o'clock. We're going to have two more five-minute interventions, and then we'll excuse our witnesses and get ready for committee business.
Now to the Conservatives, you have five minutes. Gentlemen, I'm not sure exactly who wants to lead, but you have five minutes in total between you.
We'll go to Mr. McCauley.
4:55 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Going back to boats, but on a different subject, we heard originally that Coast Guard tugboats were perhaps going to be built overseas. Then we heard a retraction and then an un-retraction.
Do we have an update on that at all?
4:55 p.m.
Deputy Commissioner, Strategy and Shipbuilding, Department of Fisheries and Oceans
It's actually not Coast Guard vessels we're talking about, but DND vessels.
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Conservative
4:55 p.m.
RAdm Patrick Finn
Thank you for the question.
Again, going back to our independent review panel for defence acquisition, when we brought the requirements to it, it noted that we had done a couple of previous analyses around an alternate service delivery, so it charged us to go and refresh that. We've done that and gone before the panel. It now agrees that we should proceed with the design and build in Canada and deliver to the navy.
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A voice
That's good news.
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Conservative
Kelly McCauley Conservative Edmonton West, AB
I love that.
Has the government consulted you about F-35 versus the Super Hornet? I know it has not made a decision yet, but has it asked for an opinion on procurement? How far along is it? How much has it involved you?
4:55 p.m.
RAdm Patrick Finn
It's asked us some information, I would say, around products.
5 p.m.
Conservative
5 p.m.
RAdm Patrick Finn
Sure. What might be aircraft that are out there? Who might be the suppliers that are interested? What might be options?
5 p.m.
RAdm Patrick Finn
It's been, I would say, on an ongoing basis. It was in our minister's mandate letter. Our minister's mandate letter calls for that to occur, as do some of his colleagues' letters. It has been something we have been providing some information on. Again, he has a broad portfolio, so it wouldn't get to him—
