Government Operations Committee on March 9th, 2017

[Kelly McCauley, Conservative, Edmonton West, AB]

You think it is acceptable for so many years when, again, smaller countries with less resources than us, starting from scratch, are able to do it in a year or a year and a half.

[Marie Lemay]

I can't comment on the other countries, but I can tell you that when we look at our process, which is to ensure a rigorous and level playing field, that is the process we have.

[Kelly McCauley, Conservative, Edmonton West, AB]

Benchmarking against what other countries are doing—and it's not just a one-off; quite a few countries are doing it—we're taking double to triple the time.

Do you think that's acceptable? Do you think our processes are correct, then, if it takes us so long and them such a short time?

[Marie Lemay]

I don't think you can make that comparison.

[Kelly McCauley, Conservative, Edmonton West, AB]

You don't think it's valid to compare it with what other countries are doing.

[Lisa Campbell]

If I may, one of the things we considered last summer when we talked to aircraft manufacturers was the best way to meet Canada's needs as fast as possible. We estimated that the foreign military sales process was one of the fastest ways to get aircraft to fill an interim need. We are going to apply the industrial and technological benefits policy to that procurement, to that process, to maximize industrial benefits.

To the question about why it takes some time, we are going to be posting updates on our process so that you can see the steps we're going through. One of them is consulting with industry, making sure they have the chance to submit robust bids.

[Kelly McCauley, Conservative, Edmonton West, AB]

In my last two and a half minutes, I want to switch over to shipbuilding.

I wonder if you can give us a very quick 30-second update. The reason I ask is that we've seen a lot in the press about concerns from contractors who are bidding on it, saying they want it pushed back. We're also hearing rumours now that the whole process is being delayed an extra year and a half. We have a gap at Irving between when we're actually starting and there are trained staff available. Apparently, they're looking at layoffs of skilled workers they've hired to start on the process because it's getting pushed back again.

Can you just give us a quick update and let me know what's going on with that?

[Lisa Campbell]

For precision, are you speaking about the Canadian surface combatant process?

[Kelly McCauley, Conservative, Edmonton West, AB]

More specifically, yes, at Irving.

[Lisa Campbell]

Shipbuilding is marked by boom-and-bust cycles. You're quite right. We focus on that very closely to make sure it doesn't happen, to the extent possible.

[Kelly McCauley, Conservative, Edmonton West, AB]

This seems to be one that we've inflicted upon Irving.

[Lisa Campbell]

Actually, the streamlined procurement process that we've employed in the Canadian surface combatant project is designed to do just that, to shorten the potential gap that was identified, by up to two years, we hope.

We launched the procurement process with Irving, and it was supposed to close in April. We had several requests for extensions of varying lengths. We looked at them very closely, with the rationale, again, of trying to maximize the number of compliant bids. There are 12 pre-qualified bidders. We extended it to June 22, because we want to make sure the industry has the time they need to submit compliant bids.

[Kelly McCauley, Conservative, Edmonton West, AB]

Are you worried that these delays are going to have an effect on our labour force at Irving? Again, we've hired them, trained them, and all of a sudden they have to wait a year before they can get started because of our own self-inflicted delays? They're looking at layoffs or losing skilled trained people.

[Lisa Campbell]

We didn't actually change the outside time. We crunched other portions of our work. We haven't changed the outside time for completing the evaluation of the bids.

It's an aggressive timeline, but we're working closely with our prime contractor, Irving Shipbuilding, to make sure we benefit from this revised strategy and don't incur a gap.

[Kelly McCauley, Conservative, Edmonton West, AB]

I realize it's difficult to explain a $40-billion project in two minutes, so thank you.

[Lisa Campbell]

Thank you, sir.

[The Chair, Conservative, Tom Lukiwski]

Mr. Weir, you have seven minutes, please.

[Erin Weir, NDP, Regina—Lewvan, SK]

Thank you.

I'd like to return to the topic of national security exceptions in public procurement that we discussed the last time Ms. Campbell appeared before this committee. Towards the end of that meeting, Shared Services officials suggested that they had invoked only two national security exemptions in the past year. I would point out that those were omnibus exceptions that covered something like a thousand purchases.

A question I had asked at that meeting was how many times the Department of Public Services and Procurement had rejected applications for national security exceptions. It seemed that Ms. Campbell was not totally prepared to answer the question at the time, so I want to ask again how many of these applications have been turned down.

[Lisa Campbell]

I'm happy to discuss the statistics on that. In fact, we're preparing a detailed response on the statistics for our department.

As I said the last time, we receive about 20 individual requests for a national security exception. One of the things I want to emphasize is that invoking that doesn't mean for a moment that we don't compete. In fact, in most cases, we continue to compete. It's more related to industrial security.

[Erin Weir, NDP, Regina—Lewvan, SK]

You made that point very clearly and effectively at the last meeting. Really, what I'm looking for is a number.

[Lisa Campbell]

We received 20 individual requests. There are also omnibus ones in place and blanket ones that I have described to you for certain organizations like CSIS, which was present. Their chief financial officer, as you'll remember, described the process for requesting them to be invoked. Some organizations, by the very nature of their work, have these omnibus processes in place.

We are gathering that information to give this committee information about the number that are in place, the volume of transactions, and the frequency of use.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay. Are those numbers forthcoming?

[Lisa Campbell]

They are, and in respect to whether they are turned down, I think, as you heard at a last committee appearance, we have a very robust due diligence process.

Often they are rejected before they get to my level. By the time it gets to me, the department has done its due diligence, and there are instances where people have said, “It's not justified in this case.” We'll get you that information, as well.

[Erin Weir, NDP, Regina—Lewvan, SK]

It would be nice to quantify that, and it sounds like it's coming.

Ms. Lemay, in your opening remarks, you mentioned funding for the rehabilitation of the Esquimalt graving dock. I'm wondering if you can tell us whether that work is going to be done with Canadian-made steel or with offshore steel?

[Marie Lemay]

Thank you. I will ask Kevin to....