Government Operations Committee on March 8th, 2021

[Yves Giroux]

Yes, indeed, the capabilities of the type 31e ships are not the same as for the others. They are designed to support larger ships, but they are warships that can certainly do a good part of the work. That was certainly emphasized to us by Odense Maritime, which builds some of those ships and which is very enthusiastic.

But you will get different answers to that question depending on whom you ask.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

Mr. Green, you have two and a half minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

The office of the PBO noted that in 2017 the U.K.'s Royal Navy awarded a contract for 3.7 billion pounds to BAE Systems for the manufacture of the first three type 26 ships. Based on that estimate, the contract would suggest a cost of about $31 billion for a fleet of 15 ships. This comparison assumes a linear relationship between the number of ships and the cost. That seems pretty basic to me. But according to this, you have stated that BAE Systems are “more experienced” and have “greater efficiency and productivity”.

I'll cut right to the chase here. Why is Irving shipyard less efficient and productive than BAE Systems shipyards? Were these productivity theories applied to some of the other potential procurement applicants?

[Yves Giroux]

First of all, when looking at costs of other shipbuilding or other procurement processes abroad, we have to be careful to ensure that we're comparing the same costs. Very often these other costs don't include procurement and the work that has to be done before the steel starts being cut. They tend to underestimate the total costs. That is an important aspect.

The other aspect is that because these other shipyards abroad produce more of these ships—that's generally speaking and not specifically that type of ship—they can have higher productivity, which is not the case in Canada.

That's a very quick answer to the question.

[Matthew Green, NDP, Hamilton Centre, ON]

I don't know if this is something you'd have come across, but do we know what Irving's profitability was last year?

[Yves Giroux]

I don't know.

[Matthew Green, NDP, Hamilton Centre, ON]

What's the size and scale of Irving versus the other shipbuilding companies?

[Yves Giroux]

I don't know. I don't have that information off the top of my head. We could get back to you on that, though.

[Matthew Green, NDP, Hamilton Centre, ON]

It's just the scope and the scale in which these cost overruns are in leaps and bounds going beyond what seems to be reasonable and what seems to be in the order of magnitude of understandable.

Again, I'll reiterate just as a comment, not for you to comment on, that idea that they would omit taxes is just such a basic and glaring omission. You talked about incentives. I think from this committee we're going to have to find recommendations that are going to have better systems in place, that have accountability over the procurement of our military spending, which, quite frankly, seems to be running completely out of control on a project like this.

I think that's my time. I'll end with that comment and hope that we can find some productive solutions.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Green.

Mr. Paul-Hus, you have five minutes.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

Mr. Giroux, you mentioned that the Department of National Defence was supposed to review the costs of this project.

Do you not think that it has already done those estimates but is waiting before it makes them public because the figures are much higher than those that you have presented to us?

[Yves Giroux]

That is a valid hypothesis. Unfortunately, nothing allows me to confirm or deny it. I rely on the good faith of the senior officials and ranking officers in the Department of National Defence.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Giroux.

Mr. Chair, from the outset, I have been listening attentively to the questions dealing with the cost of Canadian warships and to the answers that the Parliamentary Budget Officer is providing. I also have in my hand the 2019-20 departmental results report from Public Services and Procurement Canada. It often mentions expenditures related to naval construction. According to what I have been told, the minister is not able to come and testify before the deadline for the supplementary estimates (C). The Parliamentary Budget Officer is telling us about billions of dollars in expenditures, for which the minister is directly responsible. We certainly have questions for her about this.

I would like to introduce a motion that is directly related to the topic we are discussing today. It reads as follows:That the Chair of the Committee writes to the Minister of Public Services and Procurement on behalf of members of this committee in order to express their serious concerns in relation to the Minister’s lack of availability to testify before this committee and answer their questions related to procurement, including the Canadian Surface Combatants, during the study of the Supplementary Estimates (C) 2020-21.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Paul-Hus.

Mr. Paul-Hus has the floor and has put forward a motion. Is there any discussion on that motion?

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Absolutely.

[The Chair, Conservative, Robert Gordon Kitchen]

Mr. Drouin, go ahead.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Basically, Mr. Paul-Hus is asking that the committee invite the minister prior to the tabling of the supplementary estimates (C). Her appearance would be in connection with the Parliamentary Budget Officer's report, is that correct?

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Yes, that's right.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

I see Mr. MacKinnon is next, then Ms. Vignola, and then Mr. Green.

[Steven MacKinnon, Liberal, Gatineau, QC]

We have not received the written version of the motion. It is my understanding that my colleague Mr. Paul-Hus is introducing a motion to schedule the minister's appearance for the shipbuilding study.

I don't see how the motion is related to the study or to our business today.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Mr. Chair, I would like to speak.

[The Chair, Conservative, Robert Gordon Kitchen]

Mr. Paul-Hus, please go ahead.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

On the contrary, Mr. MacKinnon, it is directly related to the astronomical costs we are seeing for the surface combatant project. The supplementary estimates (C) contain links to the budget for which the Minister is responsible. However, we are never able to ask her questions. With this motion, we are simply requesting that the Chair write to the Minister and ask her to appear before our committee.

For several months now, Minister Anand has been unconcerned with committee business, with her committee. So we would like the Chair to send her a letter and kindly ask her to appear before the committee. We haven't seen her in a long time and we miss her. We have a number of questions for her.

[Steven MacKinnon, Liberal, Gatineau, QC]

First, I don't see the connection between the motion and what we are doing today. Second, my colleague talked about astronomical costs. As the Parliamentary Budget Officer just stated, the Conservatives had estimated that it would cost $26 billion. I think the member is on a slippery slope in terms of costs.

Finally, I understand that we are already scheduling a meeting with the Minister as part of the supplementary estimates study. So I don't see any need for this motion. Again, I'm wondering what the connection is between what we're doing today and inviting the minister to provide some rationale on spending as part of a shipbuilding study.