Government Operations Committee on Dec. 12th, 2024

[Arianne Reza]

First of all, the Minister of National Defence could better answer this question, but I'll see if our department has anything to add.

[Simon Page, Assistant Deputy Minister, Defence and Marine Procurement, Department of Public Works and Government Services]

I don't have any information on that. We award contracts based on the needs of Defence and our client departments. These contracts are based on very precise needs articulated by Defence. We are not involved in arms procurement outside our client departments.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Perfect. If you ever have any additional information, please pass it on to the committee, it would be much appreciated.

I have another question, this time on the purchase and supply of F-35 fighter jets. This is a big contract. I was first elected in 2011, and we were already talking about their purchase. We're very concerned that there have to be Canadian-made components to keep good jobs here. What are you doing to ensure that, in the purchase of these F-35 aircraft, we get our piece of the pie and that we can create or maintain good jobs here?

[Arianne Reza]

We're negotiating the contract hard, right now, to make sure we have a bigger framework defining what we can do for small and medium-sized businesses in Canada, and even for large businesses.

Mr. Page, is there anything you'd like to add?

[Simon Page]

The F-35 aircraft acquisition process is well underway. We should have our aircraft by the dates set at the start of the partnership and the signing of the memorandum of understanding. Since Canada is part of a partnership with other countries, things are decided by consensus. That said, the acquisition process is going very well.

To answer your question more specifically, and to complement my deputy minister's answer, the contract comes with very specific elements about the maintenance of these aircraft, which must be done in Canada.

One of the elements concerns the aircraft itself, its structure; another element concerns the engine. As far as the structure of the aircraft is concerned, things are going well, as my deputy minister said. As for the engine, we've already started the process, but we've interrupted it for the moment because the sequence is perhaps a little too fast.

Also, very recently, my minister announced a partnership with L3Harris, in Mirabel, to work on the platform for these aircraft.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

That's perfect. So, we're talking about parts, engines and aircraft maintenance.

[Simon Page]

There will be two important elements. The first is the maintenance of what we call the airframe, which will be carried out at the airframe maintenance depot. This will be done with our partner L3Harris. The second aspect concerns the engine, and will be put out to tender. We'll be continuing the process in the very near future.

After that, we'll have to sit down with the members of what's called the American Joint Program Office to find out what other points we could negotiate in order to integrate them into a Canadian solution.

[The Chair, Conservative, Kelly McCauley]

You have 30 seconds.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

I give it back to you.

[The Chair, Conservative, Kelly McCauley]

Are you sure you want to give it? It's going to Mr. Genuis.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

I'm not sure about that.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Kelly McCauley]

Oh, it's actually Mrs. Kusie.

Go ahead.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

Ms. Reza, why are contractors hired by this government completely unaware of fraud being committed by subcontractors against this government, please?

[Arianne Reza]

We have been working diligently to increase the code of conduct and to reinforce the suppliers' awareness of their obligations and the flow-through from the prime contractors to their subcontractors.

We concur with the assessment that there needs to be better awareness and accountability through the work that we're doing in terms of restitution, for example. As I started to say in an answer to a previous question, not only are we accelerating, but we are now starting to move to court. We are reinforcing very vigorously those responsibilities.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Why do you continue to negotiate with contractors who are responsible for their own subcontractors and therefore should ensure the work is actually being completed by the people they hire?

[Arianne Reza]

Again, as we've noted, we're building this muscle. In the last six months, we've started identifying the cases using data mining and asking TBS for special authorities to be able to seek restitution from the companies.

We're giving due recourse and a chance for them to cure.... We say, “Hey, we've discovered a problem. You may not have been aware of it because this sub is working for a different supplier. You are likely not aware of it because, if you were aware of it, it would be a supplier fraud.”

In a way, right now, we're focusing on the subs. We are really reinforcing expectations on them and shortening that negotiation period, so they have a cure period to be able to fix it and make the government whole, and then we move to court if they don't do so.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

Could you please provide the committee with the name of the general contractor you are working with?

[Arianne Reza]

We have submitted to this committee the names of the seven subcontractors. I think that, in the first four instances that we referred to the RCMP, there were 35 suppliers implicated.

I'm not sure.... I don't know. I know Madame Poulin is on the phone. Perhaps she has more information. “On the phone” is a little bit old school; she is attending virtually. She may have more information available.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Why is it so difficult to ensure that contractors and subcontractors are actually completing the work they've been asked to complete?

[Arianne Reza]

Again, there are many different lenses to that. Client departments have a responsibility to review the quality of the work that's being provided to them through goods, services or a construction contract. It's a continuum of responsibility. I think that, both here at PSPC and across the government, we're reinforcing those responsibilities, as well as putting that responsibility on the suppliers.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Are there any standards as to how many hours a certain project should take or an analysis to ensure that work is actually being completed?

[Arianne Reza]

I think there are two key pieces to that. First, the business requirements are set by the client department. They've identified a need, whether it's a mandate or a government priority, to develop something. They work with their project management and their own business expertise to evaluate what they project.

From the tendering and procurement process, we look at it to estimate the time, quality and resources required. Thereon, the contract is awarded. Subsequently, we look through task authorizations, verification, audit and contract management—which I think is something that this committee studies a lot—in terms of ensuring that the work is done and accurately estimated.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Why did the President of the Treasury Board find it necessary to write in her updated managers' guide that contractors should not be paid unless the work has been completed?

[Arianne Reza]

Again, that's probably best addressed to the Treasury Board Secretariat, which has the responsibility for the procurement system writ large. Perhaps they've noticed irregularities that needed to be anchored in policy.