Government Operations Committee on May 10th, 2022

[Kelly McCauley, Conservative, Edmonton West, AB]

Let's go back to the fifth and the sixth. With the understanding that there is a massive increase in productivity, how much is saved from the first ship to the sixth ship? I would think the sixth ship's added costs should be around $250 million to $300 million. What is adding that sixth ship to the contract costing taxpayers?

[Kevin Mooney]

The total cost of the six-ship contract—

[Kelly McCauley, Conservative, Edmonton West, AB]

No, I mean for the added ship. It was five, and then there was one ship added. What does it cost to do that?

[Kevin Mooney]

I think my answer to your question is that the $800 million, or whatever number was added to the contract, is not the incremental cost of a single ship.

[Kelly McCauley, Conservative, Edmonton West, AB]

What is the incremental cost for that last ship that got added, then?

[Kevin Mooney]

The number we are looking at right now is somewhere between $400 million and $450 million for the sixth ship.

[Kelly McCauley, Conservative, Edmonton West, AB]

I appreciate that. It's been difficult to get straight answers on that. Thanks.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

We'll now go to Mr. Bains for five minutes.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. Chair.

Thank you to our guests for being here today.

My question is for Ms. Cianfarani. What are some of the challenges you've seen to improving the NSS across the shipyards?

My questions are coming from British Columbia. The Vancouver shipyard is an important part of our marine sector here. What are some issues that you think they are running into, and how can the federal government help?

[Christyn Cianfarani]

Well, I think the Vancouver shipyard isn't much different from the Irving shipyard in terms of the challenges it's facing. They will be facing escalations for raw materials and services, in some cases due to COVID, and that impact will be across the board in the NSS.

I think one of the best things that can be done is for us as a nation to look at the escalator that the Department of National Defence has for these types of things. It has contingencies built into the programs. You've probably heard about that, but it is unlikely, in my view, that these contingencies would provide enough cover to be able to absorb the kinds of inflationary measures we're seeing right now.

In my view, if parliamentarians wanted to help out the two shipyards and the NSS program in general, you would ask Treasury Board to look very hard at escalators that are outside of the program itself, meaning that the program would not absorb the burden of the escalations we're seeing, especially in terms of inflation, for example.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Do you any suggestions on improving the local economic benefits to Canadian industry as we approach a conclusion in the FFC project, the future fighter capability project?

[Christyn Cianfarani]

Oh, you're on planes.

I do not have any insight into the bids that were put on the table by the vendors themselves. We stay out of the procurement offers, so I cannot tell what the winning procurement, the negotiated—the seemed-to-be-negotiated—procurement with Lockheed Martin for the F-35 includes in terms of its benefits to Canada. All I can say is that as the federal government negotiates that, we would want to see a maximization of work, whatever it can be, placed in Canada, perhaps on the platform, but particularly in the case of the in-service support and the technology insertion over the life of that program, if it is an available option to us.

You would have been aware that in the past Canada maintained, serviced and technology-upgraded the F-18s that were made by Boeing. There was a lot of transfer technology put into this country, and that stands to erode without some kind of involvement by Lockheed, which would most likely take place during the negotiation period, with the Government of Canada playing as much hardball as it possibly can at the time.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

How much time do I have, Mr. Chair?

[Kelly McCauley, Conservative, Edmonton West, AB]

He's away. Just keep going.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Okay.

I'll move on to Irving Shipbuilding. How does Irving support smaller Canadian shipyards and small and medium-sized enterprises through its supply chain?

[Kevin Mooney]

In our procurement process, we absolutely give priority to small Canadian companies and medium-sized Canadian companies. We use them for our HVAC system installations on the ships. We have a dedicated staff resource who helps us constantly survey the local Canadian market to bring in new Canadian suppliers.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Can you give some examples of where they're located?

[The Chair, Conservative, Robert Gordon Kitchen]

Mr. Bains, you have 30 seconds, just so you're aware.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

What are some examples of some of the cities that might be located in our areas and regions?

[Kevin Mooney]

I'd be happy to give you a detailed breakdown of all of our suppliers across Canada. That's information we have for you, for sure.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you.

[Kevin Mooney]

We have all the provinces represented. I can tell you that.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

We'll now go to Ms. Vignola for two and a half minutes.

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

Concerning frigates, a decision was made to build Type 26 frigates. Was that decision imposed on Irving by the Department of National Defence? Was the decision made by the department?

[Kevin Mooney]

The answer to your question is yes. The decision was made by the Department of National Defence for the Type 26.