Government Operations Committee on March 22nd, 2023

[Simon Page]

It's very difficult for me here this afternoon to speak about specific timelines for things that are in motion at this time, for which processes are in play and specific reviewing actions are required. We are tracking specific urgent operational requirements in support of DND and those very specific artillery pieces, and those processes are in play.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Is it 2023?

[Simon Page]

I would like to take a pass and get back to you with the precise information, if I could.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

I appreciate your offer to get back to us in writing.

The issue of our sovereignty comes into play when we talk about our ability to defend, in particular, our Arctic. That's a real, serious, emerging threat. Are there any plans in the works to accelerate our procurement of ships to patrol our Arctic?

[Simon Page]

To be true to the question, I will say that there is no specific acceleration plan. We have very specific shipbuilding projects that are associated with delivering capability, and we are tracking those.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

What is the expected first delivery date for the ships that would fulfill that requirement?

[Simon Page]

Thanks for the question.

The first delivery date is actually in play at the moment. The Arctic and offshore patrol ships are in implementation. They are being delivered to the navy. The first three have been delivered and accepted by the navy. We should see a fourth one in 2023 and a fifth one in 2024, and actually a sixth one soon. We are actually very close to being in implementation for the two vessels with the Coast Guard.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Page.

Mr. Bains, go ahead, please.

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

Thank you, Mr. Chair.

I'll stay with Monsieur Page.

A year ago, I believe, I asked PSPC about the difficulties that Canada and the global economy were experiencing with supply chains and what effect that could have on the cost of steel and other raw materials necessary for shipbuilding. How has the situation changed in the last year? Has it improved?

[Simon Page]

Thank you for the question.

We're seeing a change as we speak, probably over the last few months, and it's a positive one. I think we are recovering from almost three years of pandemic status within the defence and marine enterprises. We have seen significant pressures on the supply chain. Sometimes in the shipbuilding industry we think of the supply chain as being just a large shipyard, but it's a lot more than that. It's deep, it's complex and it's intertwined. There were some complexities also at the subcontractor level. We've also seen some pressures with inflation and commodity pricing, as you just mentioned.

We're just seeing now a bit of light at the end of the tunnel. The shipyards are recovering. The productivity in the shipyards is increasing. Actually, for the first time in a long time, we are speaking with the shipyards about moving some of the milestones in the right direction with respect to cutting steel, accepting ships and various milestones that you would have in the shipbuilding industry.

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

Okay. Thank you.

Do you have a percentage of increase, a number or some data point?

[Simon Page]

I think the best project in terms of tabling data points would be the Arctic and offshore patrol ships, because there's the run of six and two more for the Coast Guard after. Vessel number one was almost completed when the pandemic hit. The pandemic hit in the spring of 2020. We accepted that vessel that summer. With ship two, all the material for ship two was almost purchased at that time. From ship one to ship two, we saw a really neat productivity increase and better costs. Then came the pandemic, with some unfortunate impacts on three, four and five.

Having said that, now, without COVID, from a pure productivity point of view, we're seeing improvements from four to five to six. Seven is a different design, so there will be a little bit of a blip on the upside, but from a productivity point of view, that doesn't change. The shipyard remains a productive shipyard delivering AOPS for Canada.

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

Switching to Monsieur Perron, PSPC is requesting a $489,000 transfer from Shared Services related to reduced accommodation requirements as a result of data centre consolidations. To date, how many data centres have been identified for consolidation?

[Sony Perron]

Thank you very much.

When Shared Services Canada was created back in 2012, we had 720 data centres. We have since closed 332, and 69 should be closed by the end of this fiscal year. By next week, we should be at around 400 closed, leaving 263.

The trajectory is to consolidate workloads that used to be in these legacy data centres into four enterprise data centres that provide better reliability, better energy costs and better stability, and also to move some of the workload into the cloud, which is the other option for hosting these important applications.

We are making progress on legacy. This is being done with the client departments that run applications into these data centres, because it's not only to do a “lift and shift”. We are trying to do this at the same time as the client departments modernize their applications that serve Canadians.

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

When does the government expect to have migrated all the identified data?

[Sony Perron]

Thank you for the question.

That's a difficult one, because we need to modernize at the same time, and I'm not totally in control of that. We have to do this with the partner departments, and it depends on the agenda. We need to do this while maintaining the service at the same time.

I cannot give you a firm date, but—

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

Will we need more data centres?

[Sony Perron]

No, we will have fewer going forward, because the way to provide reliability to manage cost and optimize is to reduce the footprint and eliminate a number of these small sites.

Right now, if you were to look at the stats, reliability in the Government of Canada infrastructure is much better because we have made progress in modernizing the infrastructure. There is less interruption—

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Perron.

Ms. Kusie, go ahead for five minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair.

Returning to my initial question, as well as following up on the questions of my colleague, Mr. Barrett, in your opinions, do you believe that we can meet our military and defence obligations with our current procurement processes?

Whoever would like to take that can. Perhaps Ms. Reza...?

[Arianne Reza]

That's an excellent question in the sense that we have had to really take a step back and look at it from a project management perspective. We've spoken here about the requirements and the timing. You made reference, earlier, to the U.S. investments and our own investments of $5 billion, so we really have to take a risk-based approach to what we can do to accelerate it, to reduce the complexity of the business requirements and to streamline the various procurement negotiation steps that are there.

Perhaps from there Mr. Page can give some examples.

[Simon Page]

Maybe as a bit of context for this question, within the defence and marine portfolio right now we're tracking approximately 150-plus projects at different levels of complexity, all addressing client department needs. When we receive a requirement, we always look at a procurement strategy that will fit the procurement, that will fit what's required. We usually do that based on four different pillars. Those pillars include performance, so addressing the requirement, and then the value for money piece, which is pretty much with our department. Then we look at whether this procurement could contribute to Canadian industry, so the ITB value position piece, and we have a fourth pillar of flexibility, which we like to discuss in case the capability needs to surge at different moments or something like that.

The balancing of all of this usually gives way to a specific procurement strategy that can take place for a procurement. For something for an asset or a commodity that is, let's say, very specific, we can use a tool like an invitation to qualify specific suppliers, which will then give us a focused approach going forward. If it's a commodity that has a broader footprint, then what we do is we go more towards the traditional route of a basic RFP, getting your bid evaluation and all the process forward.

We try to match the right procurement strategy to the procurement so that we can deliver the asset in the most effective way.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you for that extensive overview.

Given the number of projects that you're involved in and the pillars that you've outlined, do you think there's any improvement that could be made in any area to, perhaps, make the processes more efficient?

[Arianne Reza]

We're really focusing on things like governance, to streamline the governance process and work with Treasury Board to streamline it. Because 450 is a lot of projects, there's just queuing them up and looking at the procurement strategies. There's understanding where we can make best use of some of the national security exceptions, working with our partners, triaging it and also working with industry. One of the things in the supplementary estimates (C) was this issue of the controlled goods. That program allows Canadian industry to have access to the U.S. defence market, so it means making sure that process is working well.

All these things are like areas on a continuum that point to how to be able to do it better, faster and with a more agile focus.

[The Chair, Conservative, Kelly McCauley]

Mr. Page.