Government Operations Committee on Feb. 15th, 2022

[Gord Johns, NDP, Courtenay—Alberni, BC]

Right now, there is no federal program at all for communities like Port Alberni and others. There's pretty much no dry dock capacity at all on the west coast.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Johns. You left 10 seconds nice and clear and open.

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

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thanks, Mr. Chair.

That would be my hundred-metre dash time—10 seconds—so I have plenty of time to run my 100 metres there. Maybe I could have 35 years ago.

I have a question for the witnesses. Back in 2018, I think, there was an issue with the welds on the first of the offshore fishing vessels. It was to do with the semi-automatic welding machine. Remember, back at that time, they had to redo almost 120 feet of welds.

I don't think the last of those have been delivered yet. In your report, I think you said it was under construction. Because that was a very significant issue, did your report look at it at all?

[Andrew Hayes]

I believe that we did refer to that as a challenge for delays.

Mr. Swales, did you want to speak to that?

[Nicholas Swales]

Yes, that's right. We identified it as a source of delay.

I would mention that the third of those ships has now been delivered.

Of course, our report was completed some time ago.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Was that issue corrected after the first one, with corrective actions in place so they didn't have issues on the second and third vessels? Or were there still issues with the welds on the second and third ones?

[Nicholas Swales]

It's our understanding that the ships were accepted into service after examination and testing, so a satisfactory solution had been found.

[Ben Lobb, Conservative, Huron—Bruce, ON]

That's good.

In my area, we have Bruce Power, a nuclear power plant. They've been involved in a number of refurbishments of reactors through the years. In each one, obviously, they become better and better. Now, they're very efficient and are probably world leaders at that site in refurbishing reactors.

Is this something that you observed in your review and report? That as each ship gets passed through, they're better and more efficient, with less overruns...?

[Andrew Hayes]

I believe that's the expectation as the strategy moves along: that after the construction and delivery of the first few ships, it will be easier and more efficient for the next ships.

Mr. Swales, would you like to add to that?

[Nicholas Swales]

There's not much I can add, other than to say that is part of the expectation around the delivery schedules of each of the classes of ship where there are multiple ships.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Yes, so in that case, for the ones on the west coast, where they're doing those offshore vessels one-two-three, is that what your experience was when you did your report? Was two was quicker and better than one? Was three was quicker and better than two and one? Or was there not much difference in one through to three?

[Andrew Hayes]

We do have in the exhibit some of the actual delivery dates for the early ships. It did show, for example, for the offshore fishery science vessels, that the second was delivered only eight months later than the deadline, as opposed to 10 months for the first one, so there is a bit of a speeding up of the delivery there. Of course, you will see that the third one came a little bit later. Whether that is attributable in some respects to the early stages of COVID or otherwise, that third ship was delivered after our audit period had finished.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Exhibit 2.3 in your report states, “Delays in delivering new ships had many effects”, and one was cost increase. In 2019, you identified that a design change would cost “$111 million because of delays”.

Do you investigate that? Was that design cost a mistake? Was it something in a technological change? Did you identify what that was and why that was?

[Andrew Hayes]

I'll ask Mr. Swales if he might be able to answer that.

[Nicholas Swales]

Thank you.

The issue was, without going into the specifics, that it was taking them longer than they had intended, and it was because it's a very complex design. The cost represented the additional staff time required to continue the work.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you very much, Mr. Swales.

We will now go to Ms. Thompson for five minutes.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you, Mr. Chair.

Welcome.

I'm going to stay with shipbuilding. I represent St. John's East. The Coast Guard is very important not only to my riding but to the province.

I want to talk about procurement for a couple of minutes. In paragraph 2.62 of your report, you mentioned that several ships are “already at or beyond their expected service lives”, in part “because of failed procurements”.

What procurements are you referring to? To that, how would those have improved the situation if they had been allowed to go through?

[Andrew Hayes]

I will turn to Mr. Swales again for this answer.

When there are failed procurements, it is natural or almost unavoidable that there will be delays because these procurements do take quite a long time from the beginning to when you actually see construction and then delivery. Mr. Swales, would you be able to talk about the specifics of the failed procurements?

[Nicholas Swales]

Sure. I would to a degree. I'm sorry—I do have the information but not necessarily in my memory at this precise moment.

One of them was what became, then, the joint support ships. An initial attempt was made to acquire joint support ships. If I recall correctly, the situation was that there were no compliant bids, so nobody came forward within the price envelope the government had identified. At that point, the decision was to not go forward with that procurement at that time.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

I really appreciate questions in different areas, but I'll finish with something a little bit more general.

With regard to the delays to essential service deliveries, which we've heard so much about in the last couple of hours, how often would they have been attributable to factors that were really outside of departmental control?

[Andrew Hayes]

That's a difficult answer to put our finger on. One of the most important elements of our report is that thorough risk analyses and identifying specific time-bound and measurable risk mitigation strategies can help to reduce the likelihood of delays occurring. I don't know if right now, without those processes in place, we can put a precise amount of time or cost on exactly what could have been avoided.

I talk about the risk mitigation and monitoring. There is, obviously, the importance of implementing mitigation strategies at the right time in order to make sure that costs and delays don't pile up.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

I've finished my questions. Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you very much, Ms. Thompson.

We've reached the end of the third round. Because of the time, and unfortunately due to the vote, we got started a little bit late. So at this point in time I want to thank the witnesses for participating today and the Auditor General's office for being here.

In particular, Mr. Hayes and Mr. Swales, thank you for participating and for answering our questions. Anywhere you felt you could add more or where you were asked to submit something in writing, if you would forward that to our clerk, it would be greatly appreciated, and our clerk would distribute that to committee members.

Thank you very much for that.

I would like to thank our interpreters for being here today and assisting, as well as our technicians for the work they've done to help us out, as well as our analysts and our clerk for the great work they do in allowing us to move forward.

With that said, committee, I'd like to thank you for being here. We will meet again on Friday, and we will see you then.

With that, I declare the meeting adjourned.