Evidence of meeting #6 for Government Operations and Estimates in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was ships.
A recording is available from Parliament.
4:45 p.m.
Conservative
4:45 p.m.
Conservative
4:45 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
I'll take your nine seconds, Mr. Johns.
Can I get back to the question I was asking? Does the Office of the Auditor General believe the contract structures are set up properly to protect the interests of taxpayers?
4:45 p.m.
Deputy Auditor General, Office of the Auditor General
We didn't raise issues with the structure of the contracts. I think the—
4:45 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
I know you didn't raise them. Was that because you didn't look at it or because you're comfortable with the set-up of the contracts?
4:45 p.m.
Deputy Auditor General, Office of the Auditor General
How I would answer that is that we didn't raise concerns about the structure of the contracts. The questions that I think should be posed to the government are around how they enforced the contract and what the considerations were that they were balancing to get to the decisions they made about enforcement.
4:45 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
I want to get back to a question Mr. Bains had asked. You mentioned this in your opening remarks and then on page three of the report it states: “Despite the delays, [the government has] made adjustments to the strategy’s implementation that improve the prospects of timely future deliveries.”
The comments that we heard were that they've reacted to the delays, were opening up possibilities in the future and there was a potential new shipyard, again, in the future.
What have they actually addressed? What have they actually changed to justify the comment that they've improved the prospects of timely future deliveries?
Talking about adding the potential contract doesn't quite qualify to meet the commenting in your report. One seems to be an action they've taken, as opposed to future actions they may take.
4:45 p.m.
Deputy Auditor General, Office of the Auditor General
As Mr. Swales noted a little earlier, some of those statements were forward looking. The addition of a third shipyard was one—
4:45 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Let me interrupt. Your comment is the government has “made adjustments”. That's past tense, not future looking. What adjustments has the government made, as in accomplished, as you've stated in your report and your opening remarks?
I'm sorry to be pushy about this, but what have they done to address this to make prospects of timely future deliveries?
4:45 p.m.
Deputy Auditor General, Office of the Auditor General
We would consider the procurement process to add a third shipyard to be an action. Obviously it takes time to implement that action. We also—
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Conservative
Kelly McCauley Conservative Edmonton West, AB
Then a future potential third shipyard is considered action achieved according to your report.
4:50 p.m.
Deputy Auditor General, Office of the Auditor General
I think we have to recognize that it does take time to put one in place. We also noted some other actions, such as adjusting schedules and build and delivery time frames.
However, it is important to note that in our report we also noted that there is very little time, very little wiggle room in terms of delays before these ships will go past their useful life and not be replaced by other ships. There needs to be a very rigid and rigorous approach to monitoring risks to completion and delivery at this point.
4:50 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Let me ask you about some of the pricing. We added I think it was a sixth or seventh AOPS. A couple of them have actually been delivered. However, for the last one, the price was almost double the average of the first ones.
The price should be dropping as we learn how to make these. Did the AG look at why the last one added was almost double the average cost of the other ones?
4:50 p.m.
Deputy Auditor General, Office of the Auditor General
I think you're correct that we would expect that the cost of ships will drop as the shipyards become more experienced in building them.
I'll ask Mr. Swales if he has any insights on—
4:50 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
You specifically referenced adding the AOPS in order to end the gap between the AOPS and the start of the CSC, but adding it at such a higher price, is that a benefit to taxpayers or to the Coast Guard?
4:50 p.m.
Principal, Office of the Auditor General
I would make two comments. One is that our audit was looking at the timeliness of delivery, not directly at the cost. We didn't directly look at that issue.
One of the other aspects with the AOPS is—
4:50 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Does it raise a red flag, as an auditor, or do you just drive by and say, “Okay, that's someone else's issue; we'll look at it later”? When you're looking at the shipbuilding, doesn't that raise a red flag?
4:50 p.m.
Deputy Auditor General, Office of the Auditor General
It's fair to say that we are always aware and we do take into consideration the costs and variances. However, in this audit we were looking at the broader picture of delivery and timeliness of delivery, the obstacles to delivery. There are, of course, the other objectives of the national shipbuilding strategy that were at play.
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Conservative
4:50 p.m.
Liberal
Majid Jowhari Liberal Richmond Hill, ON
Thank you, Mr. Chair; and thank you to our witnesses. It's very interesting testimony. As well, thank you for the reports.
I'll go back to the fighter jet reports. In paragraph 3.19, your report indicates the following:
In 2016, the Government of Canada directed National Defence to have enough aircraft available every day to meet the highest NORAD alert level and Canada’s NATO commitment.
Later on, you indicate that “it was a significant change”.
I know in your opening remark and response to some of my colleagues you said you're not in a position to be able to make a comment about the policy, and I appreciate that, but when words such as “it was a significant change” are used, I would assume that this is a significant change in the scope.
In your opinion, how are scopes changed on the two fronts, on supporting our commitment to NORAD and NATO, that put you in a position when you did your assessment to say it was a significant change?
4:50 p.m.
Deputy Auditor General, Office of the Auditor General
I would answer that question by pointing to the fact that in the report we identified that there would need to be a 23% increase in the number of aircraft. There would need to be about a 36% increase in trained pilots. What we referred to in the report was that the forces had 64%.
