Evidence of meeting #37 for National Defence in the 39th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was boeing.
A recording is available from Parliament.
Minister of Public Works and Government Services
I want to believe that wouldn't happen, because as we go out for competitive bids, obviously we'll be able to compare their bids for whatever services we require against those of other competitors. Hence, if they have padded their bids, they will obviously not come in as the lowest bidder for this particular RFP.
I think David wants to complement the answer.
Deputy Minister, Public Works and Government Services Canada
Mr. Chairman, the situation you're referring to was a very unfortunate one. Obviously fraud had taken place. There have been prosecutions and so forth, but Hewlett Packard, if I may just state for the record, is a very honourable company. The issue was that they had acquired a subsidiary that had been engaged in this unfortunate situation, and in fact they stepped up to the plate and fully reimbursed the government. They are a very good and honourable company and they negotiated in good faith with us.
Clearly, we've continued to strengthen processes. In fact, in terms of involvement of civilians, it was Public Works that detected the problem and alerted National Defence to it, and then worked with National Defence to bring the whole thing to ground.
Conservative
Cheryl Gallant Conservative Renfrew—Nipissing—Pembroke, ON
In terms of changes in the work that needs to be done as a contract is ongoing, sometimes there are changes that affect the terms of the contract. There are safeguards in place to ensure that the price of a contract isn't inflated as a consequence of changes that are being asked for by the government.
Deputy Minister, Public Works and Government Services Canada
Do you mean if the contract permits additional expenses if there are changes in requirements? Is that what you mean?
Deputy Minister, Public Works and Government Services Canada
Yes, but it is under specified conditions. Public Works is the only group...the minister is the only one who under his authority can alter a contract. A department can't just automatically add things to the contract. It must come back to us, and there must be an understanding of what's happening.
Conservative
The Chair Conservative Rick Casson
Thank you very much.
We will go over to the official opposition and finish up with Ms. Black.
Liberal
Denis Coderre Liberal Bourassa, QC
She has been here since the meeting started and she should have an opportunity to speak.
I would simply like to thank the minister for being here and to tell him that I feel badly for him because he is missing his photo op with Bill Gates, but I am delighted that he was able to spend the last two hours with us.
Minister of Public Works and Government Services
And I was able to have a photo op with you.
Minister of Public Works and Government Services
It was even better for me.
Liberal
Denis Coderre Liberal Bourassa, QC
And you are invited back to see us again and table the correspondence.
Conservative
The Chair Conservative Rick Casson
He has his priorities straight. He's at committee, where he should be.
Conservative
NDP
Dawn Black NDP New Westminster—Coquitlam, BC
Thank you very much.
Thank you for your indulgence.
I have a few questions. I think you can hear by the tenor of the questions, particularly from the opposition side, but also from the government side, that there are still some unanswered questions about the C-17 contract.
I think that we reflect what Canadians are thinking when it appears to be a sole-source contract. People get nervous, and they're nervous about whether their tax dollars are being spent as wisely or as judiciously as they could be when they don't see a real competitive process taking place, one in which the suppliers sharpen their pencils and get down and give their very best offer. There are all of those worries out there. They're out there, I believe, with the Canadian people, as well as with members of the opposition here.
I have several times asked different witnesses who've appeared before the committee about the termination clause for the C-17s. I've asked when some of your officials were here, and we've never gotten the actual details of the termination clause. I'd like to know exactly what the penalties are.
My second question revolves around the issue of the national security exemption. I'm still puzzled about why that clause was used for the C-17 contract. The Minister of National Defence indicated that he was not involved in that process, so I'm wondering if it was you, Minister, who initiated and approved that exemption, and I'd like to know why that exemption was used.
It seems to me that your role is meant to be the protector of integrity in this process of defence procurement, so I'd like you to tell us why you can essentially have a sole-source contract for so much money--$17 billion--and justify it.
Minister of Public Works and Government Services
Let me take them in reverse order.
I'm sorry to say this was not a sole-source contract—
Minister of Public Works and Government Services
I understand, and we'll try to help you fight this in your constituency if people are stopping you in the shopping centre and saying “You shouldn't have done this sole-source contract.” We'll give you lines for them, because it was not a sole-source contract. An ACAN is not a sole-source contract; that's number one.
Number two is the NSE. The NSE is invoked by the Minister of National Defence. It's not invoked by the Minister of Public Works. It came from National Defence. It came from within, but we don't invoke the national security exemption--we do, but through recommendation of the Minister of National Defence.
NDP
Dawn Black NDP New Westminster—Coquitlam, BC
But he said he wouldn't have been involved in that process.
Minister of Public Works and Government Services
No, it's done by folks under him. But I'll tell you, I think it was a good decision, a good decision because we kept all of our commercial cards intact in terms of negotiating.
I'll give you an example that wasn't raised this morning. We were able to de-twin from this contract all of the training, which is the first time it's been done in the history of Canada. The training for the C-17s, everything involving the training, from simulators to anything remotely involved with training, will actually be done in Canada.
I've got something on MERX right now. It's a letter of intention informing companies in Canada that are in this business that they can bid for this. So we've de-twinned the training from the prime contract, which we were able to do because the NSE was invoked.
And then your first question was, coming back to—