National Defence Committee on March 29th, 2007

[Philip E. Coyle]

I'm no expert on how the Canadian government works, but it's said in the United States that the President proposes, Congress disposes. Unless Congress appropriates money for activities, they just don't happen.

As I say in my formal statement, when the U.S. Congress maintains closer oversight and review, the U.S. military gets better and more effective equipment sooner and cheaper. I can't think of a case where increased oversight by Congress didn't actually help the military. You might worry about the opposite--that it would somehow slow things down--but that hasn't been the case that I can think of.

[Claude Bachand, Bloc, Saint-Jean, QC]

Thank you.

Mr. Lagueux, unlike Mr. Coyle, who considers parliamentary oversight and review to be very important measures, you do not mention that at all.

I do not necessarily want to pick up where my colleague Mr. Coderre left off. Nevertheless, I stated a few weeks ago in La Presse that I had the impression that parliamentarians weren't welcomed in the tendering process.

I don't think that you are part of that group. I called it the old boys club. It is often a group of military officials who get together. I also know that each time defence contractors want to obtain a contract or part of a contract, they tend to call lobbyists rather than parliamentarians, and that worries me to some degree.

I would like you to reassure us on that. I would like to know if asking parliamentarians to exercise greater oversight runs counter to your philosophy, or, if in your opinion, it is an essential part of the process.

[Pierre Lagueux]

Mr. Bachand, thank you for not including me in the old boys club.

As for your question, I think things need to be put in context. I understand Mr. Coyle's position regarding the United States, but you must understand, even if it is not up to me to tell you this, that the Government of the United States operates in an entirely different fashion than the Canadian government. In Canada we have what we call a Westminster system of government. Responsibilities conferred upon Canadian parliamentarians under this system are very different from those conferred upon members of Congress and Senate in the United States.

We are just saying that parliamentarians should play a more significant role in the defence procurement process, but why not talk about this process government-wide? I do not understand why you want to focus exclusively on defence procurement.

To be in a position to answer your question, our system of government would really have to be studied and we would need to determine what the role of parliamentarians is, as regards not only the defence procurement process, but all government activities.

Under the current system in Canada, the role of parliamentarians does not include reviewing each acquisition and getting involved in it, just as it does not include getting involved in other areas.

Since that is how our system is, that is my answer.

[Claude Bachand, Bloc, Saint-Jean, QC]

Well, that answer has not helped to reassure me. It seems to me that parliamentarians have a role to play in defending the taxpayers' interests. I don't like the feeling that we are trying to break into an exclusive club.

You said it was important to integrate all of the departments in order to work through these projects. However, if you feel that parliamentarians should not be involved, then you and I could very well find ourselves on a collision course because, in my opinion, parliamentarians should absolutely have a say in the mattter.

Now, Mr. Chairman, I would like to give my colleague the floor. How much time is left?

[The Chair, Conservative, Rick Casson]

Half a minute is all that's left.

[Claude Bachand, Bloc, Saint-Jean, QC]

Well then, make it quick.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chairman.

Welcome.

Three departments are involved in the procurement process: National Defence, for the specs, Public Works Canada, for the RFPs, and Industry Canada, for the economic spinoffs.

You said that we needed integrated interdepartmental project teams. According to some witnesses, what is lacking is an agency that would be responsible for the process.

Would you also agree that there is no organization or department that is in charge of the entire procurement process?

[Pierre Lagueux]

No, I do not agree with that statement.

Here is a Treasury Board document. It was in force when I worked for National Defence, and it still applies. Unfortunately, it is in English.

I would like to read that very briefly. It talks about the role of operating departments and their responsibility in acquisition. It says very clearly:

Operating departments are responsible for the achievement of their approved project and procurement objectives, and for incorporating the government's socio-economic decisions into their procurement and project management activities.

It is clear to me that the Department of National Defence is responsible for its own procurement.

[The Chair, Conservative, Rick Casson]

Thank you very much.

Ms. Black.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Thank you very much, Mr. Chair.

Welcome to both of you, and thank you for attending, Mr. Coyle and Mr. Lagueux. It has been an interesting morning so far.

Mr. Coyle, I have a copy of the Ottawa Citizen this morning, and you've been quoted extensively about the C-130J and your experiences in the U.S. There's one quote here that says, “Mr. Coyle said the C-130J was sold to the U.S. as an off-the-shelf product, but the plane has faced numerous problems.”

As it turns out the C-130J has not been an effective aircraft.

That's a direct quote in the article. I wondered if you could expand a bit about your own experience with that aircraft and give us your assessment of the plane, please.

[Philip E. Coyle]

Certainly. I was involved with the C-130J when it first came up, as I say, a decade or more ago. Perhaps what's more important is not what I might say from ten years ago but the latest report on it from the Director of Operational Test and Evaluation in the office of the Secretary of Defense. This is a report that came out in January that I'm reading from. It says:

The C-130J, in the current configuration, is not effective in performing formation airdrop missions in Instrument Meteorological Conditions where the use of Station Keeping Equipment is required. The C-130J is not effective for worldwide operations in an non-permissive threat environment. The C-130J has shortfalls in meeting user suitability requirements, due to maintainability issues.

And it goes on to explain that operational testing of the C-130J will likely continue in the U.S. past 2010 because the program has shifted to what's called spiral development.

I can make this available. It's just a two-page report, but it's perhaps more important what they're saying today than what I might say from ten years ago.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Thank you very much. I appreciate that.

You've also had experience with Congressional oversight in the U.S., and I wondered, is there anything you think we could learn specifically from that process in the U.S. Congress, or is there anything we should in fact avoid?

[Philip E. Coyle]

Well, I think one of the most difficult things for the U.S. Congress is keeping track of what happens to a program if it gets into difficulty. And many don't, as I said in my opening remarks. Many don't. But when programs get into difficulty, it's very difficult for the Congress to keep track of that.

For example, there are things called selected acquisition reports, which call attention to those programs that are getting in trouble. But because of the way the information is presented, it's very difficult for members of Congress to figure out, “Is this a 10% overrun since we started? Is this a 100% overrun since we started?”

So one thing I recommend in particular is I would caution against your using the U.S. practice of regularly re-baselining costs and schedules so that something that looks like a 3% or a 5% or a 10% increase happens again and again and again and suddenly you have a 50% or 100% increase, but you're not really aware of it because you're only seeing little pieces.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Thank you very much.

Mr. Lagueux, thank you for your presentation. You've made ten recommendations to the committee.

In terms of how I and Canadians see the role of members of Parliament, I think it would certainly be to address the issue of accountability to the government in power, to ask questions, and to ensure taxpayers get the best bang for their bucks, as my colleague Mr. Bachand said.

When we look at military procurement and it appears to be a sole-source contract, of course, MPs and the Canadian public become nervous, with some justification.

You said you disagreed with Mr. Alan Williams, who appeared at our committee and who's written a book called Reinventing Canadian Defence Procurement. On one of the recommendations Mr. Williams made, you said you disagreed with his recommending a different process or a different kind of department. One of the recommendations Mr. Williams made was that a lead minister should be designated for defence procurement.

I'm relatively new to this committee. I've only been on it for a year. One of the things that has been very stark to me on the committee is to have a variety of ministers and deputy ministers come before the committee. When I and others have asked specific questions about the procurement process, we get the answer that we should ask the question of the other minister coming the next week or that it doesn't fall under.... It's been very difficult to pin down which minister has specific accountability in this process, and I find it very frustrating.

I'm going to ask you this. Why would you be or are you opposed to the recommendation that one minister should have final accountability on the process?

[Pierre Lagueux]

Well, as I replied in the last question, my sense is there is one minister accountable for the process at DND.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

It's not what they tell us when they come here.

[Pierre Lagueux]

I acknowledge that. I've read the transcripts, and I've been watching the committee with interest. To be quite frank, I'm a little surprised at that.

However, it is clear that various ministers have various responsibilities within the process. On behalf of the ministers, various departments exercise certain prerogatives within the process.

As I said when I read from the Treasury Board document I have here, which is a document that has been in place for quite some time, it is the operating department that is ultimately responsible to ensure whatever is procured meets the requirements of the Canadian Forces. The operating department's money pays for it.

The Minister of Industry is responsible for the aspect of industrial and regional benefits. The public works minister and his staff are responsible for the contracting aspects. Each of them has the responsibility to provide those services overall throughout the acquisition process.

Ultimately, if the acquisition process fails, the equipment doesn't meet the requirements, and there are cost overruns, it is clear in my mind that the defence department is accountable.

When I was the assistant deputy minister of materiel, I chaired the interdepartmental committees, and it was clear to me who was going to hang if things went wrong.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

I wish it were as clear to the ministers.

[The Chair, Conservative, Rick Casson]

Thank you.

Moving to the government, it's Mr. Calkins, I believe.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you, Mr. Chair.

I would like to thank both of you for appearing before the committee today. It's been interesting so far.

My first question is for Mr. Lagueux.

There's been a lot of discussion and debate in this committee about buying off the shelf and whether or not we should be getting into detailed technical specifications. You alluded to it in your testimony. The example you cited was a Bell Helicopter model, which I think the Canadian Forces calls the Griffon. What are your opinions on this approach as far as buying off the shelf is concerned?

I think there's been a move by the government towards this. I think the previous government had moved towards this as well, where it made sense to do this.

My colleague Mr. Bachand has often made an analogy where buying a car is similar to some of the defence procurement stuff. You can go out there and buy a Camaro, but he ended up with a Firebird. I think there's quite a bit of difference here as to what's off the shelf and what's on the shelf.

Could I get your opinion on what the Government of Canada is looking at for on the shelf and off the shelf right now ? Where do you think off the shelf is useful or not useful?

[Pierre Lagueux]

Thank you for that.

I'm sure Mr. Bachand is pleased to know that the Camaro will soon be back on the street again.

Clearly there is quite a difference--and Mr. Coyle alluded to that in his comments--between what the American armed forces procure and how they go about procuring it and how we do that.

Certainly the American system, given the size, the money, and the technology, is to develop a new system from the ground up--whether that be a fighter airplane or a new artillery system or whatever--and put a lot of money into research and development, and obviously have a very robust operational test and evaluation of those systems.

We, in Canada, of course don't have the size of the budgets that the American armed forces have. For example, their defence budget is bigger than the total Canadian government budget. And our armed forces are less than one-third the size of the U.S. Marine Corps. So the scale is vastly different in terms of the money.

We cannot afford to develop from the ground up these kinds of weapons systems, so it makes sense for us, then, to buy things off the shelf. These things have already been proven, having been developed by the United States armed forces or by other allies around the world.

Therefore, the tendency is not to try to develop expensive, unique Canadian systems that are very costly, for all the reasons Mr. Coyle has explained, and that give no guarantees of delivering exactly what you want in the end in any case, unless you have a lot of time and a lot of money and a lot of resources to do that.

Given our size and given our scale, buying equipment off the shelf, whether it be C-130Js or C-17s or helicopters or whatever, makes a lot of sense for us. But as we buy off the shelf, we need to ensure that those various platforms and the systems that come with them integrate into the existing systems and platforms.

There has to be Canadian involvement at that point, because if you cherry-pick a bunch of different systems and then throw them all together, you have to make sure that they communicate together, that they operate together, and that they perform together. This is something that is not necessarily being tested by our allies, since they have, perhaps, a different grouping.

There is a Canadian role to play here in those systems. Particularly when it comes to systems integration, and particularly when it comes to mission systems, we need to have a capability here in Canada to develop those things and to modify those things to our requirements.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Okay, thanks.

I'm going to share with Mr. Blaney.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Thank you.

I was listening and also thinking of something Mr. Bachand said relating to the involvement of politicians in the procurement process. I think on the one hand politicians are not necessarily involved in selecting water treatment for municipalities. We give this responsibility to professionals.

And in those terms, Mr. Coyle, I would like to ask you, with your great amount of experience on the other side of the border, whether certain projects have been advanced in the United States or maintained, not out of any operational necessity, but rather due to political factors such as where a piece of equipment is made.

Bluntly stated, my question is, has there been, in your experience, some political interference in the American process, and if so, what has been done to remedy that situation?

[Philip E. Coyle]

When it comes to the largest systems, one of the jokes you often hear is that the contractors will have employees in practically every state of the union. In fact, one of the displays that the U.S. Congress asks for is a display from contractors, showing where the employment is. In the case of bigger programs, maybe Montana doesn't have very many employees, but most of the rest of the states might well have many, maybe thousands of employees involved.

That means there is a political interest in these programs once they have such a large footprint.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Obviously your decision process is quite different from ours, but can you explain briefly the role of politicians in the American defence procurement process?