National Defence Committee on Feb. 7th, 2012

[Jerome Berthelette]

Certainly.

Maybe I'd just second, Mr. Chair, what the honourable member had to say about the maintainers. We have visited many bases, and they are top-notch, best in the world at what they do.

The optimization of the resources goes on every day within the military. You visit a base and you will see that they will prioritize the maintenance and repair of their equipment based on what they have to do in the next week, month, six months, year, and so on. So if they're getting ready for an exercise in the far north, that becomes the priority for the maintenance and repair technicians. They make sure the equipment is ready to go, and when the training begins, the equipment is there and it can go.

In periods of high operational tempo, of course, the priority has to be to make sure the soldiers in the field have the equipment they need. So when you have a limited number of human resources, those human resources will focus on the equipment that's required for the soldiers in the field.

[Ted Opitz, Conservative, Etobicoke Centre, ON]

Okay.

Your report stated that the CF and DND has no long-term plan for its equipment. Does your report take into consideration factors like the Canada First defence strategy? That plan provides for about $60 billion of spending for new military equipment, and it further allocates $140 million for spare parts and maintenance. Can you comment on that?

[Jerome Berthelette]

Mr. Chair, I'm not sure that in this particular chapter we said there was no long-term plan. The Canadian defence strategy does set out a long-term plan with respect to the acquisitions for National Defence and the amount of funding that is going to go with those acquisitions. So there is a long-term plan, in terms of acquisitions. In terms of what we looked at here, what we said about the two contracting frameworks is that they need to do more work to push them out and to operationalize them.

[Ted Opitz, Conservative, Etobicoke Centre, ON]

Okay, great.

Your report also suggests that weaknesses in the implementation and oversight of DND's contracting approaches for maintenance and repair, as well as inefficient management of the information, could hamper the department's ability to meet some of those training needs and operational requirements over the long term. How do you account, then, for DND's long-term success in Afghanistan and in other key missions such as Libya and Haiti, to name a couple? Would the Canadian Forces, do you think, be able to experience such a high level of success if it were not particularly proficient in maintenance and repair of its military equipment?

[Jerome Berthelette]

Mr. Chair, I think we have to distinguish between the ability of the technicians to prioritize and meet those priorities with the equipment at hand, to make sure it's available, versus ensuring that across the range of fleets a high serviceability level is being maintained. The OWSM and the ISSCF, when fully instituted, would allow National Defence to maintain a high serviceability level, a high performance level across the fleets, and, in the case of an operation, be able to reallocate the resources in order to meet that higher operational tempo.

The ability to meet operations, as I say, is really one of prioritization.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Brahmi, you have the floor.

[Tarik Brahmi, NDP, Saint-Jean, QC]

Thank you, Mr. Chair.

Could you tell me whether Defence Construction Canada (DCC) was included in your audit?

[Jerome Berthelette]

Defence Construction Canada was not involved in this audit.

[Tarik Brahmi, NDP, Saint-Jean, QC]

I would like to touch on the supply of trucks in the armed forces. Could you tell me whether you have done an audit on all aspects regarding the truck replacement program? Do you have any special comments that you would like to make on this subject?

[Jerome Berthelette]

No, we did not conduct any audits regarding the purchase of trucks.

[Tarik Brahmi, NDP, Saint-Jean, QC]

Have you conducted any audits involving navy submarines?

[Jerome Berthelette]

No.

[Tarik Brahmi, NDP, Saint-Jean, QC]

I would like to come back to the paragraph in your report where you state that the department has lost opportunities to derive the potential benefits of improved performance, improved accountability, and reduced costs.

Could you give us some clear examples of these lost opportunities for improvement that would have a significant impact on the effectiveness of Canadian Forces procurement?

[Jerome Berthelette]

Mr. Chair,

I would refer the honourable member to page 19, exhibit 5.3, where we have some specific examples concerning equipment that has not yet become part of the OWSM framework. I will just read a section of paragraph 5.45.

National Defence had attempted to enter into nine OWSM contracts by December 2005. These contracts would have applied to the Hercules, Hornet, Aurora, and Griffon. According to National Defence:

Three of the nine planned contracts were awarded by the original target date of December 2005.... ...these...have led to performance improvements, such as faster maintenance turn-around times, increased aircraft availability, and improved management of spare parts. Two of the nine planned contracts were awarded in late 2010 and...2011. As of April 2011, the remaining four contracts had yet to be awarded.

Two of those contracts are for the Hercules, two of those contracts are for the Hornet, and one was for the Aurora.

[Tarik Brahmi, NDP, Saint-Jean, QC]

Is that a significant example of the improvements that you would suggest?

[Jerome Berthelette]

Yes, that is an example of better performance concerning the management of contracts by private companies.

[Tarik Brahmi, NDP, Saint-Jean, QC]

Have you looked at the famous JSF/F-35 contract recently?

[Jerome Berthelette]

We are currently in the process of auditing that procurement.

[Tarik Brahmi, NDP, Saint-Jean, QC]

Had you done a prior review of the process that led to the decision that the F-35 was Canada's best opportunity concerning aircraft?

[Jerome Berthelette]

No, we did not do that audit.

[The Chair, Conservative, James Bezan]

Your turn, Mr. Strahl.

[Mark Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

Thank you, Mr. Chair.

We heard from Ms. Gallant and yourself that DND is unique in terms of its size and the amount of equipment it has. As a result, it also has some unique financial constraints in regard to lapsing funds and carry-forward percentages. What effect, if any, does that have on the department's ability to effectively plan, as you've called on them to do?

[Jerome Berthelette]

Back in the spring of 2009, we tabled an audit entitled “Financial Management and Control—National Defence”. I would recommend that audit to the committee members. It talks about the planning processes within National Defence related specifically to, in some instances, the financial situation.

What we observed was that National Defence's ability to carry forward money was limited to about 1%. According to the Auditor General of the day, given the size of the budget, which is $19 billion, $20 billion, a 1% carry-forward is a very tough target to meet. It's very tough to manage your budget down to 1%. Other departments have a 5% carry-forward; National Defence’s was 1%. Given the size of its budget, of course, it probably would not get 5%, but as a result of this audit and the recommendation of the Auditor General, the carry-forward was increased, I believe, to 2.5%.

That gives the department more flexibility in the management of its programs, particularly in the management of acquisitions and capital projects, because when you have a hundred capital projects during the course of the year, it is difficult to make sure that all the work planned for a specific year actually occurs within the specific year. It could be as a result of the contractors' work. It could be a result of not having certain decisions made on time, which is nobody's fault in either case necessarily, but some of these contracts can fall behind. This will free up money. National Defence does attempt to take the freed-up money and use it for other purposes, but when it can't be used for other purposes, if they don't have a sufficient carry-forward, it can get lost.

So with this type of budget, with this complex organization, with the number of contracts and capital projects in place, it is very tough to be able to manage within a small carry-forward. They do the best they can with the people they have.

[Mark Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

To follow up on Mr. McKay's questions about delayed maintenance, did you come across any examples or situations where the safety of our troops was put at risk because of lack of maintenance of their equipment?

[Jerome Berthelette]

We didn't see any such situation during the course of this audit. I think the armed forces, as I've been exposed to it, as I've visited the bases, are very careful to make sure they don't expose their soldiers, their armed forces personnel, to risks because of maintenance and repair issues.