National Defence Committee on June 9th, 2023

[Christine Normandin, Bloc, Saint-Jean, QC]

Thank you, Mr. Chair.

I'd like to thank you as well, Mr. Giroux.

I'd like to discuss something that had been announced in 2019, but which, I gather, never came to pass. I'm referring to the creation of an entity that would have been called Defence Procurement Canada. It would have prevented duplication in various departments, including National Defence and Public Services and Procurement Canada. People seemed to be in favour of it, but I gather that the idea, even though announced in 2019, was never mentioned in the mandate letters to the ministers, to the great disappointment of some of them.

Are you aware of what this entity might have been, and can you tell us whether you were consulted at the time about its introduction?

[Yves Giroux]

To answer the second part of your question, no, we were never consulted. Like you, we did not see any progress in this area. Nor did we see this entity mentioned in any of the mandate letters.

What I can say, however, without being aware of all the details and without having been consulted, is that the establishment of a specific agency could solve a number of problems, on condition that defence procurement rested exclusively with that agency. For example, introducing a new player while continuing to assign a major role to the two departments you just mentioned would only cause further confusion and even increase the number of steps involved in the procurement process. I believe that creating another agency is not necessarily required to improve the process. We could very well reshuffle the existing cards without adding another entity.

[Christine Normandin, Bloc, Saint-Jean, QC]

So the main problem is duplication between departments. However the problem is dealt with, eliminating this duplication would be a step in the right direction.

[Yves Giroux]

That's what I believe too. There is no need for another entity, but if it were established, it would have to be the only organization responsible for procurement. And yet it would likely be difficult to have a only one entity responsible, because for obvious reasons, the armed forces will clearly want to have their say in contracts and specifications. So I don't think it would be the magic bullet that would fix all the procurement problems.

[Christine Normandin, Bloc, Saint-Jean, QC]

Thank you very much.

I've heard that other countries have policies established by public servants rather than politicians or agencies. These policies are systematically reviewed every two years to remove politics from the process and to ensure that requirements and requests are monitored on a regular basis. Is that something we should consider?

[Yves Giroux]

That's definitely a model we should consider. If politics were removed from the decision-making process, the approach to procurement would become a much more neutral.

We all know that politicians are elected to represent what the people want. It's important, particularly in matters pertaining to defence, to reflect people's preferences. So it could lead to delays without basically improving the procurement process. We have only to think of decisions with respect to the F-35s, and how it's going to cost us a lot more today than it would have only a few years ago.

The establishment of a new agency would therefore be a desirable approach in some instances, but it would still have to be closely monitored by politicians, who are ultimately responsible for government decisions.

[Christine Normandin, Bloc, Saint-Jean, QC]

Thank you very much.

A little earlier, Mr. Fisher said that it seemed to be much easier to buy baseball caps than major military equipment. Based on a number of articles that have appeared this week, I would tend to disagree.

The military are complaining that the equipment for personnel that they are receiving is often obsolete when it arrives. Are the feedback loops for end users fast enough to ensure that equipment is not obsolete by the time it is delivered?

[Yves Giroux]

That's a question for the department to answer, particularly by service personnel who have to cope with the shortcomings of this procurement system. I don't have a detailed enough knowledge of the procurement processes and feedback loops, and Mr. Penney has indicated to me that he is no better informed than I am.

[Christine Normandin, Bloc, Saint-Jean, QC]

We know that there are procurement delays. Do you systematically carry out studies on the additional costs resulting from these delays? The pandemic reminded us that costs can rise very quickly, particularly in construction. Are these delays and cost increases attributable to the slow procurement process being tracked

[Yves Giroux]

We don't do these checks systematically. We have done so for major programs, combat ships for example, but not for the entire procurement process or other specific processes, apart from the reports we've published. It's probably something that relates more closely to the Auditor General's mandate.

[The Chair, Liberal, John McKay]

Thank you, Ms. Normandin.

Ms. Mathyssen, you have six minutes.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

Thank you, Mr. Chair.

I appreciate your being here, Mr. Giroux and Mr. Penney. Thank you.

I know your report on the new acquisition of the F-35s isn't out yet. I think we should consider, as we continue on this study, inviting the PBO back once it's out. That's just a suggestion.

You sent a letter to the Minister of National Defence on January 16, asking to do that examination of true costs. Your predecessor, Kevin Page, did the same thing on the sole-source contract that the Conservatives did on the F-35s. At the time, it was discovered that DND actually kept two books on the costs of the F-35s, and they were tricky in terms of how they estimated the lifespan. That reduced overall the costs of what was estimated on each of the aircraft that was acquired, or was supposed to be acquired.

Obviously, we don't want that to happen again. We don't want those same tricks. From what you've received thus far, can you comment at all on whether you've seen anything like that, or if we should be concerned?

[Yves Giroux]

What we have seen so far does not lead to concerns of that nature—or what we've seen several years ago. We have received very good collaboration from the Department of National Defence. There have been some hiccups: information that we had asked for earlier this year that did not exist and that now exists, but I think that was just an oversight—nothing major. We are confident that what we have in terms of information fully represents the numbers and what DND is really using.

The other advantage we have compared with several years ago is that we have gained several years of experience, as has the Department of National Defence, in costing that fighter jet. They've had lots of time to refine the cost estimate, as we say, for various reasons.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

One of the recommendations you put forward in the ITB report was that National Defence “should review its materiel forecasting and positioning to ensure that sufficient stocks are maintained at the right locations.” That was a big issue. The union involved in a lot of that categorizing and maintenance of stocks.... That's been privatized over the years. The union is quite upset about a lot of the privatization and outsourcing of those contracts. Did you find that this was part of some of the problems in terms of keeping those stocks?

[Yves Giroux]

We didn't look at that. You may be referring to a report by the Auditor General. We did not make recommendations—

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

Yes. I'm sorry.

[Yves Giroux]

Maybe it's something that I completely forgot, but I don't think so. We didn't look at the intricacies of the process and the privatization of some processes at National Defence.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

I think that was an AG report. I apologize.

[Yves Giroux]

That's fine. Maybe Madam Hogan will be a bit insulted that you confused her with me.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

I'm sorry.

[Yves Giroux]

That's fine.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

Yes, I wouldn't want to ever do that.

Ultimately, you did find, though, that in terms of the procurement process, there's quite a huge gap in terms of specialists who have been hired within National Defence or who can do that job. There's a chronic issue that hasn't seen any resolution in terms of I think 30% of positions, or 4,200, being unfilled as of May 2022, and a lack of trained resources, of people who are able to help with those procurement issues.

What do you suggest or what are you looking at in terms of how the department needs to deal with that or ultimately what the consequences in the long term will continue to be, as we've seen thus far?

[Yves Giroux]

We have not looked at specifically the lack of procurement personnel at DND, but in the course of our multiple reports—and we've released a lot over the years—it's something that has come up regularly, that there is a lack of procurement personnel at DND.

In order to improve the procurement process, it's clear that it is an essential part that DND—or whoever is ultimately responsible for the procurement process, if there were to be changes made—has the appropriate number of persons in place with the right skill set. A lack of personnel is obviously an impediment to an efficient procurement process.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

That's right. Those ballooning costs that we keep talking about are a huge part of the fact that we just don't have enough people to be able to do the work that's being required of them.

[Yves Giroux]

That's a contributing factor.