National Defence Committee on June 13th, 2023

[Karen Hogan]

The shipbuilding strategy really had three objectives: renewing the fleet, creating a marine sector and generating economic benefits for Canada. You're right: Many of those are really long-term objectives.

Today it's hard to tell you that there is value in that investment, but that's the policy choice that the country has made to go forward. Now it's about tracking and not forgetting about those, but they come, as I said, with trade-offs. Creating a marine sector comes with some delays as they get ready to reach that target state that was intended within the shipbuilding strategy.

Where things could have been sped up is with respect to the length of time to negotiate those contracts to figure out who pays for what. Is it the private sector? Is it the government? How do you get to that place?

It took about seven years from the first umbrella agreement with the shipyard to the first ship. That's a very long time to just negotiate what needs to happen. That then delays the building of all future ships.

Value for money can be weighed in many ways. While there might be economic benefits, the delays and the cost of extending service life might offset those. Again, it comes down to more timely decision-making with respect to what the Canadian Armed Forces need.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

If we move away from the national shipbuilding strategy and that type of thing, do you think that historical boom and bust might be a reason for past delays in the procurement of military products?

[Karen Hogan]

You mean if we move off—

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

No, I mean the historical boom and bust. Is that something that has caused those delays?

[Karen Hogan]

I don't know about that. Not everything the military needs can be built in Canada. It's about figuring out exactly, from a strategic point of view, what should be built in Canada and what should be procured outside of Canada. That might help. If the decision is that ships should be built here, then what is the trade-off? What other things maybe shouldn't be built here? That's a strategy choice to make.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Mr. Sousa touched on unfilled positions. I just want to get a little clarity here. You said that we have the experts in procurement and we have the skill sets, but we have a gap in capacity. Is that strictly a person-power thing, a manpower thing? I understand that we're in competition with the private sector for some of these skill sets and for some of these experts as well.

[Karen Hogan]

I would argue that Public Services and Procurement Canada has a ton of expertise in procurement. When I say the Canadian government has procurement expertise, it does.

Does it have the capacity to handle the volume of procurement? I don't believe so. We see that in many areas across the public service. I mentioned not only military, but also IT procurement. Especially on that front, there is competition with the private sector, and there's just a shortage of expertise in that area.

[The Chair, Liberal, John McKay]

Thank you, Mr. Fisher.

Ms. Normandin, you have the floor for two and a half minutes.

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

Thank you very much, Mr. Chair.

Ms. Hogan, I'd like to pick up on a comment you made about the need for consensus on the future of the armed forces. I'd like to hear more from you on this subject.

For example, you could tell us about what is being done in other countries, where it seems a policy review is done by public servants every two years to ensure continuity in procurement, rather than making policy changes after every election.

Is this something we should consider?

What, specifically, is the problem with how long a policy lasts and consensus around that policy?

[Karen Hogan]

This is what we're seeing in aircraft procurement. There have been changing decisions with regard to what direction to take and how many aircraft the country needs. So there needs to be a consensus about what the armed forces need and the state they should ideally be in. I still wonder whether our country fully understands how urgent it is that we equip the Canadian Armed Forces.

In our audit on the monitoring of Arctic waters, we identified some shortcomings. I wonder why Canada isn't more proactive. The ice is melting and the waters in the Arctic are more navigable, so there will soon be gaps to fill. Right now, there are already gaps in terms of satellites and ships. What will it take to speed up procurement? I think our country needs to have a sense of urgency and reach a consensus.

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

To address that, don't you think it would be a good idea for the analytical work to be done first by public servants, and then endorsed by politicians? At the moment, it's more or less the other way around: policies come more from political options than from the grassroots. We need better ongoing monitoring.

[Karen Hogan]

I think we need to recognize the fact that this is one of the roles of the public service. We should be thinking long-term, about the future and the next generations. Political cycles can be very short; four years in power, and sometimes even less than that, is not very long.

There has to be a good partnership between government and public servants. That's very important when it comes to national defence procurement.

[The Chair, Liberal, John McKay]

Thank you, Madame Normandin.

Go ahead, Ms. Mathyssen, for two and a half minutes.

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

Thank you, Mr. Chair.

Interestingly, that was going to be some of my questioning.

Do you think the urgency of climate change is adequately presented within National Defence's priorities, in terms of how we procure and respond to what's needed?

[Karen Hogan]

What we found in our audit on Arctic waters is that there was an assessment and gaps were identified. Then, after a few years, there was a reassessment and the same gaps were confirmed. Then it was done again.

It's the need now to make a decision to deal with that. As I mentioned earlier on, the gaps we're going to see in our ability to surveil the north, or for ships—icebreakers or other ships—didn't sneak up on the country. They have been known. Where is that sense of urgency to make that decision? Is it linked to targets moving? Is it linked to procurement capacity? There are likely many things that contribute to it. It needs to start, I think, with knowing the end state. That requires consensus, then moving forward.

I can speak longer, if you'd like.

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

In your 2020 report, one of the recommendations—you mentioned it somewhat here, already—was that National Defence review its materials forecasting positioning to ensure sufficient stocks are maintained at the right locations. I've spoken to folks within UNDE. For employees, one of their major concerns, of course, is the privatization of those positions out of bases and so on.

Could you comment on that?

[Karen Hogan]

It's my understanding that the concerns the union raised are linked more to services being provided on bases. It's cleaning services and things like that, not necessarily the procurement of—

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

These are the people who maintain and ensure others have the kit they need, and who order them as needed and so on, as I understand it.

[Karen Hogan]

I think our audit focused on the goods the military needs and how that stock is managed. The country is very vast, and there's a military presence across it. It's more about making sure you have the right materials where you need them and less about servicing the buildings or bases. That was outside the scope.

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

Would you know what stocks you need if you don't have the people to take inventory of those stocks and adequately track them?

[Karen Hogan]

A lot of the stock on the bases is managed by the military, and the main depots are really managed by some military personnel. While there might be a combination of non-military and military there, my experience, as I visited some of them, was that they were mostly military folk.

[The Chair, Liberal, John McKay]

Thank you, Ms. Mathyssen.

Next, we have Mrs. Kramp-Neuman for five minutes.

[Shelby Kramp-Neuman, Conservative, Hastings—Lennox and Addington, ON]

Thank you, Mr. Chair, and thank you, Auditor General and colleagues, for being here today.

My first question is just to clarify something you stated earlier. With regard to the report itself, if the government says, “No, we're not going to proceed with that,” and if it's not even in the report, if the Auditor General thinks it's important, how can the government not proceed with it? What is the purpose of doing the report if there's not going to be any movement on it?

[Karen Hogan]

If we had a recommendation on which the government said, “We're not going to do that,” and we felt it was really essential, we'd leave it in there, and tell the government to disagree with us. We'd have that conversation in an open and transparent way.

When I talked about making sure it was something the government would implement, those were minor adjustments. It's about, “I think you should do it this way,” and, “Well, could we do it that way?”, and, “Absolutely, you could do it that way.” It's those kinds of adjustments. It's not about this being a recommendation you shouldn't get. That's why it's key that it has to address the recommendations we raised.

Andrew, you're looking at me as though you want to jump in.

[Andrew Hayes]

Yes. I'll give you an example. We had a disagreement on a recommendation in relation to the COVID benefits, and the recovery from the Canada Revenue Agency. We made a recommendation going in, knowing full well that we'd have a disagreement on it.

In other cases, maybe we were coming close to the policy line, and we could achieve the recommendation's spirit in a different way. Another example of that is the temporary foreign worker program. We wanted to make a recommendation about the quality of the living quarters, and we did, but we didn't want to trample on provincial jurisdiction, so we had to adjust our recommendation.

In the example that was given earlier regarding our fighter jets, that's an example of where we're coming close to the policy line. Looking at that recommendation at this point in time, and our audit objective at the time, which was about supporting the ability to meet NORAD and NATO obligations at the same time, we focused the recommendation on the personnel.