National Defence Committee on Oct. 24th, 2023

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

I'd like to hear your view on what went on recently with the national monument to Canada's mission in Afghanistan. A process similar to a request for proposals was initiated, a competition. A company was awarded the contract, which was then taken away. Apparently, the department didn't make that decision; the Prime Minister's Office did.

That means that the Prime Minister could be influencing the process unbeknownst to everyone in some cases. Does that worry you?

[Alexander Jeglic]

We absolutely believe in segregation between the political arm and the procurement process. There should be no intervention from political actors whatsoever in procurement-related decisions.

Specific to the reviews we undertook, we had a case within our procurement practice review where there were issues associated with the conversion of Leopard-style vehicles into monuments. We saw that contract inappropriately awarded, because the bid was no longer valid at the time the contract was entered into. The bid validity period was 90 days, and the contract was awarded after 187 days. There was no extension of the bid validity period.

[The Chair, Liberal, John McKay]

Thank you, Madame Normandin.

Mr. Angus, you have six minutes. Welcome to the committee.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you so much, Mr. Chair. I am pleased to be here, and I'm very pleased to be able to ask some important questions.

A major European tank war wasn't on anybody's bingo card two years ago. Now we're coming into the second winter of the war in Ukraine. It has caused a massive pivot internationally for supplies, from artillery shells to winter coats, boots and hats—everything that is needed.

Has this put more pressure on your office, in terms of being able to assess fairness in procurement regarding what Canada is supplying to the Ukrainian war effort?

[Alexander Jeglic]

Specific to Ukraine, we haven't seen an inordinate jump in complaints to our office. However, during the COVID period, because of the application of the national security exception, we did see a spike in complaints to our office.

Specifically on contributions being made to Ukraine, we have not seen a noticeable spike in complaints to our office about those issues.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you very much for that.

The sexual harassment scandal certainly both rocked the Canadian public's confidence and caused a lot of trauma for the men and women serving. The Department of National Defence said at the time that they would hire a team of experts in the field of diversity, equity and inclusion, and that turned out to be McKinsey, who have their own deeply troubled past.

Many questions were raised about why they were given that position. I understand that you were tasked to look into PSPC's relationship with McKinsey. Can you tell us what you found?

[Alexander Jeglic]

I would love to be able to tell you, but unfortunately that review is not yet complete. It is scheduled to be complete in a relatively short time frame. We're anticipating it will be in early 2024.

[Charlie Angus, NDP, Timmins—James Bay, ON]

We look forward to that report.

I think the thing that concerned us as New Democrats was that in a previous annual report you identified that more than half of the competitive solicitation processes resulted in a single bidder. If we're talking about certain kinds of rockets that have to be put on ships, that may make sense, but is this across the board? If so, what does this tell us about defence procurement, specifically about what's taking place in terms of barriers to meaningful competition? What are you seeing?

[Alexander Jeglic]

That's a great question.

First, thank you for reading our annual report. I think there are some really important pieces of information in the annual report.

You cite that figure: 34% of the time when competitive processes are run, you have only one bidder. You're not benefiting at all from diverse solutions and competitive pricing, so all that energy is for naught. It really is a good question to unpack why that's happening. Some of the reasons we've heard for it are the ultimate sophistication and difficulty of gaining entry to federal procurement in general, and there are also real issues about incumbent advantage.

Here's one of the questions that are asked typically in a procurement process: Is there an incumbent currently providing the goods or services? If the answer is yes, it seems to suppress any other willing bidders to step forward. The question is, how can we dilute incumbent advantage to encourage more people to participate in these competitive processes?

[Charlie Angus, NDP, Timmins—James Bay, ON]

That's very interesting, because we have heard through this study calls for cutting red tape on defence procurement and loosening rules around sole-source contracts. For me, that's always a red flag for a boondoggle down the road.

Can you offer thoughts in terms of safeguards that you think should be in place for defence procurement and that we would need to make sure of? If we're going to cut red tape, are we going to make sure that small, medium-sized and other businesses are able to compete fairly and this isn't just going to the powerful insiders?

[Alexander Jeglic]

Absolutely. Transparency is kind of the offset to the risks you've identified.

That's where documentation matters. I answered a previous question about documentation, but it's incredibly important as you make decisions throughout the process that you document these decisions. If you make a decision that there is a rightful application of an exception to competitive procurement, in many instances that may be accurate. However, if you don't document those reasons, it's very difficult to know why a contract has been directed.

I can't underscore enough the need to document all decisions associated with procurement processes and then make transparent the outcomes. If the Canadian public no longer trusts in the federal procurement system, we all lose out. That's something that I've emphasized in our most recent annual report, which is that I do feel there is a risk as a result of a general lack of transparency.

The final thing I'll say is just on the national security exception. There are obviously inhibitors to transparency associated with the invocation, sometimes rightfully, but other times, when there's a blanket application of the national security exception, it might do more harm than good in terms of creating a belief that things aren't being done appropriately.

Transparency is the offset to some of the risks you've presented in your question.

[Charlie Angus, NDP, Timmins—James Bay, ON]

My final few seconds are on the need for you to have the power to compel documentation. You don't have that, but if you did, that would be certainly something that would aid in your work.

[Alexander Jeglic]

Absolutely.

[The Chair, Liberal, John McKay]

Thank you, Mr. Angus.

Mr. Kelly, you have five minutes.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Thank you, Chair.

Thank you for the important accountability work you do for Canadians.

You mentioned in your opening statement that you have requested sufficient budget resources to be able to continue to do proactive reviews, but you cannot. That budget request has been refused. For the record, does this mean that you do not have the resources to do proactive reviews and you can only investigate complaints?

[Alexander Jeglic]

I would say that, at this time, it's not that we don't have resources to do any systemic reviews, but we don't have the resources to do the volume of systemic reviews that we should.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Okay.

The point of systemic review or proactive review is to ensure best practice.

[Alexander Jeglic]

Absolutely.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Your office doesn't have the budget to do that now.

[Alexander Jeglic]

Absolutely.

If I may say, on your point, the reason we do knowledge pieces is to create reasonable grounds to actually do these systemic investigations. If we don't have the resources to launch knowledge pieces, we might not know where the problems lie. We're very reliant on the stakeholders who work with our office to disclose information to let us know where to go.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Thank you.

You mentioned that the departments refuse your request for information. That's troubling.

Is that during a proactive review or a complaint review?

[Alexander Jeglic]

I wouldn't use the terminology that they refuse document production, but they're unable to produce documentation in certain circumstances. In other circumstances, the documentation that's provided is not fulsome.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Okay.

I thought you said you had to go back and re-ask and re-ask.

[Alexander Jeglic]

There is that. It stemmed from the question about the establishment of the electronic database. The database was not capturing information accurately. As a result, what was scoped in were not relevant contracts for us to actually review. We would have to go back to the department and ask them to reproduce relevant documentation.

It's not a refusal to provide the documentation; it's an inability to provide accurate information.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

In the third recommendation in your report, you say, “DND should update its procurement policies and training to require all evaluators...to assess and confirm that they're not in a conflict of interest”. I would hope that this really would go without saying.

Is your office concerned that conflict of interest exists with evaluators?