National Defence Committee on Oct. 24th, 2023

[Prof. Trevor Taylor]

Again, the situation in the U.K. is very different from that in the U.S., because the volume of law that Dr. Ross has referred to doesn't exist in the U.K. There is a lot of guidance and a little bit of law about procurement.

Processes are there for two reasons. One is to make sure you're buying just the right thing and the right priority with the money. The other is to make sure the behaviour of the parties involved isn't improper in any way. Those are risks that are well recognized, but what's less well recognized is that if you take these through sequentially, if you have a very measured system, you have other risks, which are that your equipment doesn't arrive in time or it's out of date with the things we're familiar with.

I would quickly observe that in many aspects of life, and certainly in defence acquisition, trust among the people who are doing the work—trust in their judgment and in their integrity—saves a lot of work and a lot of time, but it's a fairly scarce thing in government and something that public procurement officials are reluctant to rely on.

[Dr. Alexis Ross]

I'll speak to your point about layers and simplifying or streamlining that.

In the Department of Defense, our program managers, those who are responsible for managing the program as it goes through the process, sought in this last round of acquisition reforms to simplify the layers and to delegate some of the decision-making authority from the highest levels of the Pentagon down to the next-highest levels. Rather than having the Secretary of Defense level making decisions on certain programs, we have now delegated that decision-making authority to the secretaries of the military departments: the Army, Navy and Air Force.

We found that when the program managers had to go all the way up to the Office of the Secretary of Defense for reviews and approvals—of course, going through their respective military service department—it created an additional amount of administrative requirements, justification documents and, frankly, just time in the Pentagon, briefing senior leadership twice: at your service level—in other words, the Navy, Air Force and Army—and then again at the Secretary of Defense level.

We found that great streamlining could be accomplished, and it's currently in progress. We've had that for about six or seven years, and it certainly has decreased some of the time and burden of the process.

[The Chair, Liberal, John McKay]

Thank you, Madame Lalonde.

Madame Normandin, you have one and a half minutes.

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

Thank you, Mr. Chair.

I have a question for Professor Taylor.

In a July 2023 report, the UK describes the procurement system as having poor accountability.

In our situation, when a problem arises, the blame can fall just as much on the minister in charge of procurement as the defence minister. That makes it challenging for us to get accountability.

What hinders accountability for procurement decisions in your experience?

[Prof. Trevor Taylor]

I have a quick answer to that. You used the word “blame”. If inquiries into why things have gone wrong are looking for blame, then people of course don't speak accurately because they don't want to put in evidence that leads to it being put on them.

In the recommendation that I've made—and our minister actually took it with regard to one of our major programs that did go wrong—accountability should be asking people what they decided when and why, and seeing what grounds they had. Generally speaking, people do not go to work thinking, “I'm going to wreck this project.” In order to make things better, you have to understand why people did things, why they decided what they did and on what grounds. That means that you are not searching desperately for blame; you're searching for understanding. If you do look for blame, you will not get good understanding.

That doesn't apply if you have a corruption issue. I'm just talking about the regular processes that we've been discussing so far.

[The Chair, Liberal, John McKay]

Thank you, Madame Normandin.

Mr. Angus, you have a minute and a half.

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

Thank you, Chair.

Procurement is a funny thing. The public always gets told that the lowest bid on a ship is going to be the best thing ever, and then, of course, everybody knows the price is going to go through the roof.

We have the Canadian surface combatants project, which was originally tagged at $60 billion and is now coming in at $84 billion. Who knows where it ends up? For me as a legislator, that extra $24 billion would hire a lot of nurses, fix a lot of my roads and make sure that some of my northern indigenous communities aren't living in third-world conditions.

Professor Taylor, you talk about spiral acquisition. Is this just part of the game of procurement or is there a way we can actually put the real cost in, so that we know what we're dealing with when we go back to our citizens and tell them why they're buying these very expensive projects?

[Prof. Trevor Taylor]

Every project is different and has particular characteristics. I think you acquired your ship by a competitive process and that may have been vulnerable. It's also a slow process. I don't know how the requirements have changed since the commitment to a contract was made.

My view is that in this day and age, we have to have a more co-operative view about trying to calculate what the cost is likely to be.

If you want further complication—which you may not like—most platforms cost much more to run in service over their life than they do to buy in the first place. In a way, in looking at the acquisition costs, you're focusing on something that is relatively unimportant. The thing that is really going to take your dollars is looking after it once it's in service. That gets less attention because it's more difficult to pin down.

[The Chair, Liberal, John McKay]

Unfortunately, I have to leave it there.

I'm sorry to keep running this hard clock on you, but it's just what it is.

Mrs. Gallant, you have four minutes.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

I'm going to ask both questions in one shot and they can split the time.

Dr. Ross, do you know if any of your colleagues have completed any reports on the status of the army, navy or air force with respect to the Canadian Armed Forces and if we should be expecting any of those reports?

Professor Taylor, would you compare and contrast the U.K.'s acquisition of the Upholder/Victoria-class submarines to Canada's acquisition process for those very same vessels? Hopefully we'll be in the market for some more submarines and we don't want to be using that same process this time around.

[Dr. Alexis Ross]

I'll start.

No, I am not aware of any army, navy or air force reports related to the Canadian Armed Forces or acquisition.

[Prof. Trevor Taylor]

The Upholder procurement process actually predates my awareness of the situation.

I can tell you how we are looking at procurement for submarines. We have two things about procuring submarines. One is that we left a big gap between procuring the last of our nuclear bomber fleet and the attack submarines. The result is that it cost us a fortune. We really learned.... Employment at the yard went from 17,000 to 3,000 and when we tried to start building Astute submarines, we found there were lots of difficulties because of skill shortages.

The second thing is that when we look to the current generation of submarines that we're building, which is the new Dreadnought class of nuclear weapon submarines, we're doing that from the beginning with an alliance between the one company that can build them and the government, the navy and the procurement authorities. It's called the submarine delivery alliance and they are working together. They have a generous budget, you might say. It's a significant sum of money. They report annually on the progress being made.

It's another of these areas where we know we can't have a competition for who can build a nuclear submarine, so what we can do is get the.... The parties know the importance of it, even down to the workforce.

That's how we're doing submarines currently.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

What has the U.K. done to speed up its procurement process? How have you overcome the inertia of making change, essentially?

[Prof. Trevor Taylor]

The quick thing is that when there's a crisis, we do very well, because we cut out a lot of the process. Because the risks of being late are greater than the risks of perhaps a bad choice or a priority that shouldn't quite be a priority, those processes are shortened. We have an urgent operational requirement process that enables people to avoid competitions—not always, but sometimes—or, if there is a competition, it's on a very basic level.

The U.K. record on doing urgent operational requirements, and that includes getting things to Ukraine, is pretty good. The issues arise when we think about the army needing a new reconnaissance vehicle or something like that, which does take forever and is a real mess.

[The Chair, Liberal, John McKay]

Thank you—not that we know anything about messes around here.

Mr. Collins gets to ask the question he never asked before.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

That's great. Thanks, Mr. Chair.

Mr. Taylor, let me start with you. We're certainly interested in scaling back the number of barnacles on the bottom of the ship here in terms of the internal policies and controls that we look at. Most of the study recommendations that have come through have talked about the policies that drive procurement here with our level of government.

You emphasized in your opening the need for closer dialogue between industry and government. What role does industry play with procurement reform?

[Prof. Trevor Taylor]

With procurement reform, it's not massive, but I think there is a decently close government contact group with the major companies and major suppliers. They articulate and spell out—not that the government always takes notice—some of the costs and risks of the processes that the MOD uses. There is a dialogue. If you look at British policy statements, and I can let you have some of them, you will see that the government recognizes that it needs to have a better partnering relationship with industry and not an adversarial relationship.

I hesitate to go over time, so I won't say more than that. It is strongly recognized in government. It's not always practised, but it's recognized at the government level.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks.

Ms. Ross, you mentioned cost, schedule and performance. How can the private sector help us with that?

[Dr. Alexis Ross]

I think a close relationship with the defence department and its industrial base is critical for keeping the cost, schedule and performance in the right balance. Much of that has to happen early on, in the early phases of a program. When you're designing requirements, you need to feel comfortable and adequately utilize the insights that come from industry in telling you what is possible, perhaps helping you think about the weapons system in a way that you might not have, helping you know a little bit more about the requirement, and informing what technological capabilities could address the capability gap you're seeking.

I think that constant communication is critically important. A lot of our rules and processes preclude that, in some cases, to avoid issues or situations where—I'm trying to think of non-U.S. jargon—you could have competition issues that would incite protests by losing bidders in contracts. We have to strike a balance.

Those rules often make the workforce very risk-averse and hesitant to communicate at all. It takes leadership, people who are in senior positions, encouraging them and really covering and having their backs to do so, so that they feel comfortable engaging in the appropriate ways with industry to inform both the requirements and the program.

[The Chair, Liberal, John McKay]

Thank you, Mr. Collins.

On behalf of the committee, I want to thank both of you for your testimony. Particularly, I want to thank Professor Taylor, who is five hours ahead of us.

I should imagine that your next stop is bed.

[An hon. member]

Fish and chips at the pub.

[The Chair, Liberal, John McKay]

Oh, maybe it's the pub. I don't really know. Maybe you can have a conversation about duelling barnacles.

Again, thank you. I'll leave it to you to sign off.

Colleagues, I want to remind you that the deadline for witness submissions for the rising domestic operational deployment meeting is tomorrow, if you want to put in more witnesses. On Thursday, it's the PBO. Our esteemed clerk either has sent you a calendar or is about to send you a calendar, which should occupy the rest of 2023.

With that, the meeting is adjourned.