Evidence of meeting #95 for National Defence in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was work.
A recording is available from Parliament.
Liberal
The Chair Liberal John McKay
It's quarter after five. We're obviously 45 minutes late. We have another vote in the House at, I think, around six o'clock. The bells are going to start ringing 15 or 20 minutes from now—something like that. I'm going to look for the committee to give me some latitude with the bells.
If we suspend at quarter to six, and go to vote and then come back, would that be acceptable to the committee? Is that a plan going forward?
Liberal
The Chair Liberal John McKay
It's been very difficult to get the witnesses here. They are now 45 minutes later than they thought they were going to be.
Ms. Lambropoulos.
Liberal
Emmanuella Lambropoulos Liberal Saint-Laurent, QC
Would it bother people to vote with the voting app in the room, so we can save time?
Liberal
The Chair Liberal John McKay
Well, I don't think this party will agree to it.
We could save time, but still....
Conservative
Liberal
The Chair Liberal John McKay
Right now, my proposal is to suspend at quarter to six. That would allow people to vote at six o'clock. The vote would take 10 to 15 minutes. At best, we get back here at 25 after six o'clock. Then we could finish as much as we could.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
Are you trying in advance to get unanimous consent to carry the meeting past the bell?
Liberal
The Chair Liberal John McKay
Well, I'd better get it in advance, because otherwise it's total chaos and we'll just....
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
No, bells happen. You ask and you get unanimous consent to continue for 15 minutes.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
Yes, go ahead and we'll cross these bridges as we go.
Liberal
The Chair Liberal John McKay
Are we fine with that? All right.
With that, I want to welcome Ms. Carr, Ms. Winger and Ms. Henshaw to the meeting.
I know we have a brilliant clerk here. I'm sure he has briefed you. I think a few of you have appeared before committees before. You know the drill. You have five minutes.
We'll start with Ms. Carr, then go to Ms. Winger after that.
Thank you.
Jennifer Carr President, The Professional Institute of the Public Service of Canada
Thank you, Mr. Chair.
Good afternoon, everybody, or good evening almost at this point.
My name is Jennifer Carr and I'm the proud president of the Professional Institute of the Public Service of Canada.
Among the 75,000 members we represent are almost 7,000 workers at the Department of National Defence.
I personally have been a proud Defence team member for almost two decades, working in an environmental engineering position and proudly contributing to the operational readiness and the safety and security of our troops.
On behalf of our members, the institute has been raising concerns about outsourcing for many years. Across the government, decades of unchecked spending on contracting out have created an army of consultants—people not hired on merit, not subject to pay restraints or hiring rules and not accountable to Canadians. They work beside our public service workforce but do not operate according to the same set of rules.
A Carleton University analysis revealed that the government spent over $22 billion on contracting out in 2021-2022. Almost a third of that was for the Department of National Defence alone. Just one company received three quarters of a billion dollars. The fourth-largest—Calian—received a quarter of a billion dollars for delivering services that our public service employees could have delivered.
What do these eye-popping figures really mean? Contracting out leads to less value for money, less accountability and the loss of invaluable skills and expertise.
Let's first talk about taxpayer money being wasted. Last year we asked the Department of National Defence how much they spent contracting out work that could be done by our members of the public service. We had asked this question many times before, but we finally got an answer. DND's chief financial officer said it was an estimated $5.1 billion last year. That's more than double what DND pays for its own public service employees.
A total of $5.1 billion dollars was spent on outsourced positions compared to $2.3 billion on in-house ones. That's grown beyond a shadow public service. We now have a giant vampire sucking billions of taxpayer dollars into the pockets of private companies.
Then there's the tremendous loss of institutional knowledge. Skills and expertise vanish from the public service, thereby increasing the ongoing reliance on contractors and impacting our operational capacity and the security of our execution.
I'd like the committee to look at the effect private contractors have on our operations, on the safety of the workers and on our national security.
As public service professionals and members of the Defence team, our members take tremendous pride in their work and in servicing the Canadian Forces. They can always be counted on to put the safety of members of the CAF first—always.
Too often when hiring, managers now prefer to hit the “easy button” and just contract out the work. In the process, diversity and inclusion rules are thrown out the window; official language requirements are disregarded, and often contracts are then given to companies staffed by former DND employees. Doing that fosters an environment in which who you know is more important than what you know.
We therefore don't bring in new talent, and we lose touch with younger professionals. We fail to renew. Retention failures lead to recruitment failures. It's like a snake eating its own tail—we have a government creating its own labour shortages.
The evidence is clear. Decades of unbridled contracting out have meant higher costs and diminished services. However, there is something that can be done. We have suggestions to turn political rhetoric into real change.
First, stop making it easier to outsource than to hire in-house. Apply diversity and inclusion rules and language requirements to contracting out, just as is done for internal hires. Reinvest in human resources. Make hiring faster and fairer and more efficient.
Second, let's get serious about retaining our staff. If we start paying public service professionals the market rate, we will improve retention and save millions on juiced-up contracts to private companies. The government is currently paying these contracted employees market rates, as well as up to 30% more for a company, but only if they don't work for the federal public service.
That has to stop. It makes no sense. If we can match market rates, we can repatriate the public service employees lost to private contractors.
Third, end the vicious cycle of the government creating its own labour shortages.
Each of you at this table will face a five-year lobbying ban when you enter public life. Why not institute similar rules for employees leaving the Department of National Defence and jumping into outsourced positions?
I know there's plenty of blame to go around for how things got this bad, but on behalf of the public service employees we represent, I urge this committee to focus on solutions. Help us take the next step down this road toward a wholesale culture change we so desperately need.
Thank you. I look forward to your questions.
June Winger National President, Union of National Defence Employees
Thank you for the opportunity to appear today. I'm June Winger. I'm the national president for the Union of National Defence Employees.
Our union represents 20,000 civilian defence workers. Our members ensure that military operations are mission-ready at all times and that military members have safe and secure places to live and work. Our members are experts who work on bases and in offices, laboratories, warehouses, airports and garages. They provide support services so that the military can continue to be agile and combat-ready.
I'm here today to discuss the problem of contracting out, because this is a significant issue that's going on in the department. Through the exposure of the ArriveCAN scandal, Canadians are now—more than ever—aware of the problem of contracting out.
What we've seen over the years is that instead of staffing, DND is relying on an extensive and growing use of external private contractors and using layers upon layers of subcontracting in order to accomplish its mandate, just like the previous speaker was saying.
Our union deals with the consequences of this every single day. We grapple with the understaffing, with the shoddy work that's being done by contractors and with health and safety risks not just to our employees but to military members. I didn't even mention the runaway costs yet. There seem to be countless serious examples that demonstrate how the contracting that's going on is not yielding good results for Canadians.
First, I'd like to take a moment to say a few words about the ongoing strike of our non-publicly funded workers that has been ongoing for 45 days as of today. Even though these members provide key support services to our military and their family members, they are managed as though they are external contractors.
We repeatedly hear that National Defence is not responsible for these workers, and yet 40% of the funding that goes to CFMWS is paid by National Defence. They keep telling us that they're not public servants, but they are public servants: They're just schedule V rather than I. When we go into negotiations, the employer keeps saying that it can't do anything without the approval of National Defence and Treasury Board. It doesn't make any sense.
In fact, when we were in bargaining, at each bargaining unit the CFMWS negotiator was telling the employees that they don't have the money to pay them properly, and the only way to get that money from National Defence is for them to go on strike, so here we are on day 45. While these members are on strike, they've been bringing in casuals: hiring people to come in and do the work while this government has anti-scab legislation in front of them, and now we know that military members are also being assigned to do the very work of these strikers. It's clear that this arrangement with CFMWS doesn't make sense and doesn't work.
It's important to remember that not only are military spouses a significant portion of these workers, but that the core aim of their work is to provide support to the military and their families, the very support that ombudsman Gregory Lick referenced to this committee just days ago: that they're needed to address the retention issues in the Canadian Armed Forces.
What's going on with CFMWS is just the tip of the iceberg. The sheer volume of contracting out that we are seeing, the unchecked contract amendments, extensions and ballooning costs, the lack of oversight and quality control and the major errors and total failures in certain contracts don't seem to indicate that contracting out is being used at all as it has been intended. In this committee, we've heard officials state that contracting out should be used only as a temporary stopgap and for surge capacity, but in reality, that's not at all how DND uses it.
National President, Union of National Defence Employees
That's okay.
I just want to bring to your attention that in October 2018 the ADM review services conducted an audit of all the facility maintenance contracts. This audit concluded that the department was not completing a value-for-money analysis on the outsourcing it was doing. The audit made key recommendations, including conducting a cost-benefit analysis and reporting on that cost and efficiency to the public service work versus outsourced work. It was clear that this was required, and yet we haven't seen it being done at all.
Liberal
The Chair Liberal John McKay
Thank you, Ms. Winger.
I don't wish to be harsh with the witnesses, especially in the circumstances where we've abused your time, but I have to hold people to the clock, unfortunately.
Ms. Kramp-Neuman, you have six minutes, please.
Conservative
Shelby Kramp-Neuman Conservative Hastings—Lennox and Addington, ON
Thank you, Chair.
Thank you to the witnesses for being here tonight, and for your patience and flexibility with the House and its schedule.
That being said, let's jump right into it. I would suggest that under the previous government, in 2007 to 2015, National Defence directly issued a total of 70 sole-sourced contracts. This government has issued 6,838. It's nearly a hundredfold increase in sole-sourced contracts awarded by DND directly.
Ms. Carr, you expressed comments about raising concerns, alarming numbers, eye-popping figures. Could you elaborate more on how this trend is concerning to you, and could you perhaps shed some light on why a government should suddenly rely so heavily on sole-sourced contracts?
President, The Professional Institute of the Public Service of Canada
I'd like to say that this problem goes back at least two decades. I started with the Department of Defence in 2006 and we have been on this issue, so this is not a partisan issue. This has become an overreliance.
What has happened is that when it becomes easier to ask a contractor to amend their contract to provide a service, it becomes the go-to. It becomes the way that people are looking to stopgap measures to get the employees they need to do the work they need, without having to go through all of the hoops.
One of the things that is important for this committee to know is that the Department of National Defence has two separate agencies. One is a government-owned contractor operator, done by Weir Canada, called the Naval Engineering Test Establishment. They also have a schedule V Crown corporation called Defence Construction Canada.
We have seen these separate agencies, arm's-length agencies, taking more and more of our jobs. Defence Construction Canada was established in 1951. It was to do defence construction only, and they have ballooned to providing environmental services. That was my job when I was at the Department of Defence.
They are doing project management now and also contract management.
When we start seeing those jobs being outsourced—and, again, it happens with all the major contracts as well—they will add somebody to do this work, and it's an amendment after amendment after amendment, ballooning the costs.
Conservative
Shelby Kramp-Neuman Conservative Hastings—Lennox and Addington, ON
Perfect.
Thank you.
Further, by far the Department of National Defence issues the most procurement contracts. Since 2016 DND has had 135,759 such contracts. The next closest, perhaps fittingly, is PSPC at 53,425.
Ms. Winger, you suggested that there are countless examples that are not yielding good results. Can you perhaps elaborate on why DND insists on spending so much on consultants, despite having so little to show for it?
National President, Union of National Defence Employees
That's an excellent question. Thank you.
It's really puzzling, isn't it? It's almost impossible to figure out why, because it defies all logic. None of us would run our households this way, and yet for some reason National Defence continues to.
A big challenge is that there is a very small amount of SWE, the salary/wage envelope, and there is a very convoluted, lengthy staffing process as well. Those two are hindrances when you have the ease of being able to have a great budget for O&M where you can just draw the money off to be able to do the contracts.
I think it's been made so easy. Like I said, we had this review services audit that says that they're supposed to provide this analysis, but it's not being done. I can just point to Shearwater. The other day they decided they were going to do some maintenance on three military hangars and they were contracting that work out. When we asked them for their analysis of the cost-value benefit, they didn't know what we were talking about.
We described a business case. They had no idea. We actually provided them with a business case, and management came back and said, that's not our job. If it's not their job, whose job is it?