Public Accounts Committee on Dec. 7th, 2010

[Robert Fonberg]

Let me start. I'm not sure which bar the member would like to speak to. No laws were broken. No Treasury Board authorities were broken. We have a project approval guide. Did we follow it exactly to the letter of our guide? No. We've explained the reasons for that, and we're going to kind of fix the guide. So I'm not exactly sure what the precise issue is. Nothing bad happened. We have paid a lot of money for helicopters. We're getting the helicopters within their approved funding limits. They're going to be world-class helicopters. They're going to last for 40 years.

So when we are accused of breaking rules and not following rules, I think there should be a degree of clarity about what those rules are and exactly how serious those rules were, Mr. Chairman.

[The Chair, Liberal, Joe Volpe]

Thank you, Mr. Fonberg.

Mr. Harris.

[Jack Harris, NDP, St. John's East, NL]

I have a question for Ms. Fraser, following up on the response, regarding this issue of choice and whether aircraft other than the Chinook were looked at. Was that something you looked at in your audit? You did go back to 2005. Did you look at that process of examining other aircraft?

I'm bending over backwards to understand the position of the department as much as I can. Is it acceptable, from a government management point of view, to decide that this is the platform that is going to meet our needs, but it really does require modifications to do exactly what we want? Is there anything particularly wrong with that?

I do know it took from 2005 to 2009 for them to decide exactly what they wanted. Is it unreasonable to say, looking at all these, that this one looks about the best, but to make it exactly the best for us we need all these things to happen? Is there anything fundamentally wrong with that?

[Sheila Fraser]

We're not questioning the choice of the supplier or the type of helicopter that was chosen. We basically have two issues.

One is, as we note in paragraph 6.79, Public Works officials told us they used a market analysis done by Defence, and we found that it wasn't sufficient to justify this. We wanted to see better justification of why that particular supplier was selected.

The other issue we have is with the projects. It was known that there would have to be modifications to these helicopters, and the risk rating that was given was “low to medium”. We believe it should have been rated “high”. The decision-makers should have known that there would be risks on cost and on delay, because of the modifications that had to be made.

So it was really about the risk assessment, how it was documented, and how it was presented to decision-makers.

[Jack Harris, NDP, St. John's East, NL]

It should have been retendered then in 2009.

[Sheila Fraser]

Well, not necessarily. If there had been an adequate justification showing that this supplier was really the only one that could meet all of the requirements, and if that supplier had actually been rated against all of those requirements, we would have been satisfied.

But the problem was that they went out with an ACAN, there was another supplier that indicated interest and was eliminated, and then over a three-year period the requirements changed quite significantly. I think this calls into question the whole process that's used to do these kinds of acquisitions.

[The Chair, Liberal, Joe Volpe]

Mr. Fonberg, I sense a certain amount of frustration on your part, and I wanted to give you the opportunity to go ahead and express yourself on behalf of the department and everyone else. The issue is not so much whether you did things that were incorrect or illegal; it's that the starting point was the lowest-cost-compliant for what we were going to buy, and it turned out to be the best-value package as we went down the road. I think that's what the report of the Auditor General said. So I can appreciate your frustration.

You can appreciate the frustration of members of Parliament who get a call from a constituent who says, “Look, if you want to buy five bushels of apples, you don't go and get a seedling, plant it, and wait five years for the tree to tell you you're getting Macintosh instead of Golden Delicious.” That's how the public is seeing this. I think we all want to make sure we do the right thing.

So how is it that we get into a situation where our military says we're doing quite well without this Canadianized version in a theatre of war, but we have to wait for a Canadianized version for domestic purposes? I want to give you an opportunity to address that. All those who are watching want to know so they can understand whether their money is being used judiciously.

[Robert Fonberg]

Well, I kind of like Golden Delicious myself, Mr. Chairman.

There were probably three questions in there. As for my frustration, as the report says, this is an extremely complex set of processes, costing billions of dollars, that take place over many years.

If I had asked you to tell me, in 2000, what kinds of cellphone requirements you would have, you probably would have bought a big cellphone that would have cost you a whole lot of money. But technology changed pretty dramatically and allowed for the requirements to be delivered in a different way.

I'll turn to my colleagues with respect to the timeline, but it actually takes a little bit of time to explain 10 years' worth of process—how things change and what we had to do in the way of approval processes, whether formal, legal, or driven by Treasury Board. We can explain all of that. Does it lend itself to a 30-second answer? No, but we are here to try to explain that to members.

We have ultimately the same interest as the committee in making sure that Canadians understand that they are getting value for money from efficient and effective acquisitions and processes.

I don't know if my colleagues would like to expand on that.

[The Chair, Liberal, Joe Volpe]

Mr. Fonberg, everybody in Canada wants to make sure that our troops get safe and valuable equipment, and our military today has told us that they've done quite well with off-the-shelf items, rather than Canadianized items. So constituents are saying, “Well, if you don't need them in the theatre of war, why are we spending so much money for Canadianized equipment at home?”

[Robert Fonberg]

The chief of air staff will actually talk to what's on the Chinooks in theatre.

[LGen André Deschamps]

I think we have to be careful that we don't generalize what we did in Afghanistan. Much of the kit we bought was specifically for that theatre, for that geography, and for that climate.

What we're buying is something that serves us everywhere, especially in Canada. I think we just have to be careful we don't generalize.

The Manley panel made very specific recommendations for the things we needed to do now in Afghanistan, and this is what the government reacted to. Thanks to our allies, we were able to respond and deploy assets that were suitable for Afghanistan.

The Chinook Delta would not be suitable for Canadian operations in the high north. It's not built that way. It doesn't have the inherent capabilities to operate in the very rough domestic environment for us in Canada. The Chinook Foxtrot that we're buying will have that capability.

So I want to be careful that we don't generalize.

[The Chair, Liberal, Joe Volpe]

With all due respect, you've already said that. I've accepted that and I appreciate it--except that you don't have that equipment operating in Canada today. So the question always is, if you don't have the need in Canada today, but you're able to lease, purchase, or borrow for a specific theatre of war operations, why are we going through this process? Why go lowest-cost-compliant as a point of departure when we are looking for a best-value package?

[LGen André Deschamps]

Well, sir, I can't answer to how the procurement strategy has evolved. All I can tell you is that the notion of being able to lease or borrow at the right time is fraught with danger. We were very fortunate in Afghanistan. We had a very reliable partner that helped us to ensure we got what we needed to do our mission in Afghanistan. In fact, they took it out of their hide. The U.S. army basically took a helicopter they were flying and said, “Here, we will give you these helicopters at a very reasonable price so you can meet your mission objectives.” Is that going to happen the next time we need helicopters? I can't say that, Mr. Chair.

We just have to be careful we don't build our national security on other people's good intentions. We have a great ally to the south of us, but we have other missions we have to be able to do autonomously. I think that's what we reflected in our future requirements, and this is what we're trying to deliver through CFDS.

[The Chair, Liberal, Joe Volpe]

I don't see any further questions.

I want to thank all of our witnesses for the opportunity to hear their explanation regarding the report tabled by the Auditor General. I want to thank the Office of the Auditor General. Some of the questions have been tough, as they have been tough for some other officials around the table. We look forward to getting some written responses from Treasury Board. I think there was one that was associated with DND. If you can get that to us in a timely fashion, we'd appreciate it as well.

I'm sure that Madam Fraser and her office will be following this very closely. We intend to cooperate as much as we can because I think we all have shared interests.

Thank you very much, lady and gentlemen.

The meeting is adjourned.