Public Accounts Committee on March 30th, 2010

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Fine. Thank you very kindly.

Perhaps this question is for Mr. Ross or Lieutenant-General Leslie. Would it be a fair assumption to say that certainly in your careers you've never faced such a serious deadline or demand for a major equipment acquisition?

[LGen A. Leslie]

No, sir. I've been running the army for four years, and this is my 30th year of service. I have never seen the intensity and the urgency of the operational requirements; neither have I ever seen a better response.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Just so that we get bang for our buck, perhaps DND could give us some indication here. This is a significant amount of equipment involving a large capital expenditure, and it is primarily used in Afghanistan. At some point we will be leaving Afghanistan—in 2011. Is there flexibility in this equipment to serve other demands and aid in other projects and areas, or is it specific to Afghanistan?

[Robert Fonberg]

That's a great question. Thank you for it.

Mr. Chairman, it's obviously a capability question. As to what the Canadian Forces need going forward into the kinds of theatres they expect the government might want to have them deploy to, I'll turn it back to my colleagues, to the general and the ADM Materiel.

I believe the plan will ultimately be to divest ourselves of the RG-31, but that all other fleets will become critical elements of the capabilities the Canadian Forces have.

General Leslie or Dan may want to make a comment on that.

[LGen A. Leslie]

Sir, I'll start, if I may, concerning the operational requirements.

You're absolutely correct that a lot of this equipment was introduced to Afghanistan, but in the context of a larger vision for the Canadian Forces, as outlined in the Canada First defence strategy. Training, people, and equipment capability give the Government of Canada choices on how they wish to employ us. We all recognize that domestic operations,

is our top responsibility, in ensuring that Canada-first defence strategy.

Expeditionary ventures imply a certain degree of protection. Loosely they're categorized as either light, medium, or heavy. The majority of the Canadian army's equipment—and we're currently running 8,000 or 9,000 vehicles, just to put it in context—is medium to light. We need some heavier assets to give our soldiers a higher chance of survival under extreme conditions and we need some lighter equipment to do missions such as we conducted in Haiti. The majority of our equipment fleets are in the medium range because you can go slightly higher into the heavy and slightly lower into the light.

This equipment lasts 25 to 30 years from the moment of acquisition, unless the enemy destroys it. If you look out over the sweep of potential mission areas—and I wouldn't presume to even guess where we'll be 15 years from now—an investment in this capability, which has been made and is being made, will afford choices over the next 25 to 30 years, i.e., the normal lifespan of ground-based equipment.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

I have one other question. Lessons learned are important for all of us, and time is money. In this particular case, the achievements and the entire process are nothing short of magnificent, for everybody involved. Our hats are off to everybody who pulled such a load.

But are there lessons to be learned as well here for regular appropriations? The reason I ask is that we see that some of our appropriations are five-year, seven-year, or ten-year processes. By the time we eventually end up with a product, there is almost a next-generation need, and that's time involved and money.

Can we take some of the lessons learned here, where we have recognized a need for speed, and potentially build some of it into our normal purchasing apparatus or process so that we can save both time and energy, and not only that, but be more efficient and effective on the ground, in the air, on the sea, or wherever?

Could I have your thoughts on that—anybody?

[Robert Fonberg]

That's a great question. Thank you, Mr. Chairman.

François, do you want to...?

[François Guimont]

Thank you, Rob.

Mr. Chairman, I touched on this at the beginning. Before I get into the specifics of the lessons learned out of this audit, because there are a number, let me say that the department is in continuous improvement on procurements. We don't start and end. Every time we do a procurement and we find a nugget that allows us to go more quickly and be more effective, with value for the taxpayer, being open, fair, and transparent, we will use it. We have governance in place; we have a unit that deals with procurement renewal. I want to say that at the outset; I think it's quite important.

The other point I would make is more specifically on what we have seen. I spoke of the authorities at the beginning. These projects benefited from a special approach, if you wish, vis-à-vis Treasury Board approval. That's the front end: after you have your specifications and you know what you want to do, you're going to have to get the authorities.

Instead of going about it sequentially, which is getting the project approved and then the contract authority approved afterwards, we did it jointly with DND and sought both approvals. The board was supportive of this, which is rather unique. Frankly, this is months of time saved.

So combined authority to start with is one thing.

The second thing is that we used a mix of instruments and we phased them. Instruments means procurement tools, and they fall into two baskets. The first basket is defining the need and seeing what is available out there; the second basket is about the competition per se.

Concerning the first basket, we talk of tools such as a letter of interest, whereby we get a feel for what's out there vis-à-vis the requirements of DND. DND at the time is not necessarily set in concrete; they want to have an interaction with companies to see whether what they are being told will meet their requirements, and vice versa. So we use a letter of interest.

We can then move to an actual solicitation of interest and qualification, an SOIQ, which is an actual screening whereby we shortlist a number of companies.

We have also in these procurements, at least in one case, carried out a so-called phased approach to the RFP, the request for proposals. Instead of posting the RFP only at one time, we started to introduce the RFP over a two-week period, with interactions with the companies and questions and answers.

There were some issues with that. There were some issues, obviously, because companies are often used to getting, after an SOIQ or a letter of interest, the RFP through our MERX system. In such cases, the package is static, although there can be interaction afterwards. We were fleshing out or detailing the RFP more precisely, from a first step to a last step. But that phased approach is a lesson learned as well.

I'll make two more points quickly.

I spoke of integrated teams. My folks who are dealing with DND are not in our building; they are co-located with DND. This is unique. We have the right number of people with the right skill set and the right mindset. An integrated team is something that is unique and works extremely well.

The last point I would make is about technology. On a couple of procurements we carried out so-called site visits—which are announced, if you will, through our procurement process—of the industry that has said it has the capability to meet the requirements. What we see is also very often fed back to the people completing the first phase of the RFP, if we have taken a phased approach.

Technology, then, in the context of BlackBerrys and things of that nature, allows for input. Instead of being sequentially done—which is to go on site, come back, debrief, write up, modify—it was done instantly. So the away team provided input to the home team, and modifications would be made in real time.

All these things packaged together created the shorter timelines that we've seen in the procurement of these goods.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Kramp.

Merci beaucoup, monsieur Guimont.

Monsieur Dion, vous aurez sept minutes.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

Thank you, Mr. Chair.

While reiterating my admiration for what men and women in uniform are doing in Afghanistan, I note that we have four cases done by the audit that we need to look at. The deputy minister said they have been successfully delivered, and I want to thank you for the clarification you have given in the case of VBL and SAT, about the fact that the cost doubled and that it was not necessarily the option that should have been considered.

I would like to speak about the delay.

Equipment needed to be operational and on the ground by February 2008, but the process was not completed in 2009. Could you remind me when the vehicles were operational and on the ground?

[Dan Ross]

There were 18 vehicles in October 2009.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

Eighteen vehicles in October.

[Dan Ross]

It was in October 2009.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

What about the rest?

[Dan Ross]

They were in Canada and were being used for troop training.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

Because you realized, as time went on, that more training than anticipated was required.

[Dan Ross]

Not really...

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

That is what the report states. The importance of training had been underestimated. So vehicles had to remain in Canada. Therefore there were fewer vehicles in Afghanistan.

[Dan Ross]

That is normally the case, as Lieutenant-General Leslie commented. For the armoured heavy logistics vehicle and the Nyala, where we bought approximately 100 in the one case and 75 in the other, we needed virtually all of them in Afghanistan. The Auditor General is quite correct. In hindsight, we need to program our projects for larger quantities for the training.

For the LAV-RWS, they required those 18 in theatre. They have them there, and have had them there since October. The 15 are available for training in Canada.

Andrew, do you want to talk to training quantities?

[LGen A. Leslie]

I agree 100 p. 100 with regard to the fact that we underestimated the number of LAV-RWS needed for training. In fact, interaction between the soldiers and the turret was complicated because the soldiers were below the armoured level and the turret operated night and day. I am responsible for that underestimation.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

It was postponed even further.

[LGen A. Leslie]

That is correct.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

My question is probably for the deputy minister, but perhaps for you as well. When will you cease to consider an operation that has taken nearly two years to be a success, when this is an area where rapid action is essential? This is why the Auditor General referred to these four cases, which were urgent. In one of the four cases, there was nearly a two-year delay.

I understand that there are all kinds of difficulties and unexpected events, but when will you say that two years is too long for this to be considered a success?

[Robert Fonberg]

All I would say, Mr. Chairman, is that procuring this type of equipment for this type of a situation always has very significant inherent risks as to what is actually available at what time, the kinds of bets people need to make, and the kinds of judgment they need to bring to it.

We made a bet that these vehicles would be available before they obviously were ultimately available. Does it mean that because they were two years late it wasn't a success? We missed our timelines, and I think a lot of people would obviously have liked to have made the timelines. But the military made the adjustments it needed to make sure its soldiers were actually protected in the field. The vehicles are now there, so I would consider that to have been a successful overall procurement.

Did we miss by two years? We missed by two years. Were we happy about that? Absolutely not. Would I actually consider the overall project to have been a success? I would turn to the army for their view on whether the capabilities are actually working and how they managed that two-year space when the vehicles weren't there. But overall, that would be my view.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

I would like to come back to the Leopard 2s. I will first speak to the Auditor General, because I would like to know if I have understood correctly. I find this situation troubling.

The department purchased the Leopard 2s even if at some point it realized that it would not be easy to equip them with a mining plow and a bulldozer blade. That is the first element, if I understand correctly.

You also told us that the Leopard 2s are more or less unusable, and that the Leopard 1s are being retained even if they are inadequate.

Finally, you are telling us that, in order to rectify this problem—which has yet to be corrected, if I understand correctly—more sophisticated Leopard 2s will be purchased, at a cost of $376 million, but this is still in the project phase.

These are the three things I read in the report, but perhaps I have misunderstood.