Mr. Chair, members of the committee, good morning. I am Michelle d'Auray, the Secretary of the Treasury Board.
The Treasury Board and its secretariat set policies to guide departments in a wide range of management and resourcing activities, including the acquisition of assets. The Treasury Board is also the committee of cabinet which provides ministers with expenditure and contracting authority, when an acquisition process reaches that stage. As a point of information, the F-35 project has not yet reached that stage.
Our guidance on costing and the elements to be considered in estimating costs are predicated on the purpose for the costing and the decisions for which the information will be used.
For example, if an entirely new program is being considered, relevant or appropriate costs would include: personnel and benefits; accommodation; grant or contribution funds, if that is indeed the nature of the program; administration or overhead, which includes a range of activities such as communications, legal services, financial and human resources services, etc.; and any asset or materiel required to deliver the program.
For the acquisition of an asset, relevant or appropriate life-cycle costs would include the purchase price of the asset and other one-time costs directly related to its acquisition, such as the project office to manage the process. They would also include the delivery and set-up required and any consequential costs related to maintenance, replacement, refit, and repair to keep the asset operational throughout its useful life.
Where relevant to the acquisition itself, and only in those situations, personnel and training costs would also be factored. In instances where such costs are not incremental and are covered by an existing program for which the acquisition is made, they can be provided for information but are not directly related to the acquisition.
But as our policies also indicate, costs are one factor among many that are considered in any major decision. The ultimate goal is to achieve an optimal balance of overall benefits to the crown and the Canadian people in relation to the objective sought and results to be achieved.
In the context of the audit on replacing Canada's fighter jets, as the Auditor General has indicated in his report and in testimony before this committee, the nature of the multi-country development program, the assessment of the requirements for Canada's defence and security, the setting of a budget for the replacement of a fighter jet capability, and the opportunities provided for Canadian companies are all unique elements that do not easily lend themselves to the normal sequencing of an acquisition process or the usual application of our set of policies and practices. In recognizing this, and in accepting the Auditor General's recommendation, the government has given us a clear direction on the way forward.
As part of the seven-point action plan issued by the government on April 3, 2012, TBS will commission an independent review of DND's acquisition and sustainment project assumptions and potential costs for the F-35, which will be made public. Prior to project approval, TBS will also review the acquisition and sustainment costs and ensure full compliance with Treasury Board policies.
I would be pleased to answer any questions.
Thank you, Mr. Chair.