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Evidence of meeting #42 for Public Accounts in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cost.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Kevin Page  Parliamentary Budget Officer, Library of Parliament
Sahir Khan  Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Peter Weltman  Senior Director, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Michelle d'Auray  Secretary of the Treasury Board of Canada, Treasury Board Secretariat
Robert Fonberg  Deputy Minister, Department of National Defence
Dan Ross  Assistant Deputy Minister, Materiel, Department of National Defence
François Guimont  Deputy Minister, Deputy Receiver General for Canada, Department of Public Works and Government Services
André Deschamps  Commander, Royal Canadian Air Force, Department of National Defence
Simon Kennedy  Senior Associate Deputy Minister, Department of Industry
Kevin Lindsey  Assistant Deputy Minister, Chief Financial Officer, Finance and Corporate Services, Department of National Defence
Tom Ring  Assistant Deputy Minister, Acquisitions Branch, Department of Public Works and Government Services

9:35 a.m.

Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament

Sahir Khan

Actually, sir, from LRIP one to five.... First of all, there are two issues here. There are actually published figures and they're contracted. The issue is those are actually a price, not a cost—

9:35 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

Excuse me. There is one figure that has been agreed by the joint program office. Do you know what it is?

9:35 a.m.

Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament

Sahir Khan

The LRIP 5.... Which LRIP batch?

9:35 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

For the low-rate, initial production period, per-aircraft cost.

9:35 a.m.

Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament

Sahir Khan

Forgive me. It's just that we're unsure which batch you're referring to, sir.

9:35 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

The initial production period batch.

9:35 a.m.

Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament

Sahir Khan

Sir, there are multiple batches within the LRIPs. Currently we're at—

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

You give me all the ones you know and we'll see whether you actually know what the LRIP is.

9:40 a.m.

NDP

The Chair NDP David Christopherson

Order.

9:40 a.m.

Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament

Sahir Khan

We have a chart, sir. I just want to know which batch.

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

I have—

May 3rd, 2012 / 9:40 a.m.

Peter Weltman Senior Director, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament

May I respond quickly?

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

Please.

9:40 a.m.

Senior Director, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament

Peter Weltman

There are six LRIP batches in the process right now. Two of them have been negotiated, and the other four are under negotiation and they're cost plus. They're in the SAR. We'd probably have to get back to you on the cost. They are available.

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

You'd have to get back to me, all right.

The cost is $100 million, the LRIP cost. Why was the figure that you've used as a fundamental parameter for your estimate over $40 million more than this?

9:40 a.m.

Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament

Sahir Khan

Sir, actually the LRIPs, for each batch, have a specific price attached to them. There have been cost overruns. In some cases those have been borne by the defence department, and in some cases they've been shared.

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

Could you give me a clear justification for a discrepancy of over $40 million per unit cost between your assumption and the LRIP, which is well known to all of the partners in this project?

9:40 a.m.

Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament

Sahir Khan

Sir, in some cases some of the LRIP batches actually exceed $200 million per aircraft, so we thought it would be unfair simply to compare the early rate production.

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

Excuse me, Mr. Khan, but I think you will have to agree with me, when you consult your figures, that none of the LRIP batches reach a number anything close to that high. That is for—

9:40 a.m.

NDP

The Chair NDP David Christopherson

On a point of order, Mr. McKay.

9:40 a.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

If Mr. Alexander is working from some figures, it would probably be helpful if he tabled the figures with the committee so that the PBO can actually respond in a fulsome fashion.

9:40 a.m.

NDP

The Chair NDP David Christopherson

Thank you. That's not a point of order, Mr. McKay.

I would appreciate it if colleagues would use points of order only when there is really something out of order, as opposed to trying to find an opportunity to make a statement you otherwise couldn't, not that you have done exactly that, but that has happened and I want to stop it right now.

I am also reinstating the time that Mr. Alexander lost due to a point of order that wasn't a point of order.

Mr. Alexander, you have the floor. Please continue.

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

Thank you, Chair. I'm very grateful for that.

My next question is for Mr. Page.

You are the Parliamentary Budget Officer of the Parliament of Canada. You know full well that the Department of National Defence, under Liberal governments and Conservative governments, has, as a standard for aircraft acquisitions, used a 20-year life cycle framework. You chose to use a 30-year timeframe, which has been used by the Department of Defense of the United States. Why?

9:40 a.m.

Parliamentary Budget Officer, Library of Parliament

Kevin Page

Sir, I see actually no logic, as a budget officer, to use 20 years when we know that the real life cycle is going to be probably 30 years, potentially more.

9:40 a.m.

Conservative

Chris Alexander Conservative Ajax—Pickering, ON

Which country is buying the aircraft?