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Evidence of meeting #45 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 office.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Michael Ferguson  Auditor General of Canada, Office of the Auditor General of Canada
Jerome Berthelette  Assistant Auditor General, Office of the Auditor General of Canada
Lyn Sachs  Assistant Auditor General, Office of the Auditor General of Canada
Alex Smith  Committee Researcher

9:30 a.m.

Conservative

Joyce Bateman Conservative Winnipeg South Centre, MB

So the essence of it will be--

9:30 a.m.

NDP

The Chair NDP David Christopherson

I don't know about the essence, but the actual wording will be.

9:30 a.m.

Conservative

Joyce Bateman Conservative Winnipeg South Centre, MB

The actual wording will be captured. That's great.

Okay. So now, in terms of the government's response, sir, can you confirm for us...? I mean, you're the Auditor General of this country. Are you satisfied with the government's response?

9:30 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

The recommendation we made was presented to the department. The department's response to our recommendation was that they agreed, and they will continue to refine their life-cycle cost estimates and make them available to the public. In terms of our recommendation, that was what the department's response was.

Within the confines of the audit, we made a recommendation, and we got a response. The response was that they agreed and that they would do what we asked. We were satisfied with the department's response to that.

In terms of what the government has done since and what it has announced, again, that's not something I can comment on.

9:30 a.m.

Conservative

Joyce Bateman Conservative Winnipeg South Centre, MB

I appreciate that you haven't audited the seven-point plan, sir, but as we go forward, we've recently had a rather successful procurement policy. We want to learn from what we're doing. We're here to serve taxpayers with the best possible value. Could you just speak briefly to the secretariat framework and the fact that it's going to address your recommendations?

9:30 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

The only specific recommendation we made was on the costing information, and that was agreed to by the department. The actual mechanism by which they do that really wasn't something that was concerning to us. It was just the fact that they would make the information public.

9:30 a.m.

Conservative

Joyce Bateman Conservative Winnipeg South Centre, MB

I sure hope that at some point it does concern you, because it would be incredibly valuable for us to get your perspective on this seven-point plan.

I just want to move into one other part right now. A few of my colleagues have already spoken to the industrial benefits that accrue to many Canadian companies. I believe that more than 60 have already benefited from preparatory work. I believe that it's a $425 million amount that has resulted already in concrete contracts. How are you examining this in your work?

I come from Winnipeg. This matters to the aerospace industry in Winnipeg, and this is a very important part of our economy.

9:30 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

Really, in terms of the industrial benefits, what we looked at was the information being brought forward to decision-makers. We identified that there were a number of estimates in terms of the industrial benefits. They didn't always include the range of what industrial benefits could be expected.

Also, we identified that we were concerned that they included in the amount of potential industrial benefits an amount for potential contracts that would be available to industry in all partner countries. We felt that this wasn't well explained to the decision-makers. That was really, I believe, the main focus of what we looked at in terms of industrial benefits. It was the information brought forward about what to expect in industrial benefits.

9:35 a.m.

Conservative

Joyce Bateman Conservative Winnipeg South Centre, MB

So the—

9:35 a.m.

NDP

The Chair NDP David Christopherson

Sorry, ma'am. You're right on the head. Thank you very much.

9:35 a.m.

Conservative

Joyce Bateman Conservative Winnipeg South Centre, MB

Thank you very much.

9:35 a.m.

NDP

The Chair NDP David Christopherson

Moving on now to Madame Blanchette-Lamothe, you have the floor, ma'am.

May 15th, 2012 / 9:35 a.m.

NDP

Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC

Thank you. I will be sharing my time with my colleague, Mr. Allen.

Mr. Ferguson, I have two questions for you.

In your report, it says that National Defence likely underestimated the full life-cycle costs of the F-35. What is at issue is a $25-billion cost that was originally established in 2008. However, when he appeared before this committee, Mr. Fonberg said, and I quote:

Mr. Chairman, we actually tried to clarify with the Auditor General his comments about $25 billion in 2008-09. We never had such an estimate. So you'd have to speak to him about where that estimate actually came from.

I would like to hear your comments on this. Does Mr. Fonberg deny having estimates that he actually had?

9:35 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

We didn't do any of our own estimates or analysis. All the numbers included in the chapter are numbers we got from National Defence.

9:35 a.m.

NDP

Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC

Thank you. I think it is clear.

In addition, an article was published yesterday talking about the various options that were available to us in addition to the F-35. The government is constantly telling us that all options will be studied to ensure that the best solution is the one that is proposed for replacing the CF-18. In your audit, did you have documents or other evidence that could confirm for us that other options actually were studied and that Canada's needs, that is, for taking part in wartime or peacekeeping missions, were clearly identified? Do we know whether other options were seriously identified? Do we know the bases on which the needs were identified?

9:35 a.m.

Jerome Berthelette Assistant Auditor General, Office of the Auditor General of Canada

Mr. Chair, I'll try to give a high-level explanation in response to the member's question.

National Defence has conducted a number of options analyses related to the next-generation fighter jet project and the decision as to whether to go ahead with the joint strike fighter. They assessed the jet against four other options early in the process, back around 2005. They assessed the F-35 and two other options around the time they were coming to make the decision in 2008, I believe. They used high-level mandatory capabilities to assess jets around the second options analysis, which was around 2008. They then set about establishing the statement of operational requirements, which should have been the basis upon which the final decision was made.

So yes, National Defence did consider other options. Yes, there was a basis for how they considered those other options.

9:35 a.m.

NDP

Malcolm Allen NDP Welland, ON

Thank you.

It's interesting, Mr. Ferguson, in reply to my colleague's comment about where you got the $25 billion from, I appreciate the clarification they were DND's numbers. Mr. Fonberg either doesn't remember the DND numbers or didn't understand the question, because he clearly thought you were wrong. But clearly you're standing by the facts in your report. Is that correct? Is that what I'm hearing, sir?

9:35 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

As I said in my opening statement, we absolutely stand by the facts in our report, and the facts were cleared and agreed to by the departments involved.

9:35 a.m.

NDP

Malcolm Allen NDP Welland, ON

I need Mr. Fonberg to come back and reply to why he told me that he didn't know what the $25 billion was. I'll leave that for another day.

When we get to the defined options analysis phase, we seem to have discrepancies about where it's at. I think in your report, sir, you indicate in your timeline that by 2010 we were at what is referred to as the defined options phase. Is that correct?

9:40 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

That's correct.

9:40 a.m.

NDP

Malcolm Allen NDP Welland, ON

I notice in the DND letter to Mr. Berthelette of February 7 that they also say the same thing, but under testimony here Mr. Ross actually said that they were now at the “options analysis” phase.

Can you help me understand why you believe they're at the defined stage? They believed in their letter to Mr. Berthelette that they were at the defined stage. Yet on May 1 Mr. Ross came here and said no, we're at the “options analysis stage”--and they actually changed a document that they put out last year, citing a typo error, changing it from “defined” to “options analysis”?

9:40 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

That's really not something I can respond to. I think that's a question you would have to ask of them.

9:40 a.m.

NDP

Malcolm Allen NDP Welland, ON

So it would be fair to say, Mr. Ferguson—

9:40 a.m.

NDP

The Chair NDP David Christopherson

Sorry, Mr. Allen—

9:40 a.m.

NDP

Malcolm Allen NDP Welland, ON

—that maybe we should ask them—