Evidence of meeting #35 for Public Accounts in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was inventory.
A video is available from Parliament.
Deputy Minister, Department of National Defence
It was part of the original plan, as I recall.
NDP
David Christopherson NDP Hamilton Centre, ON
Then explain to me why the time changed in such a short period of time? It's three years. That's not that long. Why did it change?
Deputy Minister, Department of National Defence
I can't answer that for you, but I'm happy to get you—
NDP
David Christopherson NDP Hamilton Centre, ON
Sorry, sir. That's not good enough. We've dealt with this before. I've been around a long time.
NDP
David Christopherson NDP Hamilton Centre, ON
We've dealt with this before. Bringing in a new deputy who says, “I wasn't there, so I'm not responsible”—that's not going to cut it, sir.
NDP
David Christopherson NDP Hamilton Centre, ON
The ministry gave this committee, the premier oversight committee of Parliament, a chart of how they were going to do things and when they were going to do it.
When we asked for a follow-up chart, three years or four years later, it was different. You're not giving me an answer as to why it was different.
Deputy Minister, Department of National Defence
I am responsible for it, even though it was my predecessor. I wasn't here at the time. I take that responsibility seriously.
I'm the deputy now, and it is my responsibility and it's my accountability. If you would like an explanation on any matter of where we are now versus where we said we were in 2012, I'll be happy to get back to the committee—
NDP
Deputy Minister, Department of National Defence
I would be happy to provide that back to the committee on every item we had in the 2012 plan—
NDP
David Christopherson NDP Hamilton Centre, ON
Start talking to me now. We'll get a detailed report from you and haul you back again if we need to, but tell me now. Give me some obvious reasons to show you weren't playing us for fools.
Conservative
The Chair Conservative Kevin Sorenson
As much as I'm interested in your answer, we're a minute over.
Conservative
The Chair Conservative Kevin Sorenson
I can't keep doing that.
We'll now move back to Mr. Chen, please. You have seven minutes.
Liberal
Shaun Chen Liberal Scarborough North, ON
Thank you very much.
I'm relatively new to Parliament, to this committee, but I am quite shocked at what I am reading and what I am seeing in this report. This is like walking onto a field of land mines. Like the subject at hand, we have no idea where they are lodged, how many there are, whether they are obsolete or not, or active.
I want to thank our guests for being here, first of all. In terms of the various strategic initiatives and projects that are articulated here by the department, I'd like to get a better sense of the cohesiveness. On the one hand, you've got, for example, the automatic identification technology initiative, which I understand is for looking at the department's inventory. You've articulated that it's quite challenging.
You've got 640 million different items, 445,000 different stock codes. Within all this inventory, there is everything from bullets to boots to jumpsuits to jet fuels, and you've mentioned today that there are 5,000 different types of ammunition, for example.
On the one hand, you're trying to get a handle on what the inventory is, how old it is, and whether it's priced properly, and on the other hand, you've got another initiative that appears to be simultaneously happening, the inventory management modernization and rationalization project. That, based on your report that I read, looks to dispose of items that are no longer needed.
Can you explain to me how you simultaneously do not have an understanding of what you have and then at the same time are able to start disposing of items? How does that connect?
Assistant Deputy Minister, Materiel, Department of National Defence
Thank you very much for the question.
What we're trying to do here is to make sure we have an understanding of our inventory overall. This means the location of it, the quantity of it, the state of it, and ultimately the price of it from a valuation perspective. The latter is key to the public accounts and also key in the context of replacement inventory. The first three are particularly important in the context of military operations: the inventory we have, how much, and where it's located.
All of these activities we've talked about in total are bent to come together and to rationalize the entire inventory. There are different activities because there are different aspects to it, including how we do stock-taking and where our stock is. As we do stock-taking, we go back into the hundreds of warehouses we have. We literally have inventory all over the country and around the world. Every ship at sea has inventory in it, and it gets drawn locally. A technician goes into the bowels of the ship, draws inventory, and months later comes back alongside and puts in a request to replenish things.
What we're trying to do is rationalize what we have. As we go through it, we take stock of it and we identify things. In some cases, we have inventory that has sat on the shelf for 50 years unopened. Do we still need it? Is it a propeller for a ship that's 30 years old? I hope to never use the propeller, but if we have a ship run aground, we have to have access to it to use it. For us, inventory is quite different from what it is in the private sector.
All of these activities include finding out what we have: the stock-taking, the disposal of it, the making sure that we're changing our processes so we're not over-buying inventory. That's the accountability that the deputy talked about. We are raising this up so that our level ones—the commanders of the army, navy, air force—understand that this is part of their key accountability. All of these activities are subsets of a plan that we are doing. We are operating in a cohesive fashion and trying to bring all that together under the governance so that we ultimately can come before you and say we have a handle on all of our inventory—where it is, how much of it there is, what state it's in, and what the value of it is. It's a very large undertaking, given that in some cases we're going back decades to look at the valuation of some of the inventory we hold.
Liberal
Shaun Chen Liberal Scarborough North, ON
It sounds to me like you have legacy processes right now that are looking at the inventory.
I'm trying to connect the dots here. You're looking at analyzing the options for your automatic identification technology by 2020, yet at the same time you have key milestones for disposing of 200,000 materiel items that are not needed by 2016, and another half a million items that you plan to dispose of by 2017. It seems to me that there are overlapping processes here.
Assistant Deputy Minister, Materiel, Department of National Defence
When we talk about the automated identification technology, we have some of that technology today. We have high-value items that are bar-coded. We use hand scanners. Some of our processes are dated. We're renewing all of our processes. We're doing a lot of work. We're using the technology we have. We're increasing stock-taking, which means we have people going out into the field and visiting bases, visiting warehouses, doing hand counts, using bar codes, doing those sort of things so that we can identify what to dispose of and take the necessary actions.
We also realize, however, that if we don't go further in modernizing this, the potential is going to be to come right back to this situation, so what we're looking at around the world with our NATO allies, with other allies, and with business is determining the state-of-the-art technology—radio frequency identification and things of that nature—so that we can have instantaneous knowledge of the location of a lot of our inventory, particularly the high-value items.
At the same time that we're doing the cleanup, specifically in this automated identification technology, we're looking at how we can improve our processes, how we can automate more of our inventory processes to align with best practices. This way, as we roll forward through the next decade, not only have we cleaned it all up and not only are we capable of coming to the public accounts committee and the OAG and the comptroller general and answering the questions, but we will also be able to do it in a more efficient manner.
We have a large undertaking under defence renewal. We're looking at inventory—the overbuys, the things we're trying to avoid—but we're also taking these other steps to ensure that missiles, torpedoes, and other high-end things are very closely tracked. It's really two parts: how we clean up, and how we improve our practices to manage our inventory.