Thank you, Mr. Chair.
Good afternoon members of the committee.
As the chair already mentioned, my name is Claude Lajeunesse and I am the chairman of the board of Atomic Energy of Canada Limited, or AECL. Here with me this afternoon is Richard Sexton, president and CEO of AECL.
I would first like to thank Mr. MacLellan for presenting the findings of the Office of the Auditor General's special audit.
I won't repeat what has been mentioned by Mr. MacLellan. However, I do want to provide you with a brief overview of our organization, our views on the report, and the actions we have undertaken to address its recommendations. Please allow me, however, to state up front that we have already addressed the recommendations made by the OAG. Of course, I will discuss these in more detail in a few minutes.
First, let me say a few words about AECL. Atomic Energy of Canada is a crown corporation. Our mandate is to enable nuclear science and technology, and to manage the Government of Canada's radioactive waste and decommissioning responsibilities.
Most of our sites are in Ontario, Quebec, and Manitoba. Our largest site is the Chalk River Laboratories, located about two hours west of Ottawa. The Chalk River Laboratories is Canada's largest science and technology complex. The site has operated since the 1940s, and is the birthplace of significant advancements in nuclear technology. For example, the laboratories developed Canada's own CANDU reactor technology, which has been deployed in many countries around the world: Argentina, Romania, South Korea, and China.
For decades, the laboratories developed and produced life-saving medical isotopes to the benefit of over a billion people. Molybdenum-99, which was produced at Chalk River, served in the treatment for and diagnosis of multiple types of cancers, as well as the diagnosis of cardiac and other illnesses.
We continue to have an important mandate in nuclear science and technology, most notably in managing a program, the federal nuclear science and technology work plan, which serves the needs of 13 different federal departments and agencies in the areas of health, safety, security, energy, and the environment.
An important part of our work is to take care of our radioactive waste in a manner that protects the environment and brings value to taxpayers. We have a responsibility to tackle these challenges now, so as not to leave it to future generations. Most importantly, finding solutions for radioactive waste disposal enables us to protect the environment and reduces risks in the long-term. This involves the decommissioning of old buildings, remediation of contaminated land, and building long-term management and disposal facilities for our radioactive waste in a manner, once more, that protects the environment, the workers involved, as well as the public.
Furthermore, we have been assigned the responsibility for managing the Government of Canada's responsibilities for historic, low-level radioactive waste, where the government has accepted the responsibility for such remediation. This includes the very important $1.2-billion project to clean up historic waste in the municipalities of Port Hope and Clarington in Ontario.
Beginning in 2009, the government undertook a major restructuring of our organization.
First, the assets of our CANDU reactor division, the division which was responsible for the development and sale of the reactors, were sold to CANDU Énergie Inc. a subsidiary of SNC-Lavalin.
Secondly, a governance model called “government-owned, contractor-operated” or 'GOCO'—was put in place in 2015 for the management of the rest of our operations, i.e. our nuclear laboratories and decommissioning sites.
Under this model, a private company—in this case Canadian Nuclear Laboratories, or CNL—is responsible for operating our sites. AECL continues to own the sites but they are managed and operated by CNL. AECL's role is to identify priorities for CNL and assess their performance according to the terms of our contact with them. We have a team of experts in nuclear science and technology and decommissioning and waste management who oversee CNL activities, approve their annual plans and if necessary, challenge what is proposed. Our goal is to protect the interests of the Government of Canada, the interests of the public, the environment and taxpayers.
Given that this model was put in place only about one year before the special examination was conducted, the AECL board and management team welcomed very much the OAG's special examination. We viewed the examination as an important exercise that could identify areas for organizational improvement and set the stage for the continued implementation of the then relatively new GOCO, government-owned, contractor-operated, model.
In terms of the findings of the special examination and the report issued by the OAG, let me make a few comments on these findings and on how they have been addressed.
First, let me highlight that the OAC concluded that AECL overall has good corporate management practices and good contract management practices in place.
Second, with regard to deficiencies, a significant deficiency was noted in board renewal, which the OAG acknowledged is outside the control of AECL and its board.
Third, the OAG noted areas that met their examination criteria, but in respect of which there were opportunities for improvement.
In terms of our response, we agreed with all of their recommendations and quickly undertook the steps necessary to address them. Specifically, management developed an action plan, which was approved by our board, and which was posted publicly and is available on our website. I understand that you have been provided with a copy of that action plan.
These actions include implementing formal processes for the board's review of the organization's risk register; the organization of public meetings; the development of a comprehensive performance measurement framework; a review of our approach to compensation; and the implementation of a formal training program for our contract management staff. All of these actions were completed within five months of the report being issued.
With respect to the one significant deficiency that was outside of our control, I am pleased to report that actions have been taken by the government to address the appointments on the board. In February 2017, after the period of the examination, the Governor in Council appointed Richard Sexton as president and CEO on an interim basis, meaning in this case, for a term of one year or until a new president and CEO was appointed. This year, in February, the Governor in Council appointed a president and CEO for a two-year term and selected Richard Sexton.
Furthermore, in June 2017, the Governor in Council appointed the chair of the board, along with four members of the board—two men and two women—consisting of three new members and one interim appointee becoming a permanent appointee.
I am very pleased that two of the four new members of the board of directors are women.
I will reiterate in closing that AECL recognizes the areas for improvement noted by the OAG and that management has already taken action to address them. We welcome this expertise. We welcome the exercise as a means to continue to progress in the implementation of this new governance model. Opportunities for improvement are acknowledged and appreciated.
We would be very pleased to answer questions that you might have.