Public Accounts Committee on May 25th, 2021

[Andy Smith]

The three medium icebreakers were the subject of a multi-year process where we started out doing an industry pulsing to see what was available on the market. The world market for used icebreakers is very small. Canada was fortunate to acquire the three medium icebreakers from a company in Sweden through Chantier Davie, which was the exclusive Canadian broker for that company.

The first two of those medium icebreakers are in service today. With regard to the third light icebreaker, we are just in the final stages of completing a request for proposals. It's envisioned that we'll acquire that ship this fall, and it will be in service at some time in 2022.

[Len Webber, Conservative, Calgary Confederation, AB]

Mr. Smith, what was the cost of these icebreakers?

[Andy Smith]

With regard to the cost of the three medium icebreakers, I can get you the exact figure, but it was in the neighbourhood of $680 million.

[Len Webber, Conservative, Calgary Confederation, AB]

As a comparison between that and a polar icebreaker, what is the cost of a polar icebreaker?

[Andy Smith]

That's a good question.

First of all, they are both icebreakers, so that's the apples to apples comparison, but they're really very different ships. A medium icebreaker is in the range of 6,000 tonnes. A polar icebreaker is a 24,000-tonne ship, so it is a significantly larger ship, with heavier steel, given the higher icebreaking requirements of the ship.

The budget for the polar icebreaker remains under review and will be made public once we get further into the design process. However, it is also a little speculative to try to compare the cost of a used icebreaker to the construction of a new polar icebreaker of a completely different size.

[Len Webber, Conservative, Calgary Confederation, AB]

Great. Thank you for that, Mr. Smith.

Madam Chair, I have 10 seconds, so I'll pass it on to you.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Webber.

We will now go on to our last questioner for five minutes.

Mr. Van Bynen.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you, Madam Chair.

Thank you to our witnesses today.

It's great to be able to join this committee once again this morning.

I have a few questions for Mr. Matthews. There has been some concern presented in this report regarding the tools that were available to the PSPC procurement and project management teams. I think it's fair to say that these tools were limited in their scope and their effectiveness.

The Auditor General also acknowledged that key decisions were made to address risks in meeting the goals of the NSS, in some cases including reassigning the timelines for achieving these goals, but to the betterment of the overall project.

My first question is this: What decisions were made?

[Bill Matthews]

Colleagues from the Office of the Auditor General, if you want to add on to this, please do.

I have a couple of examples. First, measures to extend the lives of current vessels obviously have to be an important measure here. The other would be to add additional Arctic and offshore patrol ships to the Irving shipyards—AOPSs number seven and number eight, which will eventually go to the Canadian Coast Guard. That helps to reduce the production gap and also will result in the Canadian Coast Guard's getting ships earlier than necessary.

You can point to the west coast—Vancouver Shipyards—and see the reordering of ships in terms of the reordering of the joint support ships being brought up to number two in that case. You can also see the adding of the multi-purpose vessels to the Vancouver Shipyards workbook—17 of those, if I recall correctly. That is to better align with the requirements of the Canadian Coast Guard.

Those are a few examples of what we've done from a program management perspective that show how it all fits together.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

How much time was required to come to these conclusions?

[Bill Matthews]

They evolved. They weren't necessarily one complete package. Some were individual measures, and some were part of a broader group. Going from memory here, I would say there were discussions over about a year, on and off, with the shipyards to talk about a schedule and mitigation measures. It may even have been 15 months, but it was a long-term discussion.

My colleague Jody has been around longer than I have. If you have a different recollection, Jody, please correct them.

[Jody Thomas]

Thank you, Madam Chair. I think he just said I was older than him.

The program has been evolving over the 10-year period. The individual decisions have all taken between a year and 18 months for us to come to a determination and get approval to proceed. Nothing has been done quickly, but it has been as our relationship has evolved with the yards that our understanding of schedule has evolved; our understanding of the needs of the Royal Canadian Navy and the Coast Guard has evolved, and we have come to these conclusions and recommendations.

[Bill Matthews]

Madam Chair, I should have mentioned also that the most recent, newest addition of the third yard would be another measure in terms of how the program has evolved to better mitigate risk.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

How has this experience helped PSPC to avoid facing similar challenges when undertaking similar massive projects like this?

[Bill Matthews]

The toolset we will have in place from a risk management perspective, new software and the earned value management approach in dealing with the yards are some tools that we can likely use on other large projects of this scale as well. We'll look to leverage those investments as we can.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

This question is for the AG.

You note in your report that the timelines at the outset of the replacement processes may have been unrealistic, and it suggests that timelines proposed or called for by the previous government of the time and these schedules developed may have been, shall we say, ambitious. In your review of large procurements from the same time period, in your experience, what was a common element? That is to say, were timelines developed for these large projects often overly ambitious?

[Casey Thomas]

I would have to say that I don't recall doing any similar work, Madam Chair, in relation to timelines on other large projects. Unfortunately, I don't have a lot to add relating to this.

Mr. Swales, you can probably nod if you have something to add related to this question.

[Nicholas Swales]

Thank you, Madam Chair.

The only thing I would add is that shipbuilding is quite different from other types of procurement, so we need to be cautious in running those kinds of comparisons of time frames across different types of equipment, if I can put it that way.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Van Bynen.

Thank you to our witnesses for joining us today. It's been a great meeting with lots of great questions asked.

Colleagues, I would like to remind you that on Wednesday I will be chairing the Auditor General's lock-up for reports that will be tabled in the House after the lock-up. You will all have received an invitation to the meeting, and I would encourage you all to attend. Finally, Thursday's meeting will be concerning report 1, “Procuring Complex Information Technology Solutions”.

Is the committee in agreement to adjourn the meeting?

Thank you.

We are adjourned.