Public Accounts Committee on Nov. 19th, 2020

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Thank you all for coming. I look forward to hearing your answers today.

I would like to direct my questions to Ms. Thomas and Major-General Cadieu.

In 2016, the Auditor General recommended that DND develop supply chain performance metrics and review how stock levels for materiel were established. Why hasn't that been fixed? It's now four years later.

[Jody Thomas]

I'm going to turn to assistant deputy minister of materiel, Troy Crosby, to answer that because that's more on the materiel management side of things.

The metrics in question are under development now. In 2017, we launched a 10-year program to repair, improve and modernize the supply chain, and we are three years into that program now. Some of it has to do with developing the standards and how we will measure, and some of it has to do with modernizing the system through an IT approach to things, because we do so much that is manual and we use multiple systems right now. There's no one input that says let's develop KPIs, and it is then a problem solved.

In fact, there are multiple layers to the situation, and what needs to get done is to ensure that we are providing the performance metrics, that we have reasonable standards, that we have reasonable processes and that we have an IT system to manage it.

Troy, would you like to continue?

[Troy Crosby, Assistant Deputy Minister, Materiel Group, Department of National Defence]

Thank you, Deputy.

What I'll add is that, at this point, our focus has been on stock out rates, the occasions where there is zero stock available to respond to a demand. Over time, as we bring in new technology, we have access to the information and we could really measure our performance, we're going to turn our minds more to performance metrics focused on reliability, on responsiveness of the supply chain, on optimizing where our inventory is located and on the accuracy of our stock-taking counts. All of those together will allow us to improve our performance in responding to the demands of the Canadian Armed Forces.

Thank you.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

I can see in the action plan that there is an expected completion date of December 31, 2028. It seems like a long time to be integrating your capital software project, given that the technology, as you said, needs to be improved now.

[Jody Thomas]

I'll go back to my colleagues, and ask them to expand on this, because they are leading the effort.

We're talking about 500,000 orders per year, 460 million items. There is complexity in the amount of materiel we're talking about. There is complexity in the number of locations from which it is managed. There is complexity in ensuring we have one system, from ordering to delivery, and performance metrics rather than the multiplicity of systems we use now.

We have decided to understand the problem before we rush in, and try to fix it. There have been attempts in the past, and those attempts have only looked at one or two aspects of the complexity, the range and depth of the problem. If we're going to do this, we're going to do it right. We have committed to timelines, and firm milestones on when things are going to get done, and we're happy to report back on those.

Troy, would you like to add anything else?

[Troy Crosby]

Some of the steps between now and 2028 have been mentioned. That culminates with the delivery of an enterprise-wide resource management information system that will allow us to make all that information come together and measure the performance effectively.

Between now and then, we'll grow across a number of fronts, as the deputy minister mentioned. For example, an automatic information technology program is coming to fruition. It was approved in the summer of 2019.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

I have a limited amount of time, so I want to get to my next question, which touches on what Mr. Bezan was saying with regard to the international level, taking it down to the more local level, and ensuring the military has sufficient stock to perform its operations and missions.

Given the delivery challenges, how has the COVID pandemic impacted the supply chain?

[Jody Thomas]

COVID has impacted many aspects of the work in the Department of National Defence, just as it has with every other aspect of business and life in Canada. Some of the work on this project has been slowed. However, while we sent employees home to stop the spread, we have kept people in warehouses and supply depots working—

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Sorry. This past summer members of the CAF, through Operation Laser, were helping many vulnerable communities, like long-term care homes. Did they have enough supplies? Did they receive their supplies on time?

[Jody Thomas]

They did. I'll ask Major General Cadieu to respond, as he was critical in leading Op Laser.

[MGen T. J. Cadieu]

Ultimately, this is about better supporting men and women deployed on operations. Specific to Operation Laser, both our chief of the defence staff and deputy minister issued clear direction that before any CAF personnel integrated into operations to support our most vulnerable Canadians in their time of need, they'd have the personal protective equipment required for those operations, and that happened for those personnel integrating into long-term care facilities.

[The Chair, Conservative, Kelly Block]

I will now go to Mr. Blanchette-Joncas.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Madam Chair.

First, I want to acknowledge my colleagues and the witnesses here today.

Ms. Hogan, I'm pleased to see you again. Thank you for being here.

This is a very important topic. I took the time to carefully analyze the documents.

My first question is for you, Ms. Hogan. To say the least, your report goes into great detail. It helps shed light on situations that the average person would never have been able to see. Thank you.

What do you think about National Defence's various responses to your recommendations? What's your level of confidence? Are you satisfied with the follow-up?

[Karen Hogan]

As the National Defence officials said, we received an action plan in response to the recommendations in the report. We also have an action plan, which addresses the recommendations that we noted during our financial audits of the Public Accounts of Canada.

We're satisfied with the measures implemented to address the recommendations in the report. Of course, we can't comment right now on the progress made. We audited the department's progress in relation to the action plan and the recommendations in the Public Accounts of Canada.

We conduct a follow-up each year. At this point, we're satisfied with the department's progress. The action plan is long, and it will take years to follow up on it.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you for the clarifications, Ms. Hogan.

You said that the follow-up will take a long time. I can understand that changing a supply chain, especially in the military, requires planning and time.

The action plan was developed in 2016. The deadline for the implementation of the expected corrective measures could be 2024, or even 2028. Do you find these objectives realistic, or would greater diligence be required in the months and years ahead?

[Karen Hogan]

The department would be in the best position to tell you whether the date is realistic when it comes to implementing all the improvements that National Defence must make.

We like to see progress. For several years, when we commented on the Public Accounts of Canada audits, the department didn't follow up. We were pleased when they developed a very detailed plan in 2016.

We think that it's good to make progress each year.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Ms. Hogan.

I completely agree with your views on progress. We want results. However, we must measure this progress to determine whether there are actually results.

I'll turn to the witnesses from the Department of National Defence.

Can Ms. Thomas or her colleagues tell us more about the dates for the action plan? Are they realistic? Is greater diligence required? I'm trying to understand this. In terms of changing supply chains, we certainly aren't talking about retail operations, but rather military operations.

How could we ensure that the follow-up is conducted before these dates?

[Jody Thomas]

Thank you for the question.

I am always pushing for things to be done more quickly. It is frustrating in this department how long activities and responses, remedies, solutions to issues raised by the Auditor General or our own internal audit, and our own internal process review can take.

In this particular case, because of the complexity of the system, and the moving from essentially multiple, analogue, handwritten systems and very simplistic databases to one end-to-end solution, including the transportation aspects of it, this is reasonable.

What we do commit to is reporting back to this committee on our progress. We communicate regularly with the Auditor General on our progress. Our goal is to do it more quickly. We'd like to ensure that we do it correctly.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you for the clarifications, Ms. Thomas.

In your opening remarks, you referred to the challenges associated with the current COVID-19 pandemic. We know that the audit dates back to 2017 and that there was no pandemic at that time.

How can you explain the issues identified by the Office of the Auditor General throughout the chain of command at National Defence? Could a lack of internal communication explain these gaps in the supply chain? Could other issues be involved?

[Jody Thomas]

I'll invite my two colleagues to comment, but there's a range of problems: old systems, processes we have not updated, no performance measurements, and old processes in stockrooms and storerooms, where we're not always sure what's in the facility.

The complexity of ensuring every location around the country can equip, repair and supply every piece of equipment is difficult. We've tried to do that. What we have to do now is look at automating the system. We need databases where we can find out where things are, and how quickly we can move them around the country. We need to ensure we have centres of excellence that supply certain parts of the armed forces. That is the way to go in the future.

[The Chair, Conservative, Kelly Block]

We will now move to Mr. Green.

[Matthew Green, NDP, Hamilton Centre, ON]

I want to begin by thanking my colleagues on this committee, who reached out with passwords, and with links to this meeting. I had technical difficulties, but our world-class IT staff got me back on pace.

I'm going to dive right in, and ask the question that's on the minds of perhaps the media, friends and family who are watching, and certainly my community.

The government has touted the vaccine distribution program being delivered by the military, and yet, we're hearing in this startling audit report that all processes are in storerooms and stockrooms. Action plans are leading into 2024 and 2028.

I'm going to ask a very direct question to members of the Department of National Defence. What conversations have they had on military preparedness to respond to the tens of millions of critical vaccines that are supposed to be distributed across the country to the provinces, long-term care facilities, hospitals, pharmacies, in order to combat COVID, which we are experiencing right now as the single most severe national threat to Canada?

[Jody Thomas]

Thank you, Madam Chair.

I'm happy to begin that answer, and then I'll turn to General Cadieu because he is a member of the ADM working group that is looking at vaccine distribution.

The Canadian Armed Forces will potentially be part of that solution. There are multiple vaccines being looked at, as everybody is aware, and each requires a different solution for distribution.

What is critical to understand is that vaccine would not come into the Canadian Armed Forces system. What we would use is the bar-coding technology or whatever distribution technology the owner of the vaccine uses. We would be a conduit for moving it, either from a logistics planning perspective or from a personnel perspective—actually unloading planes or potentially, our own aircraft.

That's all under review now. I have asked—

[Matthew Green, NDP, Hamilton Centre, ON]

May I interject and ask at what point this review started? How long has your department been working with the various health agencies and Public Services and Procurement on preparing for the distribution of this vaccination?

[Jody Thomas]

The Department of National Defence and the Canadian Armed Forces have been working—