Public Accounts Committee on Nov. 19th, 2020

[The Chair, Conservative, Kelly Block]

We will now move to our five-minute round, starting with Mr. Lawrence.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I just want to start off by saying that one of the great honours of being the representative for Northumberland—Peterborough South is that I get to sit, in some cases, shoulder to shoulder—in this case, camera to camera—with some very esteemed individuals.

I'd like to start by thanking all of you for your service. I absolutely believe that we have the best, most well-trained, most well-prepared, hardest working, most dedicated service people in the entire world, here in Canada.

I'd like to move on. I also would like to say—particularly you, Ms. Thomas—your openness, your willingness to share with the committee is greatly appreciated. Knowing that we have such great service people, what roadblocks do you face? What's stopping us from ramping things up and, as has been pointed out by a number of folks, getting from 2028 to 2024?

Is there financial support to redirect? Are there roadblocks? Is there legislation? If we could get unanimous consent in the House to say, “Hey, let's do what Ms. Thomas says. We need to get this fixed immediately,” what advice would you give to us?

[Jody Thomas]

I'm going to ask Troy Crosby to weigh in on this question. At this point, while I want everything done more quickly so that we can provide the Armed Forces with what they need, and so that the department can fulfill its mandate to support the Canadian Armed Forces, what I'm very concerned about is making sure that we do it correctly, which doesn't mean that we should not be looking at ways to ensure that we can maybe advance milestones and do better than the milestones we've laid out. At this point in time, the complexity of the project ahead means that we need to understand it before I commit to anything.

Mr. Crosby, would you like to add anything?

[Troy Crosby]

I have to completely agree with the deputy. The thing that we most need right now is to focus on a very disciplined execution of the plan that we put in front of ourselves. We're absolutely seized with getting this done. Everyone is focused on supporting the Canadian Armed Forces, particularly when they're in operations but in training as well. We're all completely seized with that objective, and what we need is to be able to deliver methodically over time and build on our successes, test ourselves, check our assumptions and make sure that we're moving forward so that we deliver a long-term workable solution and we can measure our progress along the way. We'll focus on the high priority areas again such as deployed operations, and over time we'll deliver a very fulsome solution.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much. Once again, I appreciate those answers. I guess the one bit of advice I would share with you is to please feel free to ask for more. We want to make sure that you are taken care of.

I do have to say that I think my colleague Mr. Green's questions were passionately delivered and certainly coming from the right place in that we want to get Canadians the vaccine. On the same question of what resources we can get you—and I realize that if the plan comes tomorrow, if it comes in 60 days or if it comes in 90 days, the military will be there and be ready—what else could we do? What else could this government do? What else could Parliament do to make sure that you're in the best possible position to help deliver that vaccine?

[Jody Thomas]

We need to work with the Public Health Agency and our colleagues around town to look at what the delivery mechanisms required for each of the various vaccines will be. That's working with the health experts, it's working with contracting experts in PSPC and it's working with our colleagues in the Canadian Armed Forces to understand the modalities of transportation, storage and distribution and accounting for it.

There's a significant amount of work to be done, which doesn't mean we won't be ready when that vaccine needs to be picked up somewhere, and it doesn't mean necessarily that the Canadian Armed Forces would be picking it up, but maybe we will be. What we have to do is understand what the supplier of the vaccine requires for transportation and distribution, and then we'll be able to work backwards from that.

Major-General Cadieu, do you have anything to add?

[MGen T. J. Cadieu]

As has already been alluded to, the prospect of moving a COVID-19 vaccine across the country is a tremendous undertaking. It will require close collaboration, of course, at the federal level but also with all of our provinces and territories that are going to have to mobilize support. This will be a public and private endeavour. In essence it will be a whole-of-nation support, so we continue to backstop the Public Health Agency as it assesses what's going to be required for the distribution of this vaccine.

[The Chair, Conservative, Kelly Block]

Thank you very much.

I will now move to Mr. Longfield for five minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Madam Chair.

Thank you to all of the witnesses. It's always great to see Ms. Hogan. It's the third time this week. What are you doing tomorrow?

As Mr. Lawrence said, at these committees we have the opportunity to talk to phenomenal people with great expertise, so we really appreciate this.

In my previous lives, I managed warehouses for hydraulic equipment distribution across Canada starting in Winnipeg, and then I had a warehouse in Mississauga. Eventually I took on a managing director role down in Welland, Ontario. We converted to SAP. That was an interesting memory for me, because SAP does have logistical software that's very powerful, but it needs to be fed properly.

My question is more along the lines of the inventory management theory that might be employed. We sent our staff down to Texas A&M, the army/navy university in Texas, where they learned ABC management. The top 80% of your volume comes from 20% of your line items, and you manage your stock out quantities accordingly.

One piece that always entered in was that, at some point, you have to invest in your inventory. You have to move things from your balance sheet, from your cash into stock. Over the years, when going to zero quantity on hand, quite often there's a culture of, “We don't have the money so we'll wait until we're out of stock before we reorder.”

Is this any part of the audit in terms of the culture of having enough resource to order the stock that you need to have, rather than letting it get to zero, and the inventory management systems?

There are maybe several layers to that question. First of all, in terms of our audit, I see in sections 3.11 and 3.12, it's talking about systems in general, but did we look at the underlying systems that we employ that we then feed software?

Ms. Hogan.

[Karen Hogan]

It's my understanding that we did not look at all the underlying systems. We did look at the supply chain from the time a request is entered until its delivery point.

Over the years, through the public accounts audit, we do look at the challenges that the department has had in properly tracking the quantities and values of inventory, which is part of what you're talking about. Then it feeds into the supply chain and the logistics of moving things through the supply chain.

[Lloyd Longfield, Liberal, Guelph, ON]

Right. Thank you.

My assumptions may not apply here, Ms. Thomas, but in terms of operations, you have procurement, warehousing and operations going on. Is there a resource component that needs to be addressed in terms of restocking the armed forces?

[Jody Thomas]

I would be incorrect if I said that there was not a resource implication, because that will happen at the local level. Somebody will make a local decision to let something go to zero. That doesn't mean that it was an incorrect decision, and I'm certainly not casting aspersions on those decisions, but if we have a national view, we have a better chance of managing and ensuring that there are no zero stock situations.

I'll ask Troy to jump in, as he manages the national inventory.

[Troy Crosby]

There are two opportunities here. One, to build on the answer that was just provided there, is that in certain cases there are deliberate choices made to leave stock levels at zero because the materiel can be acquired fairly rapidly at a local level and it's not worth storing. In other cases, there may be material that has shelf life, and we make decisions about just how much to stock so that we don't have materiel expiring.

The other element that I just thought I'd build on from the question is something that we haven't spoken about yet, and that is ensuring that below the bar codes the materiel identification information for every one of those half-billion items is correct. Without that, we won't know whether or not things are about to expire or whether or not they have a shelf life. That materiel information layer is yet another major part of our action plan to move forward and improve the system.

[Lloyd Longfield, Liberal, Guelph, ON]

In terms of the distribution system review, is the authority to be able to make purchasing decisions, based on the requirements that are sent into the system, an issue?

[Troy Crosby]

The positioning is part of our action plan, of knowing where we're storing our equipment and whether we have it in the right numbers and the right places. I think the Auditor General's report has highlighted the importance of that, of making sure that we're resilient and responsive in our supply. That's a business choice that will have to be made and then will factor into the overall choices on the way forward.

[The Chair, Conservative, Kelly Block]

Thank you very much. We now need to move on to our third round of questioning, which is back to a six-minute round.

We will be starting with Mr. Bezan.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Thank you, Madam Chair.

Briefly, I want to go back again to the distribution of COVID vaccines, as we've already heard about in testimony. I suspect that maybe Ms. Thomas or Major-General Cadieu would be able to confirm this or give this some context.

I suspect that one of the major roles that the Canadian Armed Forces is going to play in this is distribution to rural and remote communities where commercial options are not viable. If that is the case, do we have the ability to handle the vaccine, especially the Pfizer product at -75° C, and to actually put that onto Hercs or Globemaster planes and into our trucks to get it distributed across the country, especially to first nations and rural and remote communities?

[Jody Thomas]

It is anticipated that the armed forces could well—and it has not been decided yet, but could well—be used for remote and rural communities. Certainly, transporting into the Arctic, for example, is something that the armed forces is very acquainted with doing and expert at. Do we have the capacity right now? No. Can we procure it? Yes.

There's a lot of work that needs to be done on the idea of moving a vaccine that requires that kind of temperature management, from the idea of it to the execution of it, including testing of airplanes—all that safety aspect of this. What we are doing is working through all of the options. There will be no stone left unturned, no aspect of this that the planners do not look at with the Public Health Agency.

Whether it is an armed forces transportation method or just an armed forces contribution to the planning, it will be very thorough, and we will ensure that rural and remote communities have the same access to the vaccine as the more populous areas of Canada.

General Cadieu.

[MGen T. J. Cadieu]

Throughout the duration of the Canadian Armed Forces and Department of National Defence contributions to the COVID-19 response, we have maintained the forces' posture. We are prepared to respond to Canadians in their time of need across the country, including northern and remote communities. That has not changed, and it will not change, as we continue to go through this crisis together as a nation.

The Public Health Agency continues to lead the estimate of what will be required to support the vaccine rollout logistically. We're looking forward to the out-takes of that work that we're backstopping, as well, to better understand the different roles that public and private partners may play in the distribution of that vaccine.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

I have full confidence that the Canadian Armed Forces can get into those remote communities.

The bottleneck in all of this is going to be the equipment, and having to keep these vaccines at set temperatures. I'm glad to hear, Ms. Thomas, that you're looking at procurement possibilities, and getting those in place as quickly as possible.

I want to switch back to the AG report. We talk about how the supply has impacted some operations. Ms. Thomas has said that it didn't impact our forward deployed troops in international operations. Is it then disproportionately impacting training exercises, or is this lack of supply just impacting the day-to-day operation of our bases?

[Jody Thomas]

General Cadieu can speak to that, having run operations domestically and overseas.

We prioritize overseas operations where troops are deployed. When there are supply chain problems, they tend to affect domestic operations more with warehousing capabilities in bases and wings, as opposed to a ship not being able to go to sea, because we didn't get something to it. If widget x was required in 10 days, and it arrived in 15 days, it doesn't mean an operation, an exercise, a deployment, or the operation of that base was affected.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Have we had any exercises actually cancelled because of lack of supplies?

[Jody Thomas]

I'll ask General Cadieu. Not that I am aware of, but that doesn't necessarily mean it hasn't happened.

[MGen T. J. Cadieu]

Our deputy minister summarized it perfectly in terms of support to Canadian Armed Forces operations. We always privilege getting the materiel to the men and women who are deployed abroad in support of Canadians. We do that by ensuring we have robust operational stocks. If we require priority movement requests, we privilege them for deployed operations.

To answer your specific question, we need to move materiel to our training exercises as well, because that is where we train troops to deploy into the crucible of operations. Generally speaking, we have tremendous success doing that. We do not cancel exercises because of a lack of materiel. That has never been my experience. What we might have to do, from time to time, is find the innovative solutions to continue on with our mission. Frankly, part of our training is to be resilient and deploy operations.

[The Chair, Conservative, Kelly Block]

I will now move to Mr. Fergus, for six minutes.