Public Accounts Committee on June 6th, 2024

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair, and I want to thank the minister for being present with us today on what is a really important issue.

Several audits have now come forward to the public accounts committee, not just on ArriveCAN but also more recently on the McKinsey study. They looked at the very large issue of contracting and subcontracting, this shadow network of consultants who are like bugs to a rotting meal in so many ways. They're in this environment, continuously seeking contracts from the government, and at many times even creating massive networks that become layers of subcontractors, layers and layers and layers. Multiple reports, including the ArriveCAN study presented by the Auditor General, suggest that this network has largely been able to take advantage of the PSPC rules. In some instances—there were many cases, actually—non-competitive contracts were awarded.

In your ministry, there have been instances of non-competitive contracts being issued for very large sums. Why would your ministry look at non-competitive contracts in any case?

[Bill Blair, Liberal, Scarborough Southwest, ON]

There are some limited circumstances—and, as I said, 95% of all of the contracts we sign at DND are done through a competitive process—given the nature of, frankly, the work we do at the Department of National Defence, in which occasionally we have very limited options and there is some urgency to signing contracts. At the same time, that does not abrogate the responsibility for following the rules and being open and transparent. There are some very limited circumstances in which a non-competitive process is the appropriate way to get done what is required.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

I appreciate that, but you'd also have to accept that same truth as being a truth of having to accept the inherent risk of doing a non-competitive contract. Is that correct?

[Bill Blair, Liberal, Scarborough Southwest, ON]

There is inherent risk, but I think risk has to be managed, and it has to be managed through rigorous adherence to the policies and processes that are put in place.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

That brings me to my next question. If, in fact, there is risk present, what internal checks and balances, especially with regard to the ArriveCAN situation, does your ministry undertake, if any?

[Bill Blair, Liberal, Scarborough Southwest, ON]

If I may, I think I've actually spent some time going over some of the things we do and some of the things we put in place. I may, because I have an incredibly experienced chairman, perhaps turn to Troy.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Sure, please do.

Maybe, actually, before you answer, Mr. Crosby, you could also answer one more question, because I know you've been here before on some of this.

The Auditor General's report suggests that some of these contracts—I hope you can comment on this—were also susceptible to security breaches. Are you aware of the Auditor General's report with regard to security breaches, and has the ministry done any work to review any potential security breaches pertaining to any contracts, including competitive ones?

[Troy Crosby]

I have two answers for the committee on work that's been done most recently, and these are coming out of reviews by the Office of the Procurement Ombudsman, by our internal review services, and most recently by the Auditor General. We're working to strengthen our contract compliance framework.

To begin with, the best way to mitigate risk here is to plan well in advance and to ensure that we have the time to put the right processes and procedures in place, so there's a planning element to this.

Then there's sampling to make sure we're looking across the contracting that we're doing. The Department of National Defence, in any given fiscal year, issues in the order of 145,000 contracts, so there's a sampling approach to doing this. We have a way of looking at higher-risk contracts to ensure we're looking across the board, plus we do some random sampling, and then there's reporting and governance on the performance against those reviews, so that we're continuously learning.

We're strengthening that contract compliance framework and building out the team now, so that we can ensure, in light of what we've learned, that we're going to incorporate those lessons into our policies, our procedures and our training.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

What about, in addition to those enhancements, having a more strenuous and better internal check on these contracts? At any point in the discussions you've had—and this is particularly to Minister Blair—with cabinet officials or other members, have you actually looked at hiring more public servants?

We've seen in the Auditor General's report on ArriveCAN that there's a savings of six to one, that in some instances there were contracts given to private firms when that work could have been done by the public service. That probably hurts a lot of folks in our public service, who know they have the skills and who want to do the work, but it takes the Auditor General to confirm that truth.

To that point, will you confirm or commit to the fact that public servants should be doing the work and that you should just reduce the expenditure on private contracting?

I'll make one last point before you respond. Your former deputy minister, Bill Matthews, was here, and National Defence spent a whopping $5.1 billion in contracting last year. That was more than double what you paid the public service.

What explanations do you have for Canadians who are concerned about their security and who are concerned about work by the public service and savings for taxpayers?

[Bill Blair, Liberal, Scarborough Southwest, ON]

I think they're important questions. I've already acknowledged.... I think we have an extraordinary professional public service, and I very much value their work—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Why not give them the work?

[Bill Blair, Liberal, Scarborough Southwest, ON]

—and, if I may, some of the professional contracts that Mr. Matthews shared with this committee or a committee previously are for services: for example, the maintenance of certain vehicles or ships or planes. The public service does not have the capability—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Why not?

[Bill Blair, Liberal, Scarborough Southwest, ON]

Again, I think it's appropriate to find the best way, the most cost-effective way, of getting the job done, and there are—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Again, this is not the most cost-effective way, Mr. Blair. With all due respect, it's costing twice the cost of the public service.

[Bill Blair, Liberal, Scarborough Southwest, ON]

Again, the public service may not have the capability, and I suppose we could—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

You're talking about repairing vehicles. I think they can.

[The Chair, Conservative, John Williamson]

Gentlemen, that is the time.

I'm going to move on and begin the second round.

Mr. Brock, you have the floor for five minutes.

[Larry Brock, Conservative, Brantford—Brant, ON]

Minister Blair, welcome.

Minister, do you know how much the Department of National Defence spent on management consulting contracts last year?

[Bill Blair, Liberal, Scarborough Southwest, ON]

I don't have that number available to me, but I've got some pretty good people who may have that information.

Go ahead, Troy.

[Troy Crosby]

Approximately $73 million.

[Larry Brock, Conservative, Brantford—Brant, ON]

That's correct. It's exactly $73 million.

We asked your department to furnish us with details, and that's the response we got.

Seventy-three million dollars, when men and women of our services are couch surfing and lining up at food banks. Money's not spent on boots and money's not spent on equipment.... There is indeed a morale crisis with our service personnel.

To make matters worse, we learned that Canada, at any given point in time, has enough ammunition to last about three days.

Does that concern you, Minister?

[Bill Blair, Liberal, Scarborough Southwest, ON]

Yes, of course, and as a matter of fact—

[Larry Brock, Conservative, Brantford—Brant, ON]

It should.

[Bill Blair, Liberal, Scarborough Southwest, ON]

I would refer you to the new defence policy update, “Our North, Strong and Free”, which I just released, in which we actually articulated those concerns and the investments that we needed to make.

By the way, the money to do that, to invest in, for example, ammunition production, and to provide the money for long-term contracts is in that document, but it's also in the 2024 budget, so.... I share your concern—