Public Accounts Committee on June 6th, 2024

[The Chair, Conservative, John Williamson]

Could those be shared with the committee?

[Stefanie Beck]

I believe they can.

[The Chair, Conservative, John Williamson]

Thank you. We'll look for those.

That's your time, Mr. Nater.

[Bill Blair, Liberal, Scarborough Southwest, ON]

If I could just make another comment, we also have responsibilities with respect to privacy interests in maintaining the confidentiality of certain measures.

[The Chair, Conservative, John Williamson]

Yes.

[Bill Blair, Liberal, Scarborough Southwest, ON]

I'm sure the HR official will advise me of that.

[The Chair, Conservative, John Williamson]

Very good.

It's now over to Ms. Yip for the last five-minute segment.

You have the floor, madam.

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

Minister Blair, it's always a pleasure to see a colleague from Scarborough.

Congratulations to Ms. Beck on your new role.

I want to clarify something from Mr. Nater regarding Mr. David Yeo's Conservative Party membership. It appears that it is an annual membership and was just renewed until May 31, 2025. It seems to me that it's still valid.

I'd like to now ask Mr. Crosby a question.

I would like to turn to the issue of contracting out work, more broadly, at DND. How many contracts does DND enter into, in an average year?

[Troy Crosby]

Thank you, Mr. Chair. I think I mentioned earlier that it's in the average of 145,000 contracts a year.

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

How many of them are the result of an open competition?

[Troy Crosby]

As the minister was saying, from a volume or numbers perspective, it's about 95% that are competitive.

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

Right, and I believe that, Minister Blair, you also mentioned that 5% were non-competitive, and it was because work needed to be done quickly. Is that right?

[Bill Blair, Liberal, Scarborough Southwest, ON]

If I may, I think there can be a number of valid reasons for pursuing a non-competitive process. Quite clearly, our strong preference is that they would be competitive processes. However, sometimes, through time constraints or because there is only one source of a particular thing that might be required, in those limited circumstances, frankly, the only practical way to acquire either the service or the materiel that we require is to pursue a sole-source contract. Again, our strong preference is to follow a competitive process.

[Troy Crosby]

If I could add, Minister, there are four exceptions documented in the government contract regulations. We adhere to those exceptions. As the minister mentioned, sometimes there's only one source of supply, oftentimes tied to the ownership of an intellectual property, that we have to respect. On other occasions, there could be an emergency requirement that played out during COVID, where urgency is absolutely top of mind. However, there are four documented government contract regulation exceptions to competition.

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

The committee was told last time that DND spends almost $5 billion every year in contracts. Can you break that down for the committee?

[Troy Crosby]

I can break it down to an extent. The categories, as I think the minister mentioned earlier, of spending that really represent the bulk of that money—the large dollar values—would be for very specialized activities. For instance, for the design of our new fleets of ships for the navy, that work is coded to “professional services” in our financial systems. Obviously, that is very different to what would be considered management consulting, where earlier we mentioned a roughly $73-million spend for activities also under “professional services” but specific to management services.

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

Given how large the numbers are here, how do you assess value for money in these contracts?

[Troy Crosby]

Value for money, on an individual, contract-by-contract basis, means the market rate that we're paying is appropriate to the goods or services that we're acquiring. For the most part, as just discussed, we ascertain that through competition and through market pressure. In other cases, we work with our colleagues in PSPC, for instance, and we can make comparisons with what other clients or customers are paying for similar services or goods when there are sole-source requirements because of, for instance, intellectual property limitations on the procurement strategy.

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

What happens if we are no longer getting value for money for these contracts? What are the next steps?

[Troy Crosby]

If, for example, the contractor isn't actually delivering the contracted service or good, the contracts will always have clauses within them where we could work either through PSPC or within our own contracting authorities to terminate the contracts.

[The Chair, Conservative, John Williamson]

That is the time, Ms. Yip.

I want to thank you, Minister Blair, and your officials for coming in from the Department of National Defence. We appreciate your time today.

I'm going to suspend this meeting for five minutes to allow the witnesses and the minister to exit, and then people can just stretch their legs, and we'll come back in five minutes. The meeting is suspended.

[The Chair, Conservative, John Williamson]

All right, I'm going to bring this meeting back into session.

Welcome back.

Mr. Green, I see you've joined us. It's nice to see you again. Thank you for being available and online.

As you all know, we've had a very eventful week, with the tabling of three new Auditor General reports. I'll turn to that in a second.

I want to update the members on this: The commissioner of the RCMP has confirmed his attendance here on June 18. That is something the members can expect. I've called this meeting to bring us up to speed.

Mr. Nater, you have the floor.

[John Nater, Conservative, Perth—Wellington, ON]

Thank you, Chair.

I am going to move a motion.

We've had some off-line discussions. I'm open to more off-line discussions, but I think we can come to an agreement.

I'm going to read the motion. It is prepared to be emailed.

[The Chair, Conservative, John Williamson]

Let me ask you this: Is it something you worked on with the clerk that can be sent out as you begin?

[John Nater, Conservative, Perth—Wellington, ON]

It can be sent as I begin speaking.

I want to speak to it after I've read out the motion, just to say a few things. Then we can go from there, Chair.