Debates of May 19th, 2022

Public Works and Government Services—Main Estimates, 2022-23

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Chair, nobody is questioning the shipyard employees' work. What we are questioning is the excessive cost overruns taxpayers have to cover for projects that, to make matters worse, are often delayed.

There are delays. Here is my question. Are these delays and cost overruns due to government management, or does the problem lie with the shipyards?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, just so that we are aware, I want to point out some of the benefits that the national shipbuilding strategy and the investments that we are making are having on Canadians. First, there is the creation of jobs, which includes the creation of over 18,000 jobs per year that are created or maintained. In terms of the economic benefit, it is $1.54 billion annually to the economy.

With respect to overruns, I have already mentioned that COVID has had an impact and that does impact some of the overruns that have been faced.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Chair, Troy Crosby, the person responsible for National Defence procurement, told the committee that the ships are not being built fast enough and that they are costing more.

I want to know if the minister has sent the shipyards an official letter, directive or document of some sort expressing the Government of Canada's concerns about the delays and cost overruns. If so, when did she send it? If not, why not?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, we are constantly monitoring the progress of the shipyards. We are working very closely with the shipyards.

They are working very hard to keep their projects on budget and on time, but they have faced challenges, as I have already mentioned. We continuously monitor the situation and do whatever we can to assist to ensure that those ships are built as quickly as possible and with the amount that has been allotted.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Chair, about the construction timeline, the Parliamentary Budget Officer estimates that construction of the first polar icebreaker will begin in the 2023-24 fiscal year, and the second in the following year. The ships should be delivered in 2029-30 and 2030-31, respectively.

How can they even have a timeline when the Davie shipyard is still not an approved partner in the national shipbuilding strategy?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, again, we are working with the shipyards. I would like to point out that we have actually had five large ships delivered already.

Three of the offshore fisheries science vessels have been delivered, and two of the AOPS have been delivered. Other projects are under construction. We are going to continue to work with the shipyards, and we will ensure that we continue to monitor the situation and do what we can to support them. We know how important it is to keep these jobs here in Canada and have this production take place here in Canada.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Chair, let us talk about some of projects that are currently being delivered or have been delivered, particularly the Arctic and offshore patrol ships.

A witness who appeared before the Standing Committee on Government Operations and Estimates last week, Mr. Kendrick, said he really could not understand why the cost of the seventh and eighth ships to be delivered to the Canadian Coast Guard will exceed $1.5 billion, while Norway is building three larger, more powerful ships for a total of $700 million.

Can the minister explain that?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, I would point out that it depends on what the specs are with respect to the ships that are being built.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Chair, obviously it depends on the ships. In the case of these ships, however, we understand that the contract for the first five ships was for $400 million each, but the sixth ship is going to cost $800 million, bringing the total to $2.8 billion.

We have learned that the total bill for all the ships would be $4.3 billion. The cost per ship normally goes down, but instead it is going up. The seventh and eighth ships ordered are going to cost $1.5 billion.

After gaining experience from building the first two ships, we should be improving, not regressing. Can the minister explain why this is costing more, not less?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, we continue to monitor these ships as they are being built. The estimate for the ships that I believe the member is referring to, the two vessels, is projected to be $1.5 billion. We are going to continue to monitor the situation and ensure that the ships being built are required.

There may be instances, for certain ships being built, that the design changes, but we continue to work with the shipyard. We are also continuously monitoring the price to see if the ships are over budget. We are constantly looking at that and determining what is bringing them over budget, and we are keeping a close eye on it so we can continue to work with the shipyards and they can deliver things as quickly as possible and respond to the specs.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Chair, for some time now, the minister has been telling me that the government is monitoring the work very closely.

Why does the Parliamentary Budget Officer regularly complain in his reports that the government is so cagey that he cannot get any information? The committee is in the same boat, and the experts who came to testify told the committee members that they were not allowed to know more.

Since the minister is so well informed, why are the experts and especially the Parliamentary Budget Officer not allowed to have that information?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, we are open and transparent in the way we move forward. We have been clear about the benefits with respect to the shipyards and what they produce, such as the economic benefits and the jobs that are being created. We are open and transparent with those numbers because we know that is important to Canadians. We will continue to carry on in that way.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Chair, let us talk about transparency. I will give the minister an opportunity to say more.

The committee recently heard from representatives of Irving Shipbuilding. For the contract to build the 15 new frigates, the president mentioned that Irving's bid was under $60 billion and added that the government had announced that it would cost $60 billion. However, the Parliamentary Budget Officer estimated that the frigates would cost $77.3 billion to build.

Given that Irving's figure was less than $60 billion, the government's figure was $60 billion, and the Parliamentary Budget Officer's figure was more than $77 billion, could the minister, in the name of transparency, tell us the projected cost of building these frigates?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, again, throughout this process we are monitoring what the ships are going to cost, monitoring where the shipyards are at and working very closely so that we can be open and transparent with Canadians. That is the process we have undertaken thus far and we are going to continue that process.

The PBO did include taxes, so that may be part of the discrepancy, but at the end of the day, if there is any suggestion that we are not open and transparent about the numbers, I totally disagree with the member's premise.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Chair, let us talk about transparency again.

An article in the April 19, 2021, issue of the weekly newspaper The Hill Times discusses the secrecy surrounding the fees that the federal government has paid to Irving, the prime contractor for the construction of these 15 surface combatants.

We know that Canada is paying Irving fees, but the Department of National Defence refuses to disclose the cost of these fees. Out of respect for taxpayers, how much has the government paid for this?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, we are going to be open and transparent. When those figures are able to be shared, we will share them. We will continue to work with the PBO and all parties, because at the end of the day, we are proud of our national shipbuilding strategy. We know that at the end of day it is creating jobs and contributing to the economy, which are very important for Canadians. We will be open and transparent with the numbers.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Chair, the Parliamentary Budget Officer, who we are lucky to have, by the way, estimates that the polar icebreakers announced by the government will cost $7 billion, or $3.5 billion each.

However, the Government of Canada only announced the purchase of two polar icebreakers, not how much they will cost. Does the Parliamentary Budget Officer have the right figures? If not, what should we expect?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, let me be very clear. We want to work with the PBO, we have worked with the PBO and we are going to continue to work with the PBO.

With respect to the numbers, when we are in negotiations, we cannot, of course, reveal the numbers, as we have made clear many times. When we are able to release the numbers, we will release them and operate in an open, fair and transparent way.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Chair, I will come back to the issue of the polar icebreakers. We currently have the cost estimated by the Parliamentary Budget Officer.

I understand that the minister is in negotiations. I would like to know who she is negotiating with. Is the Davie shipyard included in these negotiations, because it is not yet a partner in the national shipbuilding strategy?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, again, we are going to continue to work with the PBO.

In terms of the difference in numbers, it is an issue of taxes being included or not included. It is a different methodology. Again, when we are able, we will share all of that information so that the member and all others are aware of what we are investing.

At the end of the day, we know these investments are important, and that is why we are making them. We will continue to monitor the shipbuilding as it takes place.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Chair, at present, we see that defence procurement for major projects is rather complex and we understand this complexity.

That is why, in his 2019 mandate letters for the then Minister of Public Services and Procurement and Minister of Defence, the Prime Minister included the creation of an organization whose sole focus would be defence procurement.

This was missing in the 2021 mandate letters. I would like to know whether it is still being contemplated, and, if not, why it was overlooked.

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, right now I think we are delivering in defence. We have a strong defence record.

In terms of what we are in the process of doing, we are moving forward to finalize 88 new fighter jets, we are delivering the first Canadian-built ships in 20 years and we are acquiring six Arctic offshore patrol vessels. We are continuing to deliver in defence. Right now the situation is a strong one, and we will continue to procure in this manner, which is strong.

[Filomena Tassi, Liberal, Minister of Public Services and Procurement]

Madam Chair, I am thankful for being invited to rise in the committee of the whole to speak to the main estimates for Public Services and Procurement.

As a direct service provider, my department works to serve Canadians in support of the government's missions. My department is the government's central purchasing agent. It manages real property, acts as a treasurer and accountant, is responsible for pay and pension administration, advises on matters of integrity, and acts as the linguistic authority.

It has a wide-ranging mandate that touches so many aspects of daily and long-term government operations. To deliver on this mandate, we have requested more than $4.6 billion in the 2022-23 main estimates for PSPC.

As the central purchasing agent for our government, one of the department's most critical roles of late has been to support Canada's response to the ongoing pandemic, and we intend to keep that support going. I can tell members that our aggressive procurement approach over more than two years has ensured that Canada has a secure supply of vaccines and personal protective equipment.

In fact, Canada is a world leader on this front. We have contracts in place with several vaccine suppliers and we have access to supplies of future formulations that will protect us against variants. I can also say that thanks to our long-term contracts with Medicom and 3M, tens of millions of N95 respirators are being produced right here at home every single month.

It is because of the ground work that we laid at the beginning of the pandemic that Canada is in good standing to see it through to the end. As Canadians are keenly aware, the pandemic is not over yet and there is still more to do. For example, we are working to ensure that we have enough supply of rapid tests and therapeutics, as they remain in high demand across the globe.

So far, Canada has produced more than 600 million rapid tests, and we have contracts in place for nine different therapeutic treatments, giving us access to 1.7 million treatment courses. I can assure the House that the department will continue to deliver for Canadians as we work to finish the fight against COVID.

As members well know, the pandemic is not the only crisis we are dealing with. Every day, we learn more about the horrors unfolding in Ukraine following Russia's unprovoked and unjustifiable attack. We know that it is essential for all democratic nations to stand united in our support of the Ukrainian people and Ukrainian sovereignty. That is precisely what our government is doing.

PSPC continues to provide logistical and other support to ensure that Canada's support and assistance are received by those who need them. On the domestic front, defence procurement and defence contract management are important parts of my mandate, and I am honoured to be leading on this front during this crucial time as Canada's defence policy evolves in a rapidly changing world.

We continue to make progress on our defence procurements. That includes our government's work to procure 88 advanced fighter jets to replace our aging fleet of fighters. The purchase of new jets represents the most significant investment in the Royal Canadian Air Force in more than 30 years.

Since day one, our government has been focused on steering a process that is truly competitive. That is what we have done because we know that it is the right way to get the best value for Canadians and to make sure our defence needs are properly met.

Following a rigorous evaluation of the proposals, the government has entered into the finalization phase of the process with the United States government and Lockheed Martin. This is an important milestone in the procurement process, and I can report that we are on track to reaching an agreement later this year, with the delivery of aircraft potentially as early as 2025.

We also continue to work with our partners to renew the fleets of the Canadian Coast Guard and the Royal Canadian Navy. Despite the immense pressures on global supply chains, we are making progress on shipbuilding and revitalizing the industry in Canada.

There is no doubt that the government's purchasing power is an important lever and we are using it to drive economic prosperity, but we must make sure that prosperity is inclusive for all Canadians. That is why we have recently launched a supplier diversity action plan, which includes pilot projects to increase the participation of under-represented groups in federal procurement.

An example of this is our Black business procurement pilot project, which has led our government to awarding a series of contracts. We received important feedback from the community about the process so we can improve it going forward. Our goal here is to help remove barriers to full participation in procurement for all suppliers.

We also continue to walk the path of reconciliation by leading in the implementation of a requirement to ensure that a minimum of 5% of the value of federal contracts is held by businesses that are led by and employ first nations, Inuit and Métis people.

With our purchasing power comes other responsibilities, such as doing our part to tackle forced labour around the world. I know that all members would agree that we must do everything we can to eradicate this abhorrent practice. That is why our government has updated the federal code of conduct for procurement to clearly outline Canada's expectations for suppliers when it comes to human and labour rights. As of November 2021, all of our goods-related contracts now contain anti-forced labour clauses. That means the government can terminate contracts when there is credible information that goods have been produced in whole or in part by forced labour or human trafficking.

The department has done other important work, including major projects in the national capital region. That includes replacing the Alexandra Bridge and implementing a long-term, integrated, interprovincial crossing plan. It is an endeavour led by the National Capital Commission, which is part of my portfolio. Of course, we are also working on the renovation and rehabilitation of the Parliamentary Precinct. Just outside of these doors, we are working to modernize and preserve the heart of Canada's democracy and to keep it a place that can be enjoyed by all Canadians. Our work in this area expands beyond Parliament Hill and its historic buildings. On Monday, I had the pleasure of announcing the winner of the design competition for the city block that faces Parliament on Confederation Boulevard known as “Block Two”.

Renewing the Parliamentary Precinct is an enormous undertaking that will result in an integrated parliamentary campus while moving us toward carbon neutrality and climate resiliency. Of course, greening all of our operations across government will support Canada's commitments to fighting climate change.

Our energy services acquisition program is an excellent example of progress my department has made when it comes to greening government. Under the program, we are modernizing the district energy systems that heat and cool 80 buildings in the national capital region. I am happy to report that we have already cut greenhouse gas emissions by 57% from the baseline year of 2005, and we are on track to meet our goal of net zero emissions by 2030.

These many initiatives are made possible by Canada's hard-working public servants here in the national capital region and across the country. They deserve to be paid accurately and on time. I also want this committee to know that we continue our efforts to resolve the backlog of pay transactions and stabilize pay operations.

At the same time, Shared Services Canada is advancing work on the next generation of human resources and pay solutions: one that is flexible, modern and integrated. Shared Services Canada is also working to provide public servants with modern tools and deliver digital services to Canadians that are secure, reliable and easy to use anywhere. While not covered in the main estimates, Shared Services Canada is an important part of my portfolio, and like PSPC, it plays a vital role in supporting government operations.

Also in my portfolio is Canada Post Corporation, and I want to note for the committee and all Canadians my appreciation of postal workers. Despite hardships brought on by the pandemic over the past two years, our dedicated postal workers have continued to provide high-quality service across the country. Indeed, all public servants have stepped up since COVID-19 hit our shores to get through to the other side of the pandemic and to keep the Government of Canada running. I am so honoured and humbled to lead such a talented team, and I know that we will be able to build on our accomplishments and achieve great things for Canadians.

I have touched on only a fraction of the important work happening under my portfolio of Public Services and Procurement Canada. I am happy to take the committee's questions regarding the main estimates for my department.

[Anthony Housefather, Liberal, Parliamentary Secretary to the Minister of Public Services and Procurement]

Madam Chair, our government has been working to address inequities by modernizing its procurement practices and encouraging suppliers from diverse backgrounds to be part of the federal supply chain.

Budget 2021 proposed $87.4 million over five years, and $18.6 million ongoing, to modernize federal procurement and to create opportunities for specific communities such as indigenous people, women, LGBTQ2+ Canadians, Black and other racialized Canadians. This included a two-year study from 2018 to 2020 that aimed to leverage the government's significant purchasing power to pursue socio-economic outcomes through procurement.

As the minister mentioned, our government also undertook a Black business procurement pilot in 2021 to expand procurement opportunities for Black entrepreneurs. We also recently released two requests for information to better understand the procurement experience of businesses owned or led by persons with disabilities and the LGBTQ2+ community.

As part of its efforts to diversify the federal supply chain, we have issued requests for information to gather input from Canadian Black businesses and businesses owned or operated by persons with disabilities, as well as businesses owned or led by members of the LGBTQ2+ community.

The feedback gathered through the RFIs will be used to expand the use of targeted approaches to increase diversity in federal procurements. PSPC's Policy on Social Procurement came into effect in May 2021. It allows the department to create targeted approaches to increase diversity and inclusion in PSPC procurement and leverage trade agreements that permit socio-economic procurement.

I know that the minister has been holding a number of round tables. Could the minister tell the House what she has been hearing first-hand from business leaders?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Madam Chair, this is a very important part of the portfolio for me, to ensure that we level the playing field and give all business leaders an opportunity to enter into procurement with the federal government. I think it is really important that we listen. This is why I have had the opportunity to set up round tables and hear directly from business leaders and from those who have established a desire to work with the government, but have felt that they have faced some obstacles.

These discussions have been very helpful, in terms of providing us with feedback on what things have been working, and how we need to move forward.

I have met with diverse groups and really appreciate the feedback. One of the areas was the coaching pilot. We held a coaching pilot that talked to business leaders about how to be successful in their procurement bids, and offered training and assistance. Afterward, I had an opportunity to speak with those business leaders who experienced the coaching pilot. I can tell members that they were all grateful. They said it was helpful in terms of better understanding, recognizing and feeling supported and that they would like to see projects like that continue.

These pilots, round tables and discussions have been very helpful. We are going to continue to work toward levelling the playing field because, at the end of the day, we know that when we allow all businesses an opportunity to enter into procurement, we all benefit. It is not just the moral and right thing to do; it is also the economically smart thing to do.