NDVA Committee Meeting

STANDING COMMITTEE ON NATIONAL DEFENCE AND VETERANS AFFAIRS

COMITÉ PERMANENT DE LA DÉFENSE NATIONALE ET DES ANCIENS COMBATTANTS

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, March 4, 1999

• 0904

[English]

The Vice-Chairman (Mr. David Pratt (Nepean—Carleton, Lib.)): I'd like to call the meeting of the Standing Committee on National Defence and Veterans Affairs to order.

We're resuming our discussion with Mr. Pierre Lagueux, who is assistant deputy minister, materiel, for the Department of National Defence.

With the questions we were into, at this point, Mr. Richardson, you're next on the list.

Mr. John Richardson (Perth—Middlesex, Lib.): No, I had my turn.

The Vice-Chairman (Mr. David Pratt): Okay. Any questions from the opposition or government?

Mr. Hart.

Mr. Jim Hart (Okanagan—Coquihalla, Ref.): Thank you very much.

I had the opportunity to listen to your presentation the other day, but I wasn't able to ask you any questions. I would like to refer to a document today, so I would like to pass that document out, if I could. It's a document received through access to information regarding a meeting you conducted on February 9, 1998.

• 0905

The first thing I was wondering about is that this document from February 9, 1998, indicates that if you look at the maritime helicopter program, in fact an SOR was completed over a year ago. My question is why, if the SOR was completed over a year ago, hasn't this gone into the bidding process?

Mr. Pierre L. Lagueux (Assistant Deputy Minister, Materiel, Department of National Defence): I'm not sure where it indicates that an SOR was done.

Mr. Jim Hart: This is an SOR review, which was conducted on February 9, 1998. So if you were reviewing the SOR, it would have to mean that there was an SOR to review, wouldn't it?

Mr. Pierre Lagueux: I've just seen this document, of course. This was a briefing given to the vice-chief, me, chief of the air staff and chief of the maritime staff on February 9. As I recall, it was given by staff who were working on an SOR, and at that time they were presenting some preliminary findings and some preliminary statement of some of the operational requirements, but they had not, by any stretch of the imagination, presented a finalized SOR at this time.

As a matter of fact, as I think I said a couple of days ago in answer to another question, we are still working on the SOR. There is no finalized formal approved SOR for the maritime helicopter project. This was a very preliminary approach to the SOR that was presented.

Mr. Jim Hart: Could you turn to page 3 of the document?

[Translation]

Mr. René Laurin (Joliette, BQ): Mr. Chairman, would it be possible to have a French version of this document?

[English]

The Vice-Chairman (Mr. David Pratt): Mr. Laurin, it was passed out by Mr. Hart, and I think the policy of this committee is that documents be circulated in both official languages, is it not?

A voice: It is.

The Vice-Chairman (Mr. David Pratt): And a motion was passed in fact to that effect. So, Mr. Hart, I think our only recourse under the circumstances would be to have the document translated and to raise it at another time—unless, of course, there is unanimous consent by the committee to proceed, and my judgment is that there is not.

[Translation]

Mr. René Laurin: This is an unfortunate situation, Mr. Chairman, but I would like to be able to follow the discussion closely and that is impossible for me at this time. I do believe that we had agreed, not so long ago, that any document had to be tabled in both official languages, or it would be studied at a later time. I would therefore prefer that we look at this document at a later date, once we have the translation in hand.

[English]

The Vice-Chairman (Mr. David Pratt): Mr. Laurin, I think your points are well taken, and, Mr. Hart, I think there is no other option under the circumstances but to table the document and we'll deal with it at some other time.

Mr. Jim Hart: Mr. Chairman, I would like to say that this is unfortunate, because this is a very important issue, the maritime helicopter program, and this is a document from access to information that has just been received; there was no time to have it translated. Because this project is of national importance and we have the witnesses here today to testify, I can't imagine that we wouldn't work our way through this as a committee and offer any assistance. We have translation available to us, the document is there, it's an official document and there—

The Vice-Chairman (Mr. David Pratt): Mr. Hart, at this point I'm really bound by the committee's rules in that respect. I don't see any alternative but to proceed as I just described in terms of tabling the document, and I'm going to have to move on to Mr. Clouthier.

[Translation]

Mr. Hec Clouthier (Renfrew—Nipissing—Pembroke, Lib.): Mr. Chairman, I agree with my colleague Mr. Laurin. Rules are rules, and they clearly state that document must be presented in both official languages. I am sorry, Mr. Hart, but rules are rules.

• 0910

[English]

The Vice-Chairman (Mr. David Pratt): Mr. Hart, by way of a final comment on this, we can endeavour to have Mr. Lagueux back before the committee as soon as it's translated, subject to perhaps Mr. Lagueux's schedule.

I'm going to move on now to Mr. Price, who is next on the list, followed by Mr. Laurin.

Mr. Price.

Mr. David Price (Compton—Stanstead, PC): Thank you, Mr. Chairman.

Mr. Lagueux, we were talking the last time about the marine helicopter project. If I go to the 1994 white paper, the marine helicopter project was before the CF-18 in priority. If I look at the Department of National Defence report on plans and priorities, the Sea Kings come before the CF-18. If I look at just about every report coming out of National Defence, it always come down to that.

Also, about the letter I referred to the other day, I was a little off in that I had said 22 people. This is a letter to Senator Forrestall from the Minister of National Defence, which says:

As for the maritime helicopter project, the project management office consisting of 21 military and six civilian personnel has been set up at the Rockcliffe site of National Defence Headquarters, in Ottawa. This office's mandate is to document the requirements and evaluate the possible options for a replacement helicopter.

Yet when I look in the estimates, there's nothing in there at all for the maritime helicopter. On the other side, though, for the CF-18, which doesn't have a line item for procurement set up, there are actually five lines in there for major equipment upgrading of the CF-18.

The thing is I'm very bothered by the fact that it's obvious the maritime helicopter project should be the main one you're working on. But there's nothing in the estimates about it. There's nothing about getting organized. The minister says that you are, all of the branches seem to say that they are, and when we look at the estimates everything is coming out CF-18 upgrade.

So my question is what's going on?

Mr. Pierre Lagueux: That's a rather broad question, Mr. Price.

Mr. David Price: Isn't it?

Mr. Pierre Lagueux: Can I just ask what estimates you're referring to, please?

Mr. David Price: The latest ones, the Department of National Defence 1998-99 report on plans and priorities. It just came out.

Mr. Pierre Lagueux: As you correctly pointed out, Mr. Price, in the 1994 white paper the MHP was one of the top four projects as put forward by the government of that time. We know what the other three are, so I won't go through that. It was also mentioned in the white paper that other projects that were of high priority were the F-18 project, the Aurora modernization and so on. So those projects were also mentioned in the white paper.

The white paper of course dates back to 1994 and it's been some years since that time. Of course, perhaps the expectation was that we would have got further than we have with respect to the helicopter. In the meantime, the F-18 hasn't got any younger, nor has the technology got any better on the F-18. So it's a question of making sure that we progress the projects in terms of our availability of funds, availability of industry and so on, and having the necessary approvals.

Given that we have not yet finalized the approach to the maritime helicopter, the CF-18 upgrade is I think a much more straightforward project than procuring a new maritime helicopter, which is a very complex and very large project. The F-18 upgrade essentially, while it can be somewhat costly in itself, looks at replacing the radar, for example, a known commodity that is the radar that already exists and is on the C and D models and so on, so we can get on and do those kinds of things fairly easily.

We have been working on the maritime helicopter, as the letter to Senator Forrestall said. We do have a staff. I'm not sure if it has been tabled or not now, but the document that was referred to earlier pointed out that back in February we were, even at that time, starting to review the SOR. The SOR is not yet finalized, so we're working through that process.

• 0915

I would point out that the maritime helicopter is quite a different project compared to procuring the Canadian search and rescue helicopter. The search and rescue helicopter is essentially fairly straightforward. You're procuring a helicopter that is—and I exaggerate to simplify here—a platform with a winch. With the maritime helicopter, you need to worry about the helicopter's capabilities, but also extremely important is the mission system that goes in the back of the helicopter in order for it to perform its many roles, whether that's surveillance, antisubmarine and so on. It becomes much more complex and much more involved. As we're working on the statement of operational requirement, it's not just the operational requirements for a platform but the mission requirements as well. The interrelationship between all those things becomes extremely important and complex.

Mr. David Price: But the problem is—

The Vice-Chairman (Mr. David Pratt): Mr. Price, your time is up, unfortunately.

Mr. Laurin.

[Translation]

Mr. René Laurin: How much time do I have, Mr. Chairman?

[English]

The Vice-Chairman (Mr. David Pratt): Five minutes.

Mr. René Laurin: Five minutes?

The Vice-Chairman (Mr. David Pratt): Yes, they're five-minute rounds.

[Translation]

Mr. René Laurin: Mr. Lagueux, on page 7 of the document that you presented last week, we see that you have 850,000 items in stock. Are we dealing here with 850,000 kinds of items that you may have more than one of, or with a total of 850,000 items?

Mr. Pierre Lagueux: Mr. Laurin, they are all different items.

Mr. René Laurin: Very well. Thank you.

Mr. Pierre Lagueux: There may be several of any one of these 850,000 items in stock.

Mr. René Laurin: At the last meeting, I had asked you a question and I would like to know whether you have found an answer to it. I had asked you how much money someone who had a purchaser's card could spend during the course of one year.

Mr. Pierre Lagueux: The question that you had asked, Mr. Laurin, dealt with....

Mr. René Laurin: I asked you a great many questions; this was one of them. I had also asked you how many purchaser's cards had been issued.

Mr. Pierre Lagueux: I could tell you the number of purchaser's cards. Currently, 3,900 purchaser's cards have been issued to employees of the Department of Defence.

Mr. René Laurin: But you cannot tell me how much one individual could spend during the course of a year while using his card?

Mr. Pierre Lagueux: I know that card holders use them 83 times per year on the average and that the average purchase is approximately $350. You can multiply the two numbers.

Mr. René Laurin: So 83 times....

Mr. Pierre Lagueux: Per year and the average purchase is approximately $350.

Mr. René Laurin: Very well. Thank you.

Mr. Pierre Lagueux: These are averages. These numbers vary a great deal from one person to another or from one base to another.

Mr. René Laurin: At page 10 of the document you gave us you dealt with basic products that are purchased for the Department of National Defence. I understand that you didn't give us a complete list of the 850,000 items, but I am surprised that you have not identified clothing amongst basic products for the army. Do you feel that the purchase of clothing is not as important as the purchase of food or stationery? Just last week in the House we were mentioning the fact that members of the forces currently serve in Greece where they are not too well clothed.

Mr. Pierre Lagueux: I believe that clothing, just as a member's personal equipment, are very important items, Mr. Laurin. I did not give you an exhaustive list, rather one that would give you some examples. You could certainly add clothing and personal effects to the list.

Mr. René Laurin: Amongst these basic products, what importance would you attach to clothing? Are they as important as food, stationery or fuel? Could you give us a ranking in order of importance?

Mr. Pierre Lagueux: That's a question you would have to ask to the base operational commander. Personal equipment, food, fuel and munitions are without a doubt basic items for soldiers in the field.

When I drew up this list, I indicated these items under the heading of "commodities", a word which was translated into French as "produits de base". I realize that these are not necessarily strictly military commodities, rather types of products among others.

Mr. René Laurin: Mr. Lagueux, I would like to come back to an issue which appears very important to me. Could you tell us how many retired members of the forces are currently hired by the Department of Defence or maintain frequent contacts with the Department of Defence because they have been hired by companies or lobbyists or by suppliers to your Department? Do you have an idea of their number?

• 0920

Mr. Pierre Lagueux: Unfortunately not, Mr. Laurin. Staffing is not within my purview. I could try to find the number of former members of the military who have returned to work for the Department of Defence, but it would probably be much more difficult to know how many of them are working within the industry.

Mr. René Laurin: You're certainly in contact with these former members of the military since you are responsible for procurement. Would I be exaggerating if I said that there were more than 20?

Mr. Pierre Lagueux: We take into account all of the industries in Canada and the large number of retired members of the forces—

Mr. René Laurin: No, I'm just talking about high-ranking members.

Mr. Pierre Lagueux: At what ranks more specifically, Mr. Laurin? Generals?

Mr. René Laurin: No, I refer rather to members who were colonels or who were amongst the higher ranks, who were then hired by the Department of Defence after their retirement, or by lobbyists or suppliers to the department. You are certainly in constant communication with them.

Mr. Pierre Lagueux: I'm in regular contact with the companies we deal with. I see not only several retired members of the forces, but also bureaucrats from other departments who have retired. For example, the current chairman of Bombardier is Mr. Bob Brown, a former member of the public service. We find retired civil servants just about everywhere. There are probably about a hundred of them, but that's just a number I am taking off the top of my head, without knowing for sure.

Mr. René Laurin: I understand that's not an exact number.

[English]

The Vice-Chairman (Mr. David Pratt): Mr. Laurin's time is up at this point. In terms of the line—

[Translation]

Mr. René Laurin: I hope that there will be a second round of questions.

[English]

The Vice-Chairman (Mr. David Pratt): I'll put you down on the list again, but in terms of the line of questioning, I really think it's more appropriately directed to the ADM, personnel. I think he would probably be able to provide you with the answers you're looking for.

I have Mr. Richardson on my list next.

Mr. John Richardson: Thank you very much, Mr. Chairman.

To our guest, the naval program is now looking for the final phase to be closed in its above-the-sea, on-the-sea and below-the-sea approaches. I just wondered if you could shine any light on what you could see as the nearest estimated date for seeing the naval helicopters in use. Will you make a gamble on this?

Mr. Pierre Lagueux: Mr. Richardson, I'd be hard-pressed to answer that. I think I would have to refer you to my minister, who I believe has made statements on several occasions. He hopes to proceed with this project as quickly as possible, and so would we. We would hope to proceed as quickly as possible with this project, certainly from the time we have approval through the process of going forward.

If it's a competitive process, we'll be putting that together. In my presentation to you a few days ago, I pointed out the process that we go through. A competitive process might be the way we go with the bid, but then there's the evaluation process and the process of actually putting together or manufacturing the helicopters and the mission systems. As I say, these helicopters are a much more complex project than the search and rescue ones, so it will take many years. To really know when we would bring them into service really determines when we'll be starting in terms of getting project approval. Of course, that process is what we're working through now, and hopefully we can go as quickly as possible.

Mr. John Richardson: The customer approval of the project is in motion, is it? It's going through the system?

Mr. Pierre Lagueux: As I said, we're working right now on the first stage, which is finalizing the statement of operational requirements, of course. There were several questions about that process at our last meeting, and we indicated that we are doing that and are taking that very seriously. We want to make sure we have a statement of requirements that is very precise and identifies the precise needs not only for the helicopters but for the mission system. We want to make sure we have something with the requirements, but not exaggerating the requirements either. We want something that is affordable and meets the requirements. That's always the balance that we try to trade off.

Mr. John Richardson: That's all I wanted to ask, Mr. Chairman.

The Vice-Chairman (Mr. David Pratt): Thank you, Mr. Richardson.

Mr. Earle.

Mr. Gordon Earle (Halifax West, NDP): Thank you, Mr. Chair.

In the document that you presented at the last meeting—and unfortunately I didn't bring that document with me, so I'm going to have to rely on my memory—I believe there were four major stages that you had outlined for the procurement process. Under each of those, there were a number of steps to be taken. I wonder if there is any average time that this whole process takes.

• 0925

Mr. Pierre Lagueux: You are correct, Mr. Earle, that normally there are four steps in the process: the identification, development, definition, and implementation stages. It really depends on the project and the complexity of the project.

For example, a very large and complex project like the Canadian patrol frigate took many years to bring to final implementation, and the project is still not closed out in that we have the frigates in place, but there are still spare parts and logistical support and so on coming on board. It can take many years—in a frigate project, over ten years, for example.

A small capital acquisition, which is for example of the type of a commercial software computer-based system, can go very quickly, as a matter of fact. As I think I said the last time I was here, these steps are all here in terms of identifying the process quite clearly in a logical step, but quite often there may not be a requirement for definition, for example, so we can move very quickly through those steps and we don't need to go into full detail of every minutia of each step.

If we look at a commercial off-the-shelf product, even a military off-the-shelf product, projects that we have procured recently, such as the light armoured vehicle, the front part of the process went fairly quickly. We knew what we wanted, the requirement was clear, there was urgency, and we had a Canadian supplier of world-class equipment, so that process went fairly quickly. We were able to go through those steps very quickly, without a lot of detailed analysis. Sometimes we say .“paralysis by analysis” in some of these projects. We need to find ways to move along.

That's why we're looking at commercial off-the-shelf products, to be able to speed up these processes and not have to do a lot of analysis, coming up with different options, being able to speed up and make the process much more efficient. So it really varies. It can be many, many years, or it can be a matter of a couple of months.

Mr. Gordon Earle: Are there any time restraints or time guidelines built into any of these processes to guarantee that there's no lost time while something sits on a desk or something?

Mr. Pierre Lagueux: No, there are no time guidelines built into our policies and so on, because it varies too much from project to project. I can assure you, though, that from the user's point of view, who's waiting to obtain the equipment, he pushes very hard to make sure we move as quickly as possible.

Mr. Gordon Earle: As one final question with respect to the degree of cooperation on these ventures, for example, when we look at the helicopters, which would involve both the air and the marine elements, obviously there would be two interests involved there. The navy would have their interest because the ships are involved, and the air force have their interest because of the air component.

What kinds of checks and balances are there to ensure cooperation between the two so that there's no conflict to hold the project up?

Mr. Pierre Lagueux: Each project does have a project sponsor and a project leader, and in the case of the helicopter project, as you correctly pointed out of course, the maritime helicopter operates on the back of a ship and it's very much a naval asset, although it's operated, owned, and crewed by the air force. Because it is owned, operated, and crewed by the air force, the chief of the air staff is the project sponsor for this, and he has overall responsibility for the project. Of course, he must deliver in the end a statement of operational requirement that must be worked very closely with the navy, because the ship works with the navy.

By and large, on the type of interservice rivalry that I think you are referring to, that you would hear about in the United States, for example, and read about, we are a much smaller force. We have a force of 60,000 as opposed to the millions that the Americans have. We don't tend to have the same type of interservice rivalries. We work together. And as I said, there are in the process senior review boards, committees put in place to ensure that any disagreements are resolved at the senior levels as quickly as possible if they should occur.

With our process, I don't think we have the same type of interservice rivalry that you might see in the United States, for example, and secondly, our process, with its committees bringing all interested parties together, really works to resolve all those types of problems quickly and efficiently.

Mr. Gordon Earle: Thank you.

The Vice-Chairman (Mr. David Pratt): Mr. Bertrand.

• 0930

[Translation]

Mr. Robert Bertrand (Pontiac—Gatineau—Labelle, Lib.): Mr. Lagueux, on page 6 of the document that you gave us, you indicate that $90.6 million was spent on research and development. When you made your presentation to us last Tuesday, you mentioned that this figure could easily double. Could you elaborate, please?

Mr. Pierre Lagueux: Thank you for your question, Mr. Bertrand. I indicated last Tuesday that the numbers shown on page 6 represent only the amount the Department has spent to retain the services of outside companies, such as industry and universities, who carried out research and development work. This amount therefore does not represent the total annual budget of the Department for research and development, which is around the $180 million mark. We have five centres of research and development, one in Valcartier and one in Halifax, among others. The $90 million indicated in the document does not cover the salaries of our researchers or any other internal expenditures. Since we're talking about purchases and procurement, I simply indicated the amounts that we spent on research and development outside of the Department. But we also have our own internal system and our own research centres.

Mr. Robert Bertrand: Within the department, do you carry out research on all types of products?

Mr. Pierre Lagueux: Yes. At our research centre in Valcartier, our research deals mostly with munitions and land elements; in Halifax, naturally, we mostly do research on the naval side and in acoustics; in Toronto, we study mostly human performance, therefore personal articles and clothing; at Suffield, we do research mostly into biological, chemical and anti-mining elements. Our researchers are in each one of the five centres of specialized research and carry out the lion's share of the research. As we indicated, just about half of our budget on research and development goes to retaining the services of subcontractors and industries to whom we grant very specific contracts. Our research centres manage these contracts with industry and also carry out their own research.

Mr. Robert Bertrand: The Department grants research contracts to how many companies?

Mr. Pierre Lagueux: Perhaps 20, Mr. Bertrand, but that's just a number off the top of my head.

Mr. Robert Bertrand: I assume that they are located throughout the country?

Mr. Pierre Lagueux: Yes, their location varies, obviously, based on the research topic, but we grant research contracts to companies throughout the country, whether they be in Vancouver, Halifax, central Canada, Quebec or elsewhere.

Mr. Robert Bertrand: You also grant research contracts to some universities.

Mr. Pierre Lagueux: Yes, that's correct.

Mr. Robert Bertrand: Thank you very much.

[English]

The Vice-Chairman (Mr. David Pratt): Thank you, Mr. Bertrand.

I have Mr. Peric, and then Mr. Laurin.

Mr. Janko Peric (Cambridge, Lib.): Thank you, Mr. Chairman.

Sir, as we know, Canada is taking this leading position at the UN level to redefine a peacekeeping role. At the same time, we hear complaints and different debates in the House, members stating that our peacekeepers are not adequately equipped.

I'm going to ask you a question. What is your opinion at the present time, and if this goes through the United Nations and the Security Council, will the new role of peacekeepers affect the budget of DND?

• 0935

Mr. Pierre Lagueux: First of all, Mr. Peric, I think I'm not perhaps in the best position to answer your question with respect to how well equipped the forces are. I think that's a question that really the operational commanders have to answer. After all, they are responsible for the forces in the field. My role of course is to procure equipment for them based upon their stated operational requirements and their specifications, and we try to do that as best we can.

I could add further, though, again pointing out that I'm not a military commander in the field here, that there are always concerns with equipment in the field in terms of keeping it up to date and ensuring that it meets the operational requirements. Of course that's why we have programs to continually update our equipment or to buy new equipment. That's why we are buying the new armoured personnel carrier, because of the concerns we had with the level of protection with respect to our vehicles in peacekeeping operations. In many cases now it's not only peacekeeping we're into but peacemaking, and the situation is much more dangerous than it used to be.

There were concerns about personal gear, and we're now in the middle of a very extensive program to buy all new personal kits for our soldiers in the field. An extensive trial program is going on, and we're buying pieces of kit and we're getting very good feedback from the soldiers on that. So we're working very hard.

From the military point of view, again not being a military commander here, I would say that before we engage our troops, whether it be in peacekeeping or peacemaking or whatever type of operation, I know the Chief of the Defence Staff looks very clearly at what the risks are, what the roles are, what equipment we have, and would not recommend that our soldiers be put into situations where the equipment we have for them is inadequate for the job.

Mr. Janko Peric: You are aware of the comments we hear, even from the sites where we send our peacekeepers, that they are not adequately equipped, that the morale is very low. I would agree with you that you are not in charge of that area, but you hold a very high position and a very responsible position, and you mentioned before that you hear comments.

In your opinion, if this goes through the UN, if it's the new role accepted by the UN, will that new role affect the budget of DND? Does that mean we have to provide our peacekeepers—and you mentioned not only peacekeepers but peacemakers—with better equipment, and then will that affect your budget, the budget of DND?

Mr. Pierre Lagueux: I really can't answer that question, Mr. Peric. I don't know if it will affect the budget. But just let me say, in answer to a previous question last week when I was asked how good their equipment is or how it compares to our allies', I pointed out that from the army's point of view.... Of course that's always a matter of some opinion, but all I can say is that from my perspective with respect to the procurement programs we have now in place, we are now delivering and putting into service the light armoured vehicle reconnaissance, which is state-of-the-art top capability, offers adequate protection, is well armed, has a fantastic surveillance suite on it. We are buying new armoured personnel carriers, again to offer better protection. We are re-equipping our soldiers with all personal gear, including wet-weather, cold-weather personal gear, and so on. They have an excellent rifle. We are moving ahead on the tactical communications command control system, a state-of-the-art, top world-class system in terms of communications command system for the army, and so on.

So there are lots of things happening for the army. That is not to say there are not more things that need to be done, but these have to be prioritized in terms of our budget and the requirements for the air force and the navy.

So I think from that perspective there's a lot being done to modernize the army to ensure that they have good equipment, whether they be in peacekeeping or other types of operations.

Mr. Janko Peric: Thank you.

The Vice-Chairman (Mr. David Pratt): I'm going to have to cut you off at that point, Mr. Peric.

• 0940

In fairness to Mr. Alan Williams, who is our next witness, I have three more questioners on my list, but I would ask the cooperation of the questioners to perhaps confine their questions to two or three minutes so that we can get to Mr. Williams.

Okay, Mr. Laurin.

[Translation]

Mr. René Laurin: Mr. Lagueux, are you ready to table today the list of the members of the interdepartmental committee or would rather wait until later on?

Mr. Pierre Lagueux: I have this list with me, Mr. Laurin, and I am ready to submit it.

Mr. René Laurin: Thank you. I would ask the clerk to provide us with a copy.

[English]

The Chairman: That's great, Mr. Laurin, thank you.

Mr. Price.

Mr. René Laurin: You said two or three minutes.

The Vice-Chairman (Mr. David Pratt): Go ahead.

[Translation]

Mr. René Laurin: Mr. Lagueux, on page 27 of your document, you mention an important criterion at the time of procurement, namely the regional industrial economic impact. How is it that, almost historically, the Department of Defence has not given Quebec the share that it should have gotten based on its population? Doesn't it say that fair distribution is one of your criteria? Are there not enough suppliers in Quebec? What is the main reason behind the situation?

Mr. Pierre Lagueux: Mr. Laurin, I am not sure that I'm aware of the statistics you are using as a basis for your statements. I don't know whether Quebec has received its share of regional economic benefits in terms of military procurement or not, but I can state that on several projects, Quebec industry has been highly involved. As an example the purchase of the Griffon Bell 412 helicopters which were manufactured in Mirabel, a suburb of Montreal. Several aerospace industries established in Montreal, amongst them CAE Industries Ltd., and Pratt & Whitney Canada Inc., are major suppliers to the Department of Defence.

Mr. René Laurin: I didn't say that there were none.

Mr. Pierre Lagueux: Almost all of the munitions industry is located in Quebec, Mr. Laurin. One has only to think of SNC. Several major industries in Quebec do meet our military needs here in Canada.

Mr. René Laurin: But that's not what I'm trying to establish, Mr. Lagueux. I want to know whether you would estimate that Quebec receives its fair share of supply contracts from the Department of Defence, as a proportion of its percentage of the population which is somewhere between 22% and 26%. Does your Department have such statistics?

Mr. Pierre Lagueux: Yes, we do have statistics, but unfortunately, Mr. Laurin, I do not have them with me. I could however provide them to you. Representatives from Industry Canada will appear before you. Since it is their Department that is responsible for managing the program of regional and economic benefits, they could perhaps give you more specific statistics. But, if you wish, I could also provide you with some figures.

Mr. René Laurin: Yes, I would appreciate it, Mr. Lagueux. I wold also like you to tell me if you give specific directives to the people in charge of procurement to ensure that great importance is given to this criterion regarding regional distribution. If 3,900 purchaser's cards were handed out, it is possible that these people make purchases in different provinces. Are they given any instructions as to how they should make their purchases based on the location of the supplier?

[English]

The Vice-Chairman (Mr. David Pratt): I will interrupt you at this point because we really do have to get to Mr. Williams, in fairness to him, and we'll move on to Mr. Price at this point, with your cooperation.

[Translation]

Mr. René Laurin: I had finished asking my question and I would hope that you would allow our witness to answer it.

[English]

The Vice-Chairman (Mr. David Pratt): I realize that, but we are pressed for time. We have to be out of this room by 11 a.m., and in fairness to Mr. Williams, who has been waiting for 45 minutes now, I really think we should move the questioning along.

[Translation]

Mr. René Laurin: Mr. Chairman, I find it unfortunate that we do not have the time to question a witness who has submitted a very long document, or to study in any great depth the purchasing process, which is a very complex one. We have only had some 45 minutes during the last meeting and an hour today to question the witness. We cannot do our work properly, Mr. Chairman, if we are hurried and we hear witness after witness without being able to delve into these very important issues. If we must, let us reschedule the evidence of other witnesses.

• 0945

[English]

The Vice-Chairman (Mr. David Pratt): Mr. Laurin, because of the level of interest in Mr. Lagueux's area of activity, I'm sure we can have him back before the committee at some other point. In terms of the timing today, I'm as anxious to get out on the table as much information as you are on this issue, but in terms of the constraints we're operating under today, I think it would be best if we could get very quickly to Mr. Price and Mr. Hart, and then get Mr. Williams before us.

Mr. Price:

Mr. David Price: I'll try to make it as short as possible.

Back on the maritime helicopters and the CF-18s, the maritime project shows nothing in the estimates, no line in there at all for maritime helicopters, yet the SAR is in there, the process it went through, and there are still lines in there to carry it through to the end. There's nothing in there for the overall CF-18 upgrade project, yet there are six lines in there for definite CF-18 items that are going on. So I wonder where the planning was done for the CF-18 upgrades, especially considering that the CF-18s right now are at about 60% of their life, only 40% left, and all we're talking about are systems going into them, not about the airframes at all.

As I say, I'll go back to the last update I have, and this is from the vice-chief of defence staff report of February 3, 1999, where they're saying their priority is definitely the maritime helicopter project and not the CF-18. That's down below.

Mr. Pierre Lagueux: Mr. President, I can explain that.

First of all, on the estimates you have—and I haven't seen the tabled estimates, so I haven't seen the document you're referring to here in detail—estimates only show the money for approved programs. The MHP is not an approved program, therefore there is no spending shown in the estimates for that because they have not yet been approved. The CF-18 lines you see there are not the CF-18 upgrade program per se; they are programs related to the CF-18 that have been ongoing for some years now—for example, acquiring precision-guided munitions, missiles, and so on—but it is not the large CF-18 program that we've been talking about.

Mr. David Price: Okay.

The Vice-Chairman (Mr. David Pratt): Thank you, Mr. Price.

Mr. Hart.

Mr. Jim Hart: Thank you very much, Mr. Chairman.

On page 21 of your presentation, you give four bullets. The first one is that a program should meet the operational requirements “through a competitive, fair and accessible approach (best value for money)”. Are those in priority of how the process works?

Mr. Pierre Lagueux: Yes, Mr. Hart.

Mr. Jim Hart: Further down, at the third bullet, it says: “Further the achievement of other national objectives.”

So if the government or the Prime Minister made an announcement, that could affect the national objective regarding a program. Is that correct?

Mr. Pierre Lagueux: I'm not sure I understand your question, Mr. Hart.

Mr. Jim Hart: If you look at the maritime helicopter program—because the Prime Minister cancelled that program; he made a statement in 1993—in effect, the department had gone through the SOR process; they had found the best helicopter for the job. So those two things conflicted, did they not, and the program didn't go forward?

Mr. Pierre Lagueux: I must be having a bad day, Mr. Hart. I really don't know what you're getting at.

Mr. Jim Hart: It became a national objective then that we would not purchase the EH-101 helicopter.

Mr. Pierre Lagueux: Mr. Hart, what I referred to in terms of other national objectives is that these are government procurement objectives, not DND, but they apply to DND as a government department, and there are several other national objectives that are looked at as part of procurement. I've listed some of those on the following page.

For example, industrial regional benefits are already covered under one bullet, but small business, environmental concerns, procurement strategies for aboriginal business, official languages, and international treaties are all things that fall under this rubric of other national objectives.

Mr. Jim Hart: The point I'm trying to make here is that in fact you mentioned earlier, when Mr. Richardson asked the question regarding timelines, that you're trying to get the department and the processes moving as quickly as possible. But in fact, if you take in the time during which the EH-101 SOR was completed for this very same purpose, for the maritime helicopter program, it seems to me what's happening is that maybe you folks keep coming up with the same answer, the same helicopter, and that's causing some political pressure from this government.

Mr. Pierre Lagueux: We came up with a statement of operational requirement for the NSA/NSH project, or the EH-101 that you referred to. That was many years ago and quite a different world and quite a different scenario. We're now working on a statement of operational requirements that applies to the scenario we face today, in the world we face today. Whether that will lead to the same or a different helicopter at this time is strictly speculation, Mr. Hart.

• 0950

Mr. Jim Hart: Let me refer to another page, page 28 of your presentation—this is defence policy 1994. The first two bullets emphasize equipment and life extension as the first priority and new equipment only for core capabilities. Certainly when it comes to the maritime helicopter program, life extension is not even a consideration. Is that correct?

Mr. Pierre Lagueux: We have looked at that as a possibility in the past. And while I suppose one could put a brand-new mission system in the back of the Sea King helicopter, the problem is that you're still left with a very old platform on which to operate. We know it is maintenance-heavy and so on, so again that is still being looked at. But the approach at the moment is really to buy a new helicopter with a new mission system.

Mr. Jim Hart: So life extension is actually being considered?

Mr. Pierre Lagueux: All options have to be looked at before they can be dismissed. It certainly is a question you will ask, and others will ask—have we looked at it? It behooves us to look at it.

Mr. Jim Hart: Given the urgency of the program—

The Vice-Chairman (Mr. David Pratt): Mr. Hart, I'm going to have to—

Mr. Jim Hart: I'll be really quick. It's fortunate that the Wright brothers didn't have to go through this process, because we'd still be waiting for a heavier-than-air aircraft and they might not have even got the contract under this process.

Mr. Pierre Lagueux: I suppose that's true, but I don't think they were flying the types of equipment we're flying, with the mission systems we're flying either, Mr. Hart, and spending a few billion dollars of taxpayers' money. So I think your comment is fair, but we have to put it in perspective.

The Vice-Chairman (Mr. David Pratt): Is there consensus, then, among committee members that we have Mr. Lagueux back again?

Some hon. members: Yes.

The Vice-Chairman (Mr. David Pratt): Mr. Lagueux, thank you very much for your comments today and your responses to the questions that have been put by committee members. We appreciate your assistance.

I would now like to call on Mr. Alan Williams, the assistant deputy minister, supply operations branch, from PWGSC. Mr. Williams, welcome to the SCONDVA committee.

• 0955

Mr. Williams, can you give us some idea as to how long your presentation is?

Mr. Alan Williams (Assistant Deputy Minister, Supply Operations Branch, Department of Public Works and Government Services): I can tailor it to your needs, Mr. Chairman. Is 15 minutes okay?

The Vice-Chairman (Mr. David Pratt): Fifteen?

Mr. Alan Williams: Yes.

The Vice-Chairman (Mr. David Pratt): Okay. I thought you said 50.

Mr. Alan Williams: One five.

The Vice-Chairman (Mr. David Pratt): That might have been pushing the envelope. Fifteen is great.

Mr. Alan Williams: Mr. Chairman, thank you very much for having me here this morning. I couldn't help but think this is a very propitious day, when we're trying to talk about the complexity of the procurement process, to at the same time have the complexity of the weather system out here. I thought it was quite appropriate. But unlike the weather system, hopefully at the end of our discussion we'll agree that while weather is never fair and you can't redress it or appeal it, hopefully you'll better understand that the procurement process is fair and in fact there are appropriate redress mechanisms.

[Translation]

Mr. Chairman, thank you for giving me an opportunity to speak to the members of the committee regarding purchasing policies, procedures and practices within the federal government.

Today I will give you an overview of the purchasing services of the federal government that Public Works and Government Services Canada provides to over 100 departments and federal organizations, amongst them the Department of National Defence.

PWGSC has the mandate to ensure the integrity of the purchasing process. We have undertaken to apply policies and procedures which are fair, transparent and competitive; that is essential in order to offer quality service to our clients within the government of Canada. Furthermore, we are determined to come up with new ideas and to make the purchasing process within the federal government even more efficient as we reach the dawn of the new millennium.

[English]

The roots of the department I represent here today go back to September 1939. On the eve of the Second World War, Prime Minister William Lyon Mackenzie King asked for the preparation of an act to create a department of supply. On Prime Minister King's behalf, C.D. Howe, then the Minister of Transport, defended the move in the House of Commons by declaring that “The best guarantee that profits on war material will be kept to a minimum is to place men of skill, experience and absolute integrity” in charge of purchasing and production.

Mr. Chairman, I can't help but note, however, that if Mr. Howe was here today, he would probably rephrase that and talk about people of skill as opposed to just men of skill.

This led to the founding of the War Supply Board, which became the Department of Munitions and Supply and then the Department of Defence Production. Some 30 years later it was renamed Supply and Services Canada, which almost six years ago became part of Public Works and Government Services Canada.

For almost 60 years these supply organizations and the Department of National Defence have been inextricably linked. Throughout this time, DND has identified its needs and PWGSC has been responsible and accountable for developing and implementing procurement strategies to fulfil these needs.

I'd like to point out the fact that Canada is one of the few countries in the world where this separation exists. For example, in both the United Kingdom and the United States the military does its own procurement. In Canada this separation is crucial to help ensure not only that the process if fair but that it is seen to be fair.

The concept of separation of authority is key to the way we do business in Canada, and the principles that are called for in the Financial Administration Act are the same as we apply for the separation of departments.

[Translation]

The Department of Public Works and Government Services is the largest buyer in the country. Each year, we buy over $8 billion in goods and services from within 17,000 categories. This represents over 63,000 contracts for companies, which stimulate the country's economy and allows us to maintain and often to create employment in all sectors.

The Department of National Defence is our largest client. Contracts that we have with this department represent about half of our business over the course of a year. These contracts do not only deal with armaments, ships, planes and military vehicles. In fact, the purchases we make for the Department of National Defence cover a wide range of goods and services that we also purchase for other federal departments and organizations.

[English]

PWGSC makes every reasonable effort to satisfy the operational requirements of our clients while obtaining best value for the government and for the Canadian taxpayers, and we are committed to ensuring that all suppliers are aware of opportunities for contracts with the Government of Canada.

• 1000

PWGSC is committed to fair, open and transparent competitive procurement strategies that meet the needs of federal departments and agencies. We are committed to ensuring equal access to business for contracting opportunities that are managed in a way that will pass the test of public scrutiny. While we are also committed to delivering excellent service to our clients, we are also determined to deliver best value to the Government of Canada and Canadian taxpayers.

With your permission, Mr. Chairman, I would like to move to a short presentation—in fact, it's shorter now than what I was going to give—about the procurement process and a new framework called benefits-driven procurement, which is a cornerstone of procurement reform. I believe all members have copies of the deck. Following the presentation, or even during, if you have any questions I would be pleased to handle any of them.

Owing to the time constraint, I will perhaps go through it faster than I normally would, but as I say, if there are questions, don't hesitate to interrupt.

You have copies of the deck, I believe. I'm going to be taking you through three major sections. The first few slides will give you an overview of the kind of business we do in general with the Department of National Defence, then I'll talk briefly about benefits-driven procurement, and then I'll try to take you through the process we go through when we procure on behalf of National Defence and all other government departments.

When you turn to slide two, you'll see a description of our top ten clients, and the message there clearly is to show you that from our perspective DND does in fact involve more than half of our business each and every year.

Slide three quickly points out the range of services and products that we procure on behalf of the department, and not surprisingly it covers the whole gamut that you've been discussing with the department in your previous discussions.

Moving on to slide four, here we begin to talk about the PWGSC business contracting principles, and I think without question the cornerstone of our business is ensuring integrity in the procurement process. That is what our department is mandated to do. The legal and legislative framework is tremendously complex. The range of national and international trade agreements, the range of policies, case law, the RFPs that we've put out, the government's contracting regulations, all of these form part of the legal framework we have to administer on behalf of government departments.

Competition is a cornerstone, without any question. When we can procure competitively we will compete. This is what we are after. Even below the threshold agreements of the different trade agreements, we will try to compete—especially over $25,000—wherever we can.

It's important to know what we mean by competing. When we talk about competing, what we're saying to industry is that it's our requirement to make sure they are aware of all of the procurement initiatives that the government is undertaking and to give them the opportunity to make the business decision as to whether they want or do not want to compete. That's their business decision.

When we are aware that there are a large number of companies out there that can do the job, a typical process would involve a request for proposal where we solicit bids. When we in fact do not think there is, and consistent with each of the different trade agreements—and each trade agreement is different—if we identify that there is only one company that is in fact able to provide our need, we are not required to do this, but we do in fact publish an advance contract award notice. And we do that because we do not say that we know everything perfectly. What we are saying is that we think there is only one company, so, industry, we're letting you know what we think is the likelihood here. We think there's only one company; let us know if we're right or wrong.

If we're right, then we will proceed with that company in as cost-effective a way as we can. If we're not, we will then revert to an open tendering process. In this way, however, we're able to keep the costs down to the extent that they're appropriate and not incur huge costs at taxpayers' expense in going through a submission when in fact there is only one company out there that can do the job, again consistent with the rules of the trade agreements.

Openness is fundamental to our job. Canada perhaps has the most open tendering process in the world. All of our procurements over $25,000 are advertised on our electronic system called MERX, which is produced for us and run by the private sector. Contracts Canada, as a result of a standing committee of a year or two ago, was established. All contracts that we undertake on behalf of the crown are on the Internet for everybody and anybody to see. Everything is open. We go out to businesses across this country with 300, 400 or 500 seminars a year on how to do business with the crown. We're trying now to simplify registration using e-commerce so that small business person can do business with the crown in a more cost-effective way.

• 1005

Transparency is the other principle that guides us at all times. We are required to make sure the criteria under which we will select winning bidders is open and transparent to all the bidders. Then we're equally bound to live up to those criteria. When we don't, as sometimes we do not, unfortunately, you will note from my discussion later on there are redress mechanisms that force us to learn from our mistakes.

Turning now to slide five, the contracting objectives, our first priority is obviously to buy what our clients need. Once we do that to the extent we can with regard to the trade agreements, as you'll see, we'll try to meet the socio-economic objectives that are available to the crown.

Let me turn now briefly to slide six and talk about benefits-driven procurement. You'll get a very brief flavour as to how the crown is trying to in fact find new ways of procuring.

We were driven to this approach based on three basic realities. The first is that the government has gone through tremendous downsizing. Resources have been cut 15% to 20%. Dollars have been cut by an equal amount. That's for our department too. Industry has equally gone through significant downsizing. So the way we were doing business before, which was very time-consuming, obviously had to be reassessed in light of these fiscal realities.

Secondly, there is an increasing demand, quite appropriately, on accountability for results. This committee, the media, the Auditor General, the redress mechanisms of CITT, for example, suppliers, everybody has the right to and is demanding proper scrutiny and proper accountability. We have to develop and we have to revise our mechanism to ensure that accountability is there.

Thirdly, and equally important, when you're demanding accountability, while we sometimes single out the procurement process, what people want is results. They want to see successful projects, not simply that we can say we had a great procurement process but we didn't get what we want and our objectives weren't achieved. So we developed a new mechanism called benefits-driven procurement that's designed to do this. There are four main components to it. Essentially we have streamlined the front end, trying to move away from a process that begins with putting out to industry a brick of specs that says we want them to fulfil these 6,743 requirements and submit their bid based on that.

First of all, that takes a lot of time. We can't do that. Secondly, probably six months after we do that, the requirements have changed. Thirdly, by doing that, we're not just telling industry what we want to do but how to deliver it. We're, if you want, removing their creativity and their experiences, and preventing them from providing us with perhaps more creative solutions than we would normally think of by ourselves.

So what we're moving towards more is a situation where what we're putting out to industry is a business case. We're saying to industry, “Here's our problem, here's our business need. This is where we want to be three, four or five years from now. Using your creativity and your experience, devise for us the neatest, most expedient way to get there and we'll consider that.”

So now we have 180-degree reverse logic. Before, they would have to submit a proposal saying of course we can do everything you ask, whether they believed it or not. Now we recognize and reward them for taking our business case and saying, “We've read it; our experience tells us that what you're asking here isn't doable, or if it is doable it's going to increase your costs fivefold. Do you really want to do it?” That's a value-added we're now trying to incorporate in the front end of our procurement process.

We talked about project success, and that's why the concept is important. Before we undertake a procurement now, we're asking our clients to undertake a rigorous risk assessment. You can go through different standing committee reports and different studies. They'll identify perhaps 14 different variables that determine why a project succeeds or doesn't. This includes things like getting senior management commitment, clarifying the user needs, adequate project managers and added cost controls. The procurement process is just one of those variables. In our process, we want to make sure they are all under control before we proceed. If not, we're going to hesitate.

• 1010

We will be looking for much stricter accountability in our contracts so everybody knows what they're talking about. When I talk about accountability in my relationship with the private sector, I do not talk about partnerships. The word “partnership” leads people to think we're buddy-buddies and friends. The truth is we have different stakeholders, different shareholders and different value systems.

What I really want to have with industry is a good business relationship, with each one knowing what they are accountable for. Moving down that road, I hope we will be more successful in achieving results. In the IT world in particular, you can look at the results that basically say only one out of every nine large-scale projects is ever completed on time and on budget. Half of them are finished with double the costs. That's the history of large projects internationally. We have to try to find a better way.

Let me now quickly move on to the procurement process itself. I will quickly take you through the process within the next five minutes. The procurement process starts with the client defining their need. We try to do due diligence to make sure the need is not wired—it's fair that industry will compete for it. We do that by doing a couple of things.

We try to have discussions with industry before we go out with the RFP. We show them what we think we will be putting out and ask them “From your perspective, is this one you can live with? Are there any prejudices or biases in there you think would be problematic?” If so, we will modify the RFP in accordance with that.

We also try, in accordance with BDP, to focus more on performance criteria as opposed to specs. This is the kind of performance we need from the particular system. There may be a lot of different ways of getting there, as opposed to giving the specifics of the system, that could lead industry to think we're targeting or marketing just one particular company or one company's product.

Once we're comfortable with the requirements, we then have to go through a rigorous internal analysis to see the applicability of the trade agreements. This is tremendously complex. By and large, we're focusing on the Agreement on Internal Trade, NAFTA and WTO.

Each of these has things in common. They all give you the information about time limits—when they should be out and should not be out. They all tell you to specify the bid evaluation criteria nicely. They all require dispute resolution and proper reporting. So there are similarities, but they all have different coverages for goods and services, they all have different exclusions, and you have to be able to understand the implications of each one before you go out on a procurement. They all have different thresholds they all apply to.

So we have a significant challenge within our organization to make sure we have a comprehensive knowledge and understanding of the trade agreements.

If the trade agreements do not apply, than as you'll see on slide 14, there are a number of different socio-economic programs we can go through. We review our policies to see if there are industrial and regional benefit provisions or other government objectives we can apply. We look at the possibility of limiting the particular good acquisition to those that are of Canadian origin, or services of Canadian origin, if we can. The corps of commissionaires—again it is restricted to the corps of commissionaires to provide security services. Munitions supply is another example of a program that was established in the late 1970s to ensure that the Canadian government and the Department of National Defence had a continuous flow of ammunition from within its borders.

Once we move on from that, we then have to look at the procurement strategy. As I said at the outset, competition is our guiding principle. We will do everything possible to ensure we compete whenever possible. We will again, though, in doing these kinds of things, make sure the context is looked at. There has been a project or two within National Defence where, because the risks were too high, there wasn't proper buy-in. The business case wasn't strong any more, as it was two or three years ago, so we stopped the procurement; we didn't go with it.

• 1015

Historically, we may have gone out with it and then found out we didn't have the right case after people had spent a lot of time on it. Now we're trying to look at those comprehensive risks before we go out. We're trying to make sure accountability is clear. We're trying to structure teams differently to make sure industry knows what's expected of them.

I have no trouble making sure industry earns a fair profit. In fact, we want to try to build in incentives so they can get more compensation, as long as it's a reflection of the kind of behaviour we want. What I do frown upon and what I'm trying to move away from is when we pay for time. We want to pay for product, delivery and results, not simply for month after month of expenditures on the part of industry.

The system we use, which I've talked about very briefly, is MERX. It's open and available to all industry. Industry can get on it free of charge. They can spend $7 or $8 a month now to get a whole series of other benefits, along with knowing what's out there, should they so desire, but it's not mandatory. The system now is picked up by seven provinces—the whole MASH sector. Many elements are involved in it too. So it's a good example of the kind of cooperation we can work on jurisdictionally.

In terms of evaluation and negotiation, the criteria have to be specified in the RFP. We normally go with a number of routes. We may specify that it will to be the lowest-price technical-compliant bidder. We may go with a different method, best value, where we rate their technical proposal in light of their dollars. So, for instance, if we can get a Cadillac at a Chevy price, we might want to buy that as opposed to a Ford Escort.

Once we have concluded our evaluation, there are usually negotiations on all our terms and conditions, depending on the authority level. It is important to note that our minister is accountable for goods within the crown. The Treasury Board Secretariat is accountable for services. So our minister designates what authority levels other departments have.

Once it's gone through the appropriate approvals, we then make the award, and all non-winners are debriefed so they understand the reasons they didn't win. We then publish the contract award notice, again advising everybody what we did.

Everything up to this point is subject to a redress maximum set by the Canadian International Trade Tribunal. It's a quasi-judicial body that reports to the Minister of Finance. Any supplier who feels grieved, at any point up to this time, can go to the CITT, provided they go within 10 days of being made aware of why they were ruled non-compliant.

In terms of performance, you can see from the chart provided that we don't do too badly. In 1997 we had 45 complaints. I should point out that with the intervention of the trade agreements, this has really gone up tenfold over the last five years. The previous year it was 13, so it has gone from 13 to 45. In 1992 it was about 10, so we're seeing a high escalation. It's industry's right to do that. We're satisfied that, by and large, we do pretty well in terms of the final results that are resolved by the CITT.

Contract administration is a key role of ours. Once a contract is signed, much of our work begins. We manage the contract, make changes as appropriate, make sure changes are made to the dollar amounts we are monitoring, and ensure vendor compliance. All these things are significant parts of our job.

If the supplier is not happy with the contract, there's a wide range of dispute resolution mechanisms they can go to. They can litigate. Very often they come in to see my officers and me, and we try to settle the matter amicably. If that's not possible, there are different boards in operation—one for contracts and one for Public Works kinds of issues—and these can be resolved at those fora as well.

Thank you very much.

• 1020

The Vice-Chairman (Mr. David Pratt): Mr. Williams, you had a slight cost overrun in terms of the amount of time consumed, but we'll proceed here.

Mr. Hart, you have 10 minutes.

Mr. Jim Hart: Thank you very much, Mr. Williams. That was a very interesting presentation.

I would like to talk about regional development as far as procurement is concerned. You mentioned that as being—I guess it's the second step—socio-economic review. And one of the reasons for the high costs of some capital projects, especially when it comes to the Department of National Defence, has been the attachment of industrial offset or regional economic development. I guess that's probably the reason we have 12 frigates that cost $10 billion, and Griffin helicopters that cost $1.2 billion.

When the Auditor General appeared before the SCONDVA committee he stated that their general impression based on their 1992 audit was that there were substantial costs, and that sometimes the benefits of industrial offset tended to be exaggerated. I would like to explore this a little bit further with you. On average, how much do industrial offset and regional development provisions add to the cost of a major capital project, and how much would such purchases cost if the equipment were purchased off the shelf?

Mr. Alan Williams: I'll make a couple of comments.

First, I think discussions in detail about industrial and regional benefits should probably be directed more toward Industry Canada officials. Having said that, when we normally go out for industrial and regional benefits, we're really talking for the most part about major crown projects that cost over $100 million. These projects are by and large computed. So I would argue that the industrial and regional benefits we get are in fact within the scope of competition, thereby keeping the costs from a value standpoint for the crown.

By that I'm saying that industry knows what we've asked for. They're not under any obligation to supply them if they don't want to. If they don't, they can choose to come in with lower costs, by and large.

I have no objective evidence to show the extent to which the industrial and regional benefits have increased costs. I can point to—and Industry Canada can give you specifics, because they're accountable—the fact that they have generated significant jobs and benefits nationally. On whether, in terms of the costs of doing that, they would have lowered their bid by x% or y%, I have no objective evidence.

Mr. Jim Hart: So you wouldn't necessarily agree with the Auditor General's comments on that.

Mr. Alan Williams: That's correct.

Mr. Jim Hart: Let's check this one out. The Auditor General also stated that he was concerned, and actually made a charge that equipment of low capability was being acquired through the process we have. The Auditor General has argued that systems with low capability are often being acquired by DND, like the Griffin helicopter, and only a partial Leopard tank upgrade.

Peter Kasurak, principal of the Auditor General's office, when asked if he agreed that many of these equipment programs have been a waste of taxpayers' money, stated:

Our report called into question the value for money of this whole philosophy of low-end procurement...strategy. So in general I think we would agree.

How do you answer that?

Mr. Alan Williams: Our job within Public Works and Government Services Canada begins from the moment any client department comes to us with a need. So I'm in no position to comment as to whether or not the particular procurement they asked for was appropriate or not. What we take is that the client feels that is what they need. That's our starting point.

Mr. Jim Hart: But you also indicated somewhere in here that you wanted to make sure there was value for money.

Mr. Alan Williams: That's correct. And through the competitive process, we can make sure that what we are procuring on behalf of our client does in fact deliver that value for money. The issue you're asking about is a separate question. Was that good the right kind of good? Should they have been looking at a different good with a different capability? I'm in no position to comment on that.

Mr. Jim Hart: Thank you. That's it.

The Chairman: Thank you, Mr. Hart.

Mr. Earle, do you have any questions?

Mr. Gordon Earle: Yes.

The Chairman: Go ahead, you have 10 minutes.

Mr. Gordon Earle: Thank you.

With regard to the trade agreements, I know what the WTO and NAFTA stand for. What is AIT?

Mr. Alan Williams: Agreement on Internal Trade.

Mr. Gordon Earle: Right, so that's provincial.

Mr. Alan Williams: That's right. All provinces and territories are signatories to that. And the reason that is so crucial, just to make sure members are aware, is that under NAFTA and WTO you have national security exemptions, and under that rubric, much of what National Defence does can be precluded from those agreements. Under the Agreement on Internal Trade that's not the case. So unlike the United States, we are in fact, in accordance with the AIT, required to conduct many more open and competitive procurements even though they relate to National Defence kind of business.

• 1025

Mr. Gordon Earle: Yes. So with respect to these trade agreements, after the requirements definition comes in and you assess it against these trade agreements, have there been instances where you found, and I am thinking in particular of the international ones, that perhaps these trade agreements militate against getting the best value, in terms of the way the project is originally defined, for Canadians?

Mr. Alan Williams: No. My job is to work within the trade agreements, and I think we can.

Mr. Gordon Earle: So you haven't really found any impediments through these trade agreements that would prevent the project from going ahead in the best interest of the Canadian economy?

Mr. Alan Williams: That's correct.

Mr. Gordon Earle: Okay, thank you.

Mr. Alan Williams: It adds time, it adds process, it adds openness and transparency, but I would argue these are good values as opposed to bad values.

Mr. Gordon Earle: Thank you.

The Vice-Chair (Mr. David Pratt): Hec Clouthier.

Mr. Hec Clouthier: Thank you, Mr. Speaker...sorry, Mr. Chair. Maybe you could be the Speaker someday too. If you can look after this group, maybe you should be the Speaker.

I'm going to share my time with my colleague here from Nipissing, because I only have a short question and I know Alan has a fondness for speaking with great rapidity so it's not going to take him long to answer this question. I do notice you also started out by talking about the vicissitudes of the Canadian winter, and here we have snow and you brought snow back. It wasn't snowing until you mentioned that, but talking about the variability of these—

Mr. Robert Bertrand: Time's up, Hec.

Mr. Hec Clouthier: I have one minute and 52 seconds left. Talking about the variability of procurements, the other day we had Pierre Lagueux making a comment about the number of DND cases that were brought before the CITT tribunal. Now, Alan, can you just tell the committee, comparatively speaking, how do the challenges brought before the committee with the DND fare with the other governmental departments?

Mr. Alan Williams: In fact, DND fares a lot better. I think I had one chart up there that showed we had in 1997 about 45 complaints that were examined, and I think 5 were upheld. That's about 0.8%, something like that, based on the number we have. In DND's case, they only had I think about 8 complaints, and you can figure they're 50% of our business—only 8 complaints and only 2 were upheld.

In fact, from a numbers standpoint, if you use the CITT as a gauge, they're probably at least twice as good from that perspective. It doesn't surprise me, frankly, because for many departments procurement is just a side business. Most are involved with citizenship or immigration or Indians or transport systems; that's their business and that's what they're mandated to do, and procurement is kind of a by-product. That's not the case in National Defence. Pierre has a huge organization, they focus a lot of time and attention on procurements, and so they develop a certain skill set there that in fact isn't mirrored in many of the departments.

Secondly, most of the department's procurements are in fact complex ones and so they are subjected to a lot more scrutiny and rigour because of the increased complexity.

So when you marry those different things together, it doesn't surprise me that...we pay more attention to National Defence, quite frankly, and the results show, using the CITT as a gauge.

Mr. Hec Clouthier: Okay.

Mr. Bob Wood (Nipissing, Lib.): I just want to pick up a little bit on what Mr. Hart was saying about the Auditor General when he talked about some of the defence department's acquisitions. This kind of makes me wonder how well Public Works is communicating with DND to ensure that we're trying to acquire the right materials. Without laying any blame, I wonder if you could outline for us how this sort of thing can happen, or maybe at the very least walk us through the procurement process as it relates to DND, so we can maybe assess the system.

Mr. Alan Williams: Well, I'm not sure the process I've outlined for you is any different for DND. In fact, it isn't. It's the process we apply to government in general. When you have major crown projects, then in fact this process has a layer upon it of increased senior policy advisory committees and different oversight because of the complexity, but with the major steps going from requirements, socio-economic benefits, looking at the procurement strategy, taking it through the competitive process, through the evaluation, the result is the same.

• 1030

The Vice-Chairman (Mr. David Pratt): Mr. Laurin, you have ten minutes.

[Translation]

Mr. René Laurin: Thank you, Mr. Chairman. That is very fast service.

[English]

The Vice-Chairman (Mr. David Pratt): You're certainly a keener today, Mr. Laurin. I can't figure this out. Go ahead.

[Translation]

Mr. René Laurin: Mr. Williams, when you spoke of the definition of need, you seemed to mention that that could be seen in different ways. I would imagine that before defining a need, one has to justify it. You do not make that justification; you are not involved at that point.

Mr. Alan Williams: That is the responsibility of each department.

Mr. René Laurin: Therefore, it is not up to you to decide whether the request for a product is justified or not. You receive an order and you act accordingly.

Mr. Alan Williams: That is correct.

Mr. René Laurin: At page 20 of your document, you mention evaluation and negotiation. Where are dealing with the lowest bidder, there is no problem. It's obvious. The numbers speak for themselves and the choice is quickly made.

Furthermore, as to best quality, who intervenes to decide which contract guarantees the best quality? Is it just Public Works or are there other departments?

Mr. Alan Williams: It is always the Department of Public Works and the client, together. At the beginning of each project, we examine each option to determine what would be the best way to hold the competition. Thus, it can vary with each project. We try to find a way to get industry involved as soon as possible.

Mr. René Laurin: Now, since we're dealing with a very subjective criterion, how do you proceed to reduce subjectivity as much as possible when making a choice?

Mr. Alan Williams: We try to eliminate subjectivity as much as possible. We try to make an objective analysis of several of the details contained within the submission and of the criteria within the industry. Most of the time, undoubtedly, we do manage to do so. Otherwise, we would receive a great deal more complaints from CITT or other organizations.

It's not necessarily difficult, because there are technical criteria, performance specifications that we can be very specific about. I think that if we try, we could always find objective criteria for the purpose of the evaluation.

Mr. René Laurin: The Auditor General, in his last report, deplored the fact that we often call upon professionals who are in conflict of interest to judge the value of a contract. For example, professionals within the supplier company in question are sometimes called upon. How would you react to this statement?

Mr. Alan Williams: I do not agree with you at all. The people who judge each project are independent; that is why I indicated at the beginning that there was a separation between the clients and the agents of my Department. We are always there to verify objectivity. When there is a doubt, I will hire a third party to revise the documents and to confirm that everything has been done transparently and appropriately for each supplier.

Mr. René Laurin: The Auditor General indicates as well, that in many cases, technical studies have not taken into account the uses to which the equipment would be put by the Department, that these studies were carried out too late to influence the decision- making process, or produced results that were contrary to those the decision was based on, or were carried out by companies or manufacturers who had a vested interest in the Department's decision.

You say that you are not in agreement with this.

Mr. Alan Williams: Well it says....

Mr. René Laurin: So, the Auditor General is not telling the truth.

Mr. Alan Williams: He is speaking of events which have occurred within each department, in this case the Defence Department.

• 1035

I would make a distinction between the events which happen in each department and the time when Public Works and Government Services deal with the event. What they do is their responsibility. I am in charge when things have to be sent to tender. There is a distinction between the two operations.

Mr. René Laurin: Recently, Mr. Williams, we went to visit Germany where we met with executives of Eurocopter Canada whom I asked how it was that they were not able to qualify for the helicopter contract. We purchased Cormorans, while they sold Cougars, I believe. After a rather long diplomatic preamble, they ended up telling me the truth, that it was for political reasons.

I would therefore like to know at what stage in the process politics can come into play. There must be one, since it is up to the Department to approve the contract. Is it at the end of the process or during the course of the evaluation? When? I'm not asking you to give me a judgment as to whether that is good or bad—I think that you're going to tell me that it's none of your business—but I would like to know at what stage in the process political intervention may come into play.

Mr. Alan Williams: It doesn't happen at all.

Mr. René Laurin: Well then, how can a company claim that a product was chosen over theirs for political reasons?

Mr. Alan Williams: I cannot speak for them, but I can say without hesitation that there was no intervention whatsoever.

Mr. René Laurin: Or if there was....

Mr. Alan Williams: I can tell you that I often see....

[English]

An hon. member: You're smiling.

Mr. Alan Williams: I always smile.

It's amazing how people who are not successful find a lot more problems with the process than those who are, and they have a tendency to try to shift the responsibility for their lack of performance from their company and their response to the proposal to the crown. I have a great deal of angst about that. A lot of people work really hard, especially in our area, to ensure integrity in the process, and the results prove it, and I'm not bashful at all.

In the meantime, the company bid; they were not compliant. I did have a third party come in and assess that in fact they were not compliant—to answer your previous comment. I have no hesitation to pin accountability where it is.

[Translation]

Mr. René Laurin: But, Mr. Williams, certain evaluation criteria are so subjective. I'm referring among others to the regional distribution of purchasing. There can be an element of subjectivity there; it's not something that is clear-cut.

Mr. Alan Williams: You are correct, but that is not a....

Mr. René Laurin: There is some political intervention at that point.

Mr. Alan Williams: No, no, not at all.

[English]

Unlike the mandatories and the rated requirements, the IRBs are in fact only looked at once you get a complying bidder. So on the helicopter, it's not a question whether or not someone would fail or not fail because of the IRB; they failed because they didn't comply with the technical requirements. Yet they obviously felt that it was open enough to take the time and the money to compete, so I'm not willing to accept their accountability for non-performance and to shift it with excuses of political interference or that it was subjective. I don't think that's fair.

[Translation]

Mr. René Laurin: Mr. Williams, I would be surprised that that would happen here in Canada, but human nature being what it is, I would like to know whether we have taken any measures to prevent this from happening in the future. If, when there is a call for tenders, a client wanted to favour one supplier and ensure that they would have the order by inserting a specific requirement or more stringent condition, knowing that only this one supplier could meet those criteria, could you intervene and state that this is unacceptable?

Mr. Alan Williams: Absolutely. We are not perfect, but we do try to intervene through certain means. First of all, we do from time to time have some discussions with the suppliers before the contract is handed down, before the EPRs, to get their point of view. If something like this is included in the tender, undoubtedly the other suppliers will let me know about it if something just doesn't sound right. Then I can make changes.

• 1040

Furthermore, I try to focus on results rather than on specifications. Therefore I would hope that more suppliers would be in a position to give me the performance required rather than to meet specifications. I must recognize that there are cases where I may have been mistaken. Suppliers can then go to CITT and, if their point is valid, there is a redress mechanism.

The Vice-Chairman (Mr. David Pratt): Thank you, Mr. Laurin.

Mr. René Laurin: Are the ten minutes already up? You don't speak fast enough.

Mr. Hector Clouthier: Fifteen minutes.

[English]

The Vice-Chairman (Mr. David Pratt): It's amazing how quickly it goes when you're having fun.

Mr. Richardson.

Mr. John Richardson: Thank you very much, Mr. Chairman.

There are a couple of things I like in the overall view here, and that's the role you play in the process. Particularly, I think it has given the Department of National Defence people a feeling of security that there is an overview of it, and that the overview is being held in a forthright manner, and that they can get on with their business, not always looking over their shoulder. From that point of view, I salute what you're doing. It's the first time I've had that explanation, and I appreciate it.

There are one or two things I would like to know.

It's a small thing, and there's probably a very good answer to it, but I wonder how the corps of commissionaires got into that. Why are they listed in this section under the four—

Mr. Alan Williams: I listed it because, frankly, I thought it would be of interest to this committee.

Mr. John Richardson: Oh, that's great.

Mr. Allan Williams: There are a large number of those, and I tried to list them.

I don't think there's anything magic to it, but since, I guess, World War II, the government has used the corps of commissionaires to provide security services. As people are aware, the corps is non-profit. It's basically there to provide meaningful employment for war veterans. Under the existing trade agreements, there are ways of excluding these kinds of services.

We brought it back to the Treasury Board a number of times. The last time was 1996, and they gave it a blessing for another five years. So I think they felt that consistent with the Canadian value system, this was the right thing to do. The corps of commissionaires get a contract in the order of about $130 million, so it's not insignificant. Frankly, I'm kind of proud of it. It's a nice kind of way that Canada....

But I think, in answer to your question, it shows that even with the trade agreements, working with the trade agreements you can manage to do the right kinds of things in the right way.

One other comment about your relation with DND is that I think they feel that they are sometimes of two minds. Yes, they're happy that we're there questioning and challenging, but when we don't agree, that poses questions for them too, and sometimes there's a “grrrr”. But that's our challenge role, and at the end of the day, I think we're able to deliver what they want in a way that meets our principles and values that we've talked about.

Mr. John Richardson: I couldn't agree more that a review by you gives them some kind of assurance that they're on track and they're not in trouble.

Thanks.

The Vice-Chairman (Mr. David Pratt): Thank you, Mr. Richardson.

We'll go to Mr. Price now.

Mr. David Price: Thank you, Mr. Chairman.

I have a couple of nice short questions, but I have a feeling the answers will be long.

Mr. Hec Clouthier: We're giving you some leeway, Alan.

Mr. David Price: If we take as an example the SAR project, which is in the process right now—

Mr. Alan Williams: The SAR one is done—

Mr. David Price: This is what I'm going to get to.

Mr. Alan Williams: Okay.

Mr. David Price: I'd like to see the example of taking it from where you picked it up to where it is right now.

Mr. Alan Williams: Right.

Mr. David Price: DND is following that project along at a cost of a little over $4 million a year. I wonder what your involvement is also, as it's being followed along, until we actually get delivery.

Something that came out of Mr. Laurin's comments was that in a project, let's say even a project like this, like the SAR project, when you start your tendering process and you go out to tender, even though you've received everything from DND, and somebody comes along with a proposal that all of a sudden reduces the costs—you have the quality; you have the same thing—who ends up having the say at that point? Are you in control at that point, or does it go back to DND to start over? Do you send it back?

• 1045

Mr. Alan Williams: Let's talk about SAR first and then we'll talk about the second question.

From the moment we made the announcement back on January 4 or 5 of 1998—I know that because I had to fly back from my holidays for that, in the ice storm—frankly, we had to take from the announcement time.... We talked about negotiation earlier. We in fact then started our negotiation with our experts from my department on the contract. In fact, while I think the public figure at the time was for $593 million, something like that, it turned out that the contract we signed for them was for $579 million.

My job was to make sure that when we negotiate the contract we do it in the most expedient way, and when you sit down and examine their bid in detail, sticking within the parameters of mandatory requirements and not trying to tamper with that, you do find ways of streamlining certain things and finding smarter ways.

The first part of the answer to your question is that my job is to try to negotiate the best possible contract on behalf of the crown.

Mr. David Price: Along with DND? Is DND sitting with you all along?

Mr. Alan Williams: Absolutely. There's nothing we do in isolation. But at the end of the day the contract signature is PWGSC's, it's not National Defence's, and I'm the contracting authority. From that time on we are working with the company—in fact, my people are now overseas looking at progress on the contract, looking to see whether or not the costs are in line, looking to see whether or not the contractual requirements are in fact being applied on the search and rescue.

Mr. David Price: There again, DND is along with you all the way.

Mr. Alan Williams: Absolutely. We don't do anything in isolation; everybody has to know. But if you want to talk about specific accountabilities, the contract accountability rests with me and the program responsibility rests with them. Together we have to make sure we're going hand in hand. If there's a problem with the aircraft from a program standpoint, we have to know about it so we can make the proper adjustments in the contract from both a technical standpoint and a cost standpoint. We're busy working on that even as we speak.

Mr. David Price: In that process, as I said, the cost to DND is a little over $4 million a year to follow it along. Your costs in that, if you're following along, are probably going to be in the same ballpark. That comes out of your budget or out of the project budget?

Mr. Alan Williams: There is a project budget associated with it. With search and rescue you're talking about roughly $199 million, plus or minus. All of their costs and all of our costs are included in that. Whenever you talk about a major crown project of $100 million plus, costs from all departments are included in there and that's where they're funded from.

Mr. David Price: Okay.

Mr. Alan Williams: Now, your second question....

Mr. David Price: Yes. We can even take the SAR as an example. It's a very large project, but.... Let's say somebody comes along after you've sent out tenders. Some company out there says, “Hey, just a minute, I could quote on that and I have something a lot cheaper, a lot better. The specifications are different, but I can do the same job with it.” And they come to you with that. What do you, as the contractor, do with that case?

Mr. Alan Williams: Too little too late. They would have had an opportunity to comment on whether or not the specifications were of a disservice to them, whether they would be precluded from bidding. Once we go with the RFP we will not tamper with it unless we know we did something wrong. We certainly won't do something that can be seen to favour one company over another. For better or for worse, that's it.

We may decide we've done something wrong, and then we'll cancel the whole thing and start it up again. If we start up again it has to be dramatically different from what we cancelled because we don't want to be seen to have just cancelled something one day and start out again the next day, and then somebody else gets in.

With something as complex as this kind of procurement, there's no question, there was tremendous consultation before we went out. Everybody knew what was in there—in fact, I would argue that four companies felt it was open enough and transparent enough that they had a shot to win, and they all bid. If somebody comes in after that, it really is too little too late. Our values of openness and fairness I think would be just devastated if we were to do that.

Mr. David Price: A project like that tends to stretch out over years. What if during the project somebody comes along with a technical innovation that changes the whole ballpark, which happens a lot?

Mr. Alan Williams: Absolutely.

Mr. David Price: What do you do in that case?

Mr. Alan Williams: Hopefully we're smart at the front end to recognize that possibility. It gets back to talking about the kinds of performance things you want as opposed to the specific detailed specs to get you there. If you do the former, then in fact you can talk about the kind of performance you need from a particular aircraft without constraining or containing the kind of creative ideas you're talking about.

• 1050

In fact we went out recently—and this is what BDP is, so it's a perfect example—for a radio system up north, where we applied this kind of principle. One of the companies came in with a tremendously creative idea we hadn't thought of, using government-furnished equipment. It caused our legal people a great deal of angst—“What? How can you do this?”—but in fact we applauded them for creativity. It was a new approach and it saved the taxpayer money, and we went ahead with it.

So as we move more toward these kinds of ways of doing procuring, I think we can accommodate that kind of creative energy from industry a lot better than we could have historically.

The Vice-Chairman (Mr. David Pratt): Thank you.

Mr. O'Reilly. Five minutes.

Mr. John O'Reilly (Haliburton—Victoria—Brock, Lib.): Thank you very much, Mr. Chairman, and Mr. Williams, thank you for appearing.

It's a pretty complex report. I want to go back to Mr. Hart's comment on Peter Kasurak. In my former committee on public accounts I perceived there was hostility in the Auditor General's department on the DND auditing. I wondered if in your opinion DND is audited harder than other departments. The reason I ask that is that other departments are subject to the same scrutiny. You talked about a hundred and some departments or whatever that you do, and I found, in following public accounts, that it would appear as though DND were always criticized more than other departments. Is that because maybe they buy more or there's a bigger thing?

If you go to chapter IV, they report on equipment projects and they say you were “likely to meet the cost and performance objectives”, but then they go on to say you didn't conduct adequate analysis to support the decisions and so forth.

Now, other departments you're procuring for do exactly the same thing and aren't criticized on it. So I go back to Mr. Hart's friend, Mr. Kasurak, and realize that he graduated from Duke University and he writes articles on various management issues, and he left the Department of National Defence before entering the Auditor General's department. I find, in my own mind maybe, that there's a perceived hostility.

So as for the Auditor General's department, in your mind, and you may not want to answer this—I'm going to look into it further—is he biased or hostile? You know, if you have someone writing military books who's auditing you, who knows better than you do, and they criticize you.... And I don't find this in other departments.

That may be a hot topic for you to answer, but....

Mr. Alan Williams: I think you are right, I don't want to answer it, but it's because I can't answer it. I'm in no position to judge whether the AG is harsher or not harsher on DND than on any other department. I couldn't comment on that. I have no way of knowing.

Mr. John O'Reilly: No, I said it was my own perception, but I detect this hostility and wonder if there is, in your mind...not hostility, but maybe DND is audited a little harder because of the large procurements that are made.

Mr. Alan Williams: DND has a lot of complex pricey commodities that they're purchasing. It would stand to reason that those would be audited, but I think other large-scale systems are being audited all across the department, whether it's HRDC's...everybody's being audited too. Other than that, I can't comment.

Mr. John O'Reilly: Thank you, Mr. Chairman.

The Vice-Chairman (Mr. David Pratt): We have six minutes left and three questioners. Anybody want to do the math on that?

Mr. Bertrand, very quickly.

[Translation]

Mr. Robert Bertrand: I would like to come back to the International Trade Tribunal. You said that they had received 45 complaints.

Mr. Alan Williams: In 1997.

Mr. Robert Bertrand: In 1997. Amongst these complaints, were there any from international bidders?

Mr. Alan Williams: Are you asking if there were complaints about suppliers?

Mr. Robert Bertrand: Yes. Were some of these suppliers from Great Britain?

Mr. Alan Williams: Perhaps, but I am not entirely sure, I believe they all came from Canadian companies.

Mr. Robert Bertrand: Five complaints were upheld. What happens then?

• 1055

Mr. Alan Williams: Generally speaking, we cover the costs incurred to make the proposals. If it's a serious case, we can also allocate an amount for lost profit. Generally it's a question of money.

Mr. Robert Bertrand: I assume that those who make a complaint require the services of experts. Are these charges reimbursed to them? I don't know if you follow me here.

Mr. Alan Williams: Yes, it happens. They provide a list of their costs. We examine their costs and we try to determine a fair amount.

Mr. Robert Bertrand: That's all.

[English]

The Vice-Chairman (Mr. David Pratt): Thank you, Mr. Bertrand.

Mr. Hart, followed by Mr. Laurin if there's time.

Mr. Jim Hart: Thank you very much.

I want to follow up on Mr. Laurin's question regarding political interference, which sparked my interest a little bit. I believe you had stated that there is no political interference.

Mr. Alan Williams: That is absolutely correct. In the three and a half years I've been accountable for government procurement, there have been zero instances of political interference in the process.

Mr. Jim Hart: And when a contract is being looked at, or when you're looking at the requirements, operational requirements drive those considerations.

Mr. Alan Williams: That is the client department's responsibility, that is correct.

Mr. Jim Hart: There is a senior committee that's been struck, and I'm going to talk about the maritime helicopter program for one second.

Mr. Alan Williams: Sure.

Mr. Jim Hart: Brigadier-General Dempster had a meeting last week, on February 24 and 25, not with operational people but with spin doctors. They were policy people and also communications people. From the information we have, we also know that Herb Gray is getting involved in this within the next two weeks as well. If that's not political interference and not being driven from the operational side, then why do we have communications people and a minister looking at this issue of requirements and specifications, when it's supposed to be operationally driven?

Mr. Alan Williams: Both of the examples you use are of course outside my area of accountability, so I can't comment on it. What I am saying is that from the moment the decision is made by the government to procure something and the requisition comes over to my department for its acquisition, the process we take is one that abides, without question, to the principle of integrity, openness and fairness, and once we start on a competitive process we stick through it to the end and provide the results that come logically through that concluding process.

Mr. Jim Hart: So you're revising your answer from none to before it gets to you there could be political interference?

Mr. Alan Williams: No, I'm not revising. I can only comment on what's in my area of accountability. And my comment has been that as long as I've been in this department there has never been any political interference in the procurement process that we've undertaken on behalf of any government department.

Mr. Jim Hart: Okay.

The Vice-Chairman (Mr. David Pratt): Mr. Laurin, very quickly.

[Translation]

Mr. René Laurin: Mr. Williams, regarding the attribution of service contracts, several constituents in my riding have complained that they have never been able to obtain anything whatsoever from the Department of Public Works. I'm thinking specifically of the hiring of architects or engineers. Is that also a matter that concerns your Department?

Mr. Alan Williams: Yes.

Mr. René Laurin: Are there any procedures you follow? Is there a rotation? Is it best to be a member of the Liberal Party?

Mr. Alan Williams: In these areas, we work in a very transparent manner. There are directories of the SPEC or ACCORD which are used in the areas of construction and these types of services. The suppliers must be registered in these directories. If there are some in your area who do not receive government contracts, you could call me and I will make sure that their names are added to the directory.

Furthermore, as I have just indicated, we do offer seminars on how to deal with the government and how to obtain government contracts. I could ensure that they learn how to deal with the government.

Mr. René Laurin: Do you consult with the minister when the time comes to hand out a professional contract?

Mr. Alan Williams: Me? Never.

Mr. René Laurin: Never. Does the minister, make any suggestions to you?

Mr. Alan Williams: No.

Mr. René Laurin: No.

Mr. Alan Williams: No.

Mr. René Laurin: Therefore it's simply by coincidence that the professionals hired for a certain number of years are rarely members of the opposition parties.

• 1100

Mr. Alan Williams: As I have just said, from beginning to end, the process follows its course based on determined values and the minister does not get involved in the process.

Mr. René Laurin: If you gave me any other answer, would you expect reprisals?

[English]

The Vice-Chairman (Mr. David Pratt): Mr. Laurin, on that note we're going to have to end this meeting.

Mr. Williams, thank you very much for your presentation and for your comments today. It was very instructive and very enlightening.

Thank you to the committee members.

The meeting is adjourned.