NDDN Committee Report

INTRODUCTION

The Government of Canada has considered carefully the Report of the Standing Committee on National Defence and Veterans Affairs (SCONDVA) with respect to the Procurement of Canada's Victoria Class Submarines. The Government has taken note of the 12 recommendations contained in the Standing Committee's Report.

The Government remains committed to ensuring that the Canadian Forces (CF) are provided with the proper equipment to safely and effectively perform their duties. As such, the Government seeks to provide the CF with the best equipment possible, while ensuring that an open, fair and transparent procurement process meets Government priorities beyond the purchase of military equipment. However, military activities are inherently dangerous and while the safety of CF personnel remains of paramount importance, there are risks that can never be eliminated.

The Government shares the concerns of the Committee over the need to reform the procurement process. This is important in order to ensure that the Government's requirements for goods and services are effectively met, Canadian taxpayers get value for money and Canadian economic and social interests are supported.

The April 2005 Defence Policy Statement indicates that the CF will need to transform in order to allow them to continue to effectively fulfill their mission of defending Canadians, defending North America in cooperation with the United States and contributing to international peace and security. The Government is also preparing a Defence Capabilities Plan that will provide a clear picture of the anticipated operational environment in which the CF will be called upon to operate in, the capabilities they will require to implement Government policy, and the long-term costs associated with these capabilities.

THE RESPONSE

This Response provides a concise overview of the Government's position with respect to each of the Committee's recommendations. In doing so, it provides the Government's position with respect to each recommendation as well as the plans and initiatives in progress, and already in place, that are intended to improve not only the procurement process, but also the training of Canada's submarine crews.

RECOMMENDATION 1

The government provide a comprehensive update of Canada's defence policy at least every four years and report to Parliament in order to clearly identify Canadian defence priorities and the capabilities and equipment the Canadian Forces need to meet their commitments.

The Government recognizes the importance of open and transparent reporting to support effective communication with Parliament and Canadians. Therefore, along with the Minister of Foreign Affairs' annual updates on the International Policy Statement, the Minister of National Defence has undertaken to appear before Parliament to provide updates on the Defence Policy Statement.

These annual updates will provide details on how the Department of National Defence (DND) and the Canadian Forces are implementing the broad priorities identified in the Defence Policy Statement. Further information will also be provided in DND's Estimates documents and annual departmental performance report, as well as the annual report of the Chief of the Defence Staff.

In addition, the Government remains committed to ensuring the participation of relevant departmental and military officials as witnesses before the Standing Committee. In the past two years alone, 55 National Defence and Canadian Forces officials have appeared before the Committee.

The Government's practice has been to conduct a comprehensive review of defence policy as changes in the domestic and international security environment warrant, rather than according to an arbitrary timetable.

In the coming months, the Government will also offer details on military transformation, beginning with a Defence Capabilities Plan that will provide a long-term view of the anticipated operational environment in which the CF will be called upon to operate, the capabilities they will require to deliver Government policy and their associated long-term costs.

RECOMMENDATION 2

The government inform Parliament when any significant changes are made in the planned expenditures or methods of payment for all major military equipment acquisition and related support projects which have received effective project approval from Treasury Board.

The Government provides Parliament with detailed information on the programs, services and operations of departments and agencies by tabling the Estimates documents, more specifically through annual Reports on Plans and Priorities and Departmental Performance Reports. This information includes the status of major Crown projects, acquisition priorities and current and future capital spending.

The Government recognizes the importance of open and transparent reporting to support effective communication with Parliament and Canadians, and continues to view these reports as the primary source of information on procurement issues of interest to SCONDVA. Moreover, the family of Estimates documents also provides information requested by the Committee on significant changes in planned expenditures for major military equipment acquisition and related support projects.

In addition, the Assistant Deputy Minister (Materiel), the senior procurement official for the Department of National Defence, has appeared before the committee on numerous occasions to answer Members' questions and concerns on matters of military equipment acquisition.

Furthermore, the Government regularly publishes reports and documents that provide this type of information. With respect to DND specifically, this information is available on the Department's web sites and includes:

• the annual Defence Plan document which identifies capital initiatives for developing business plans;
• the annual Report on Plans and Priorities which identifies capital priorities and project status;
• the Annual Report from the Chief of the Defence Staff which identifies achievements and ongoing activities to provide equipment capability for the Forces; and
• the annual Departmental Performance Report which provides a forecast and reporting on the status of capital projects.

RECOMMENDATION 3

The Canadian Navy undertake an immediate review of its submariner training program to ensure that it can sustain a cadre of qualified submariners and provide the required amount of at-sea experience on an operational submarine. The Chief of the Maritime Staff should provide a report on this review to the Standing Committee on National Defence and Veterans Affairs.

The Navy maintains dedicated personnel and a training establishment committed to providing the best possible submarine training to assure that the submarine community is continuously able to perform efficiently and safely at a high level.

The training establishment is composed of key stakeholders in the submarine community as well as the Navy's senior training and personnel managers. A specific Submarine Crewing Focus Group convenes as needed to help coordinate submarine training activities and personnel issues.

Through a rigorous training process, which also includes sea-going opportunities, the training establishment strives to produce the optimum number of qualified and experienced submariners and allows newer and longer-serving members to obtain qualifications and advance their careers. Experience levels are enhanced through the use of shore-based simulators and sailing opportunities with foreign navies.

All naval training is monitored and reviewed on an ongoing basis as a matter of routine. The progress of submarine training is captured annually in training performance management reports. DND will continue to make officials available to appear to provide information on issues of interest to the Committee.

RECOMMENDATION 4

The training time at sea on an operational submarine provided for initial and refresher submariner training should be maintained at the currently planned level and increased if the review of the navy's submariner training program deems it necessary.

The Government recognizes the importance of maintaining skill levels of CF personnel through rigorous and realistic training. As the submarines enter service, the CF will pursue alternative training practices to ensure that the needs of the submarine service continue to be addressed. The Navy has developed a strategy through which additional days at sea will be provided to CF personnel by rotating portions of the crews from the submarines that are kept alongside. In addition, sailing opportunities with foreign navies will help enhance experience levels.

This approach will generate additional opportunities for new submarine trainees and will ensure that trained submariners are able to maintain their skills by receiving practical experience.

RECOMMENDATION 5

The Navy review the firefighting training provided to all naval personnel on submarines and ensure that the simulated fire situations used for training submariners are as realistic as possible to illustrate the conditions that could be encountered during a fire aboard a submarine.

The CF established a Board of Inquiry composed of military experts to review the events surrounding the fire on-board HMCS Chicoutimi. The Board's report, which was approved by the Chief of the Maritime Staff and the Chief of the Defence Staff made findings in 38 areas and made 23 detailed recommendations to strengthen crew training, fire fighting and standing operating procedures. The Navy is acting on all the recommendations from the Board related to the safety of the submarines and has carried out the necessary safety improvements for the submarines to return to sea, including modifications to the vessels and enhancements to crew procedures and training, such as increasing the number of fire extinguishers, updating emergency breathing equipment and examining the development of new smoke clearance techniques and fire fighting procedures.

The Navy has reviewed lessons learned in the aftermath of the fire on-board HMCS Chicoutimi and the recommendations made by the subsequent Board of Inquiry. These lessons will be applied to future firefighting and damage control training both in submarines and surface ships, as appropriate.

RECOMMENDATION 6

All major crown projects valued at more than $100 million proposed by the Department of National Defence be reported to the Standing Committee on National Defence and Veterans Affairs for possible examination, as previously recommended in this committee's June 2000 procurement study.

The Government notes the similarity of this recommendation with Recommendation 6 made in SCONDVA's June 2000 report on procurement. The Government continues to recognize the importance of open and transparent reporting to support effective communication with Parliament and Canadians. Through the tabling of Estimates documents, departments and agencies provide detailed information to Parliament on their programs, operations and services, specifically through their annual Reports on Plans and Priorities and Departmental Performance Reports. This information includes the status of major Crown projects, acquisition priorities, and current and future capital spending. The Government is also prepared to have the Minister and departmental officials appear to discuss procurement projects.

The Government considers that the above-mentioned documents should remain the primary source of information on procurement issues of interest to SCONDVA and to other Parliamentary committees.

The Government also notes the readiness of National Defence and Canadian Forces officials to appear before the Standing Committee. This cooperation should continue to provide the Committee with the ability to question the department directly on relevant matters.

RECOMMENDATION 7

Parliament examine ways to increase the resources and the time available to the Standing Committee on National Defence and Veterans Affairs to carry out the examination of major crown projects proposed by the Department of National Defence.

The Government has noted the Committee's recommendation, however, as noted by the Committee, Recommendation 7 is a matter for Parliament to pursue.

RECOMMENDATION 8

The recommendations of recent reports and updates of the Office of the Auditor General (OAG) concerning the procurement process of the Department of National Defence be reviewed for potential implementation as quickly as possible and reported to this committee.

The Government has fully responded to the OAG's recommendations concerning the procurement process.

The Government recognizes the importance of ensuring timely and efficient acquisition of military equipment for the CF while accommodating broader government priorities. As such, it is committed to improving the way it conducts its purchasing to ensure the system functions in an efficient and effective manner. The Government as a whole, and DND in particular, are constantly looking at ways to streamline the procurement process, implement new standards and best practices. Great care is taken to ensure that due diligence is followed and that the procurement process is open, fair and transparent.

DND has implemented many changes to the defence materiel business over the years. The Department has sought to adapt to shifting priorities and unforeseen challenges such as budget reductions in the 1990s, new business approaches, new business tools and a high operational tempo over the last decade or more to continue to deliver high-quality, best value goods and services to the CF. Few organizations in Canada, either in the private or the public sectors, can rival the size and complexity of DND's materiel acquisition and support organization.

The Materiel Group within DND has made excellent strides in simplifying procurement processes, reducing the number of contracts, making better use of information technology and institutionalizing best practices approaches through its Acquisition Reform Program. DND is committed to reducing the time required for acquisition programs by at least 30%.

For example, the speedy acquisition and deployment to Afghanistan of the replacement to the Army's fleet of Iltis light utility vehicles with G-Wagons, and the introduction of tactical uninhabited aerial vehicles, have demonstrated that effective procurement can be done quickly. The Government as a whole, and DND in particular, will continue to find innovative ways to make the development of requirements and specifications, the review of submissions and the awarding of contracts more timely and efficient.

RECOMMENDATION 9

All major equipment acquisition projects undertaken by the Department of National Defence be the subject of rigorous and detailed risk analysis, in keeping with the recommendations of the Office of the Auditor General, with a report to this committee.

Integrated risk management is an essential component of DND's management of major acquisition projects. Furthermore, Treasury Board policies require the development of a Project Profile and Risk Assessment, which documents the risks associated with a project, and outlines the management strategy to deal with these risks for all major acquisitions. Project submission documents to the Minister of National Defence and the Treasury Board seeking Preliminary and Effective Project Approval include a section addressing the overall potential risk to a project based on a complete and thorough risk assessment and risk mitigation exercise. This section of the document includes a discussion of the major risks, their potential impacts and the planned mitigation strategies.

Risks incurred by acquisition projects are reviewed and assessed by senior management at Senior Review Board meetings, which are held on a regular basis. Furthermore, DND's Materiel Group offers various tools, such as the Materiel Acquisition & Support Desktop and other tracking processes and procedures, including checklist aids, to help project offices identify, analyze and mitigate risks. In addition, the Materiel Group provides expert risk management consulting support to project management staff through the Project Support Services organization. Risk management training, both as an integral part of project management courses and other specialized courses, are also provided to support project managers in identifying and managing risks.

DND has institutionalized a systemic approach to risk management by providing the training, tools, guidance, templates, expert support and regular reviews by senior management.

RECOMMENDATION 10

Information on the status of major military equipment acquisition projects be added as an integral part of the Part III — Plans and Priorities of the Estimates documents for the Department of National Defence, instead of just an internet link. Furthermore, the Department, in consultation with the Treasury Board, should review the possibility of adding more information on the rationale for these acquisitions in these documents.

The Government recognizes the importance of striking the proper balance between providing information on its major military equipment procurement projects that is both relevant and timely. The Government remains committed to ensuring its reporting structures and documents are available in an understandable and usable formal for Parliamentarians. DND already provides a high-level overview and status report of major crown projects by referencing electronic documents currently available on-line.

Through the yearly tabling of the Estimates documents, departments and agencies provide detailed information to Parliament on their programs, services and operations, specifically through their annual Reports on Plans and Priorities (RPP) and Departmental Performance Reports (DPR). This information includes acquisition priorities, current and future capital spending and the status of major projects.

The RPP provides high level expenditure plans for the upcoming fiscal year and planned expenditures for future years, and the DPR provides an individual account of accomplishments achieved against the previous year's RPP. In order to ensure equitable comparison between the various departments, each year the Treasury Board Secretariat provides guidance on the content and scope of these reports. Both, the DPR and the RPP are required to provide information on major crown projects. The challenge has been, and continues to be, striking the right balance between brevity and comprehensiveness.

As indicated in the Government's response to the June 2000 SCONDVA report on Procurement, the Government continues to believe that these reports should remain the primary source of information on procurement issues of interest to SCONDVA and to other Parliamentary Committees.

RECOMMENDATION 11

The Office of the Auditor General consider undertaking a review of all major updates and refits of the Victoria class submarines which may be undertaken over the course of their operational service.

The Government notes that it is the prerogative of the Office of the Auditor General (OAG) to review government programs, through a financial audit, performance audit or special examination in accordance with the Auditor General's (AG) mandate. DND will cooperate with the OAG in the conduct of any audit which the AG chooses to undertake.

RECOMMENDATION 12

The Standing Committee on National Defence and Veterans Affairs is disappointed and angered by the inertia and systemic obstruction of the Department of National Defence in producing the bilingual documents required for the Committee to function smoothly. This has frustrated the Committee in doing its work. On a number of occasions, they have proposed tabling English-only versions of documents requested by the Committee. The reasons given for the delay in providing bilingual documents centered on prohibitive costs and inadequate time for translating technically complex material. Whereas this has led to a marked slowdown in the Committee's work, and whereas documents as important as the contract, the list of deficiencies in the submarines and the list of corrective measures took four months to be tabled and certain other requested documents have still not been tabled, it is recommended that the Standing Committee on National Defence and Veterans Affairs file a letter of complaint to the Minister of National Defence and report our concern about easy availability of translated documents to the Commissioner of Official Languages.

The Government values the role of Parliamentary committees and has increased resources to facilitate their important work. For its part, DND recognizes the key role that the Standing Committee plays in parliamentary oversight of national defence and will continue to support the Committee.

From the moment the Committee began studying DND's acquisition of submarines, Defence has supported the Committee's research. Witnesses appeared before the Committee when they were requested. Defence facilitated the Committee's fact-finding trip to Halifax to visit submarine installations and to speak to submariners.

In addition, the Department expedited the delivery of documents requested by the Committee. For example, departmental officials determined that SCONDVA's initial request included approximately 130,000 pages in their original language. Gathering and preparing the documents for release would have taken many months, unnecessarily delaying the progress of the Committee's study.

In an effort to provide timely information to the Committee, the MND shared this assessment with the Committee and offered to tailor the Department's work to reflect the Committee's needs. In turn, the Committee identified priority items and requested that documents be promptly provided to its researchers for review. When the Committee's researchers concluded their initial review, the Committee requested that the documents be translated. Following through on its commitment, the Department placed a high priority on translating them.

Within a few weeks, the Government translated and provided all the documents that the Committee requested. Subsequently, the MND also responded to a letter of complaint from the Committee and reiterated the Government's commitment to addressing all of the Committee's recommendations in a comprehensive response.

Furthermore, the Department is currently working with the Office of the Commissioner of Official Languages to facilitate the Commissioner's investigation into the provision of translated documents to SCONDVA. Defence will continue to support the Committee's work and will continue to ensure that all documents tabled with the Committee are available in both official languages.