:
I call the meeting to order.
Pursuant to Standing Order 108(3)(g) and the motion adopted on Thursday, October 21, 2010, we are considering the report of the Auditor General of Canada referred to the committee on Tuesday, October 26, 2010.
I am pleased to have with us again today, from the Office of the Auditor General, the Auditor General, Madam Sheila Fraser.
[Translation]
Good morning, Ms. Fraser.
[English]
We also have the assistant auditors general, Jerome Berthelette, bonjour et bienvenue, and Mr. Ronnie Campbell. Good morning. It is good to have you with us.
Madam Fraser, you probably know that I am still relatively new in this spot and am fascinated by the reports, as are all Canadians, that say we operate in a system where there are rules, that we follow the rules, and that we revise the rules and then have the Auditor General comment on whether we have observed everything. So I am just dying to hear what you have to say.
:
Mr. Chair, we are pleased to be here today to present our fall 2010 report, which was tabled this past Tuesday.
As you mentioned, I am accompanied by Assistant Auditors General Jerome Berthelette and Ronnie Campbell.
[Translation]
This report covers a broad range of programs and activities that are important to Parliament and have an impact—whether direct or indirect—on the lives of Canadians.
[English]
We are reporting on the first of two audits of Canada's economic action plan. This first audit took place while the plan was being rolled out, and it focused on how programs were designed and projects were approved.
Our second audit, which will be reported in the fall of 2011, will look at whether the approved projects were completed as intended.
[Translation]
The Economic Action Plan is a huge undertaking, involving some $47 billion in federal money and a further $14 billion from the provinces and territories, within a two-year timeframe.
[English]
Departments and central agencies worked hard to accelerate their selection and approval processes and put in place the appropriate controls. We are pleased to see the important role that internal audit played.
[Translation]
In 2007, we began a program of auditing the management practices of small federal entities. This year, we looked at the Canadian Forces Housing Agency, the Canadian Pari-Mutuel Agency, and the Pension Appeals Board. We are pleased to report that management practices in the areas we examined are sound.
[English]
The federal government delivers a broad range of services that have a direct impact on the well-being of Canadians. To achieve and maintain high-quality service, organizations must define service standards, monitor performance, and take action to make improvements when they identify service issues.
We are pleased to note that the Canada Revenue Agency and Human Resources and Skills Development Canada have set service standards and are using them to improve service delivery.
[Translation]
Citizenship and Immigration Canada has been working since 2007 to improve its service delivery. However, it has established service standards for very few of its major programs. We encourage Citizenship and Immigration to complete the work it has begun towards a comprehensive set of standards for its services.
[English]
This report also looks at the way conflict of interest is managed in the public service. We found that the Treasury Board of Canada Secretariat has yet to put in place the new policy required under the Public Servants Disclosure Protection Act of 2007 and to provide related guidance.
[Translation]
Avoiding situations that could lead to conflict of interest is key to maintaining the public's confidence in an impartial and objective public service. Public servants need to be able to recognize potential conflicts and know how to deal with them.
[English]
Departments need to do a better job of determining the areas where they are most exposed to conflict of interest and of taking the required action when conflicts are identified.
[Translation]
We also looked at how the federal government regulates and supervises Canada's six largest banks. We found that the Department of Finance and the Office of the Superintendent of Financial Institutions have appropriate practices in place. Banks play a key role in just about every economic transaction and are major sources of credit. Canada's economic well-being depends on the health and stability of its banking system.
[English]
Experts have linked Canada's relative success during the recent global economic downturn to its approach to regulating and supervising banks. Rapid changes in financial markets present an ongoing challenge.
[Translation]
Chapter 6 of my report presents the findings of our audit on the acquisition of the Chinook and Cyclone military helicopters. We understand that acquiring complex military equipment like these helicopters presents unique challenges. Nonetheless, the results of this audit are troubling. National Defence did not follow its own rules in managing and overseeing the acquisition projects. We identified several gaps with respect to the completeness of information presented to decision-makers as well as approvals and oversight by senior boards at key decision points.
[English]
We found that National Defence and Public Works and Government Services Canada generally complied with the policies and regulations regarding contract management with respect to the acquisition of the Cyclone helicopter. However, this was not the case with the advance contract award notice used by Public Works and Government Services Canada to procure the Chinook helicopter. As a result, it is our conclusion that the contract award process was not fair, open, and transparent to potential suppliers. Public Works and Government Services Canada disagrees with this conclusion.
We also found that National Defence underestimated and understated the complexity and developmental nature of the helicopters it intended to buy. The substantial modifications to the basic models resulted in significant cost increases and project delays. After lengthy delays and significant cost increases, National Defence still has not completely estimated what it will cost to operate these helicopters. Without this costing information and sufficient funds, National Defence may have to curtail planned training and operations. This is cause for concern.
[Translation]
Let's turn now to the chapter on registered charities. We examined how the Canada Revenue Agency encourages registered charities to comply with the Income Tax Act. Canadians donate millions of dollars to Canada's 45,000 registered charities each year. We are pleased to note that the agency is doing a good job of administering the Income Tax Act as it relates to these charities.
[English]
Turning to the Canada Border Services Agency, we found that the agency's practices facilitate the flow of imported commercial goods into Canada. This is important when you consider that Canada imported over $440 billion of commercial goods in 2008. The agency is now working to ensure that it has the information it needs to effectively assess risks and to collect the revenues owed by importers. It is important that it complete its plans and strategies to achieve this objective.
[Translation]
The last chapter of this report looks at whether the Canadian Food Inspection Agency has planned for and responded to animal disease emergencies. Animal disease outbreaks are particularly costly in terms of lost production—not to mention the threat to animal health, and in certain cases, human health. The agency must be ready to act quickly when such emergencies arise.
[English]
We are pleased to note that the agency has learned from its past experience and has put a lot of effort into improving its capacity to respond to emergencies. We encourage it to complete the remaining work that it has identified.
I thank you, Mr. Chair. This concludes my opening statement. My colleagues and I would be pleased to answer any questions that committee members may have.
Thank you.
:
Thank you very much, Chair.
I'd like to take this opportunity to thank the Auditor General and her office again for all the hard work you have done in preparing these reports. It's greatly appreciated and it is very important for us in the committee as well.
I'll be talking about chapter 6, “Acquisition of Military Helicopters”, this morning, and focusing my comments on the mismanagement that you raised, which equates to the billions of dollars in cost overruns.
You mentioned in paragraph 6.59 of your report that, “In 2006, the project was described by National Defence internally and to Cabinet and the Treasury Board as an off-the-shelf procurement”, and then you further stated that, the “Risks were generally assessed as 'low' to 'medium'....”.
First of all, do you believe that is accurate? Secondly, why is this description important? Then, thirdly, I have a follow-up question with respect to comments you made with respect to the F-35s as well.
As we note in the report, we disagree with the description of these helicopters as being off the shelf. There were significant modifications that were needed to the Chinook. In fact, at that time, even in 2006, National Defence itself recognized that there would be modifications that would be required.
I doubt, at the time, that they realized the full extent of the modifications because they actually didn't define the full set of requirements until three years later. During those three years, they continued to look at design, their requirements, and I guess request additional modifications.
Obviously, rating this project as low risk to medium risk would not have adequately informed decision-makers about the potential risks, both to increasing cost and to project delays that subsequently occur.
In the report, in exhibit 6.6, we lay out the various costs and their estimates that National Defence has prepared to date. You will note in there that the estimate of personnel and operating costs has not been completed. This is important because the Chinook is a new helicopter for National Defence. They need to put in place about 500 people to maintain and support it. These are new technical requirements. They have to put those people in place, and the costs of all of that have not been fully been estimated at this point.
We can recognize that at times it may be difficult to do estimations early, but there should be some indication, again, given to decision-makers. If the department doesn't know what those costs are and doesn't receive proper funding, they themselves have indicated that they will have to go back and either reduce operations or reduce training, or look to other areas to obviously find the funds for these operations.
Good morning, Ms. Fraser. I am pleased to be seeing you once again this week.
I will be focusing on chapter 4. My colleague here is our defence critic. He will be looking at chapter 6 with you, and he will do so capably and in detail.
Chapter 4 deals with conflict of interest, and you seem to be less than satisfied with the measures taken since the beginning by Treasury Board in this area. I undertook a little exercise: I went back over the reports published over the past 10 years where you identified conflict of interest situations. I have the impression we have seen this all before and are getting bogged down. Nothing seems to be moving forward on this issue. I am really wondering why. I would be tempted to give you a long list of the conflict of interest situations that have been identified over the past 10 years. As you know, I am interested in the relocation file. I have looked into a number of cases where a conflict of interest was reported, as well as the investigation reports.
The Michel Genest report, for example, showed that all members of the selection committee for the procurement bids were in a conflict of interest situation. I also learned about the work done by the Department of Justice on this issue. They defined what constitutes a conflict of interest and a serious conflict of interest situation. A Justice Canada report talks about “[...]bribery, influence peddling, accepting benefits from persons dealing with government, accepting secret commissions, fraud, self-dealing, selling or influencing appointments and breach of trust.”
Regarding Treasury Board's MAF, some, but very little, of the work has been provided. There is still nothing about the legal provisions expected since 2007. I would like to know whether, in the exchanges you have had with people at Treasury Board, you have had the impression that they are willing to address this issue once and for all. This is ridiculous. When we were working recently on the modernization issue, I raised the topic of the Interchange Canada program, which was criticized in 2006 and 2007, when human resources practices were audited. I am extremely concerned about the direction things are taking with that program. I do not know if you can comment on that.
:
No, I don't want to pass. Absolutely not. I certainly don't want to pass.
Ms. Fraser, thank you for being here. It's very nice to see you.
Mr. Berthelette and Mr. Campbell, don't feel left out. Feel free to participate in this discussion as we go along.
Ms. Fraser, this government has repeatedly suggested that it has created 420,000 jobs, and I will give you some quotes here. In the last week alone said, “I would love to repeat the number, and that is 420,000 net new jobs.”
: “Canada has created over 420,000 net new jobs since July 2009”, and the next day, “...more than 420,000 net new jobs since the end of the recession”.
said on the 25th, “...the creation of some 400,000 jobs in the last 16 months”.
Ms. Fraser, these are very definitive statements. They're not saying we have attempted to create these jobs or we suggest when we do the final accounting that we have created these jobs. They say they have created these jobs. Now, from what I understand, your report does not support these claims. There's no way to tell whether they have or not. What gives the government the right to pull the wool over the eyes of Canadians?
:
Chair, what we found in the audit is that there are difficulties with the quality of the information that Canada Border Services has and with the processes they have to make sure the information that's being declared to them is accurate, and, consequently, of course, that people are paying the right duties and taxes.
One of the problems the agency has--and we report this even when we do our financial audits--is that many of the systems they have are still paper-based, and there is a need to invest in electronic systems so they can have better information. They also need to change the way they're doing their audits to be able to extrapolate and understand their error rates.
There are projects under way, we note in the report. We didn't go in to assess those particular projects, but certainly the agency gives us the assurance that those projects have been designed to try to address these problems and to be able to give them better information. We do see there is an issue. They did audits on about 3% of the shipments coming into Canada and assessed an additional $59 million of taxes. I would caution everyone that we can't extrapolate that because they do this on a risk basis, so they may have picked the highest risk, but they don't really know what the potential could be.
It is really about getting systems that can provide them with better information and then a more rigorous audit program to be able to assess what the lost revenues are.
Thank you, Madam Fraser and colleagues, for being here today and for the fine work you're doing on these reports.
I'd like to focus first of all on chapter 5, “Regulating and Supervising Large Banks”. As a former banker, I'm pleased to see that Canada's banking system is appropriately regulated. As you mentioned, Madam Fraser, Canada's economic well-being depends on the health and stability of the banking system. Over the last two years, during the global economic recession, this has been more important than ever, and it's been proven to be the case.
In your opinion, has the strict regulation of Canada's banking system played a role in Canada being able to avoid some of the problems that occurred in the United States, the United Kingdom, and other countries?
:
As we mentioned, I think this audit is really about the delivery of the program and how it was established.
As you can imagine, when we saw that the government wanted to get this money out very quickly, we were somewhat concerned that people might disregard some of the controls that were in place. We were very pleased to see that there was a lot of attention paid to identifying risks, managing them, and at the same time speeding up the approval processes and the processes to flow the funds out.
We give a lot of credit to the public servants who worked extremely hard to deliver these programs very quickly while at the same time ensuring there was responsible management of the programs and appropriate controls.
In particular, I would like to note the work that was done by the internal audit groups. We saw that they changed their plans, in some cases carried out audits to give assurance to senior management, and in other cases provided advice on how programs should be established. We were actually able to rely on the work that internal audit had done, which hasn't happened very often in the past.
I think the public servants deserve a lot of credit for what they have done.
:
Thank you, Madam Fraser. Thank you, Mr. Saxton.
Madam Fraser, before I go to the next intervener, I'd like to ask a couple of questions.
We are all very anxious to make sure that everything is transparent, that there's accountability, precision of information that comes forward, and that it is critiqued at all times.
You said something a moment ago about jobs and the action plan, etc. About a year ago, I personally raised the issue of $19.5 million that was contracted to a company in Wisconsin--Avalon Rail--in order to renovate a dozen VIA rail cars.
Did you look at that contract?
:
Mr. Chairman, I cannot really comment on the acquisition of the F-35s, because we are not familiar with the analysis nor the way that these planes were purchased. I would hesitate to comment on this issue.
However, it would be important that the committee discuss, with the departments, the acquisition strategy for this complex equipment. Should we expect to have a firm price at the beginning of the process, or should we perhaps proceed on a step-by-step basis and state that we are giving our approval for the design and for the requirements? In the case of the Chinooks, this process took three years. Rather than expect to have a firm price at the beginning of the process, perhaps it would be better to have a step-by-step process where we would be provided with better information.
I doubt that, in 2006, we were in any position to estimate all of the modifications and understand all of the complexity of the project. If there is a question that needs to be asked about the way we proceed with these acquisitions, it is as follows: should we not be reviewing the process?
:
Thank you, Mr. Chairman.
Good morning, Ms. Fraser, I'm always happy to see you. I have some questions. My colleague was kind enough to invite me here today to support her as we deal with the issue of military equipment, particularly the helicopters.
I would like to tell you that, a few years ago, I met the president of Boeing Canada here, in Ottawa. And I was very surprised when he asked me to explain what was going on with the Chinooks. I answered him by saying that, since he was the president of Boeing Canada, he should be in a position to know. He told me that he did not really know.
So I decided to go to Philadelphia. I think that you are the right person to hear the following: I paid for my own ticket to travel to Philadelphia and did not accept a seat on the Boeing plane. The Chinook assembly line is located in Philadelphia. The American government is of course by far the largest supplier and purchaser of this equipment. I saw the assembly line and I was told that modifications were being made to the Canadian equipment. I asked about these modifications. I was told that they had been asked to make these modifications in order to have, for example, an additional gas tank and special defensive weaponry. Indeed, this type of craft is, in the American theatre of operations, always accompanied by Apache attack helicopters that provide defence, but we do not work that way. So I said to myself that this meant, in my opinion, that we were going from a low-to-average risk to a high risk.
If I were to ask assembly line workers to install two gas tanks instead of one on my car, and say that I wanted this instead of what is normally found on a car, they would tell me that they would happily comply, but that it would cost me quite a bit more. I think that, in the final analysis, this is what happened.
I have here the MERX contract from 2006, as it was put online. The specifications are indicated. For those who are listening to us—because you are familiar with the process—when military equipment is purchased, the Department of National Defence determines the specifications, Public Works and Government Services Canada puts the contracts online and oversees all aspects of the contract and Industry Canada deals with the economic spinoffs. I do not think that National Defence did its job properly. Indeed, when you determine a specification—the specifications are indicated here—and then, during the course of the contract, state that a mistake was made and that something else in addition is required, well I think that is a major problem.
I would now like to ask you some questions. Also, I should tell you to pick up your pen to note them, because I do not think that you will have enough time to answer all of the questions and I would appreciate your sending me a written response a little later on.
First of all, do you feel, when changes are made to the specifications during the contract, that that could result in unfair competition with respect to the other suppliers? Do you feel that the cost of the project will increase if other suppliers sue? Indeed, any supplier could say that this was not what was requested initially, that specifications were changed mid-stream and that, meanwhile, his services were not retained.
Even though you have already given me your opinion, I would also like to know how you feel about the Advanced Contract Award Notices, the ACANs. I've always given examples related to cars. When I negotiated the purchase of my car, I did not go about it the right way. Indeed, I wanted to buy the red Camaro that I had seen in the show, I thought about it day and night and I even said so to the salesman. I told him that I wanted this car, that I absolutely wanted this colour, and that I wanted everything that came with it, in a nutshell, I wanted the car. My father then told me that this was not how things worked. He told me that I should visit the other salesmen to try and get some competition. So I would like to know your opinion about the Advanced Contract Award Notices.
I do not know if you can go so far as to require that the project managers at the Department of National Defence remain the same. With respect to oversight and management rules, it often happens that, right in the middle of a contract, the manager is changed. It is important to me that I have an answer to that.
In addition, I would like to know whether you asked for any explanations regarding the Cyclone helicopters. The delivery date has been delayed and we were supposed to be able to impose fines, but no one has been fined. The way I see it, we are again deciding to renegotiate the contract and to try to come to an agreement with Sikorsky. I find this weird.
I do not know whether or not you're going to be able to respond to all of my questions in the minute remaining. If not, I would ask that you send me the answers, if you could.
Madam Fraser, once again, thank you. We're happy to have you with us here today.
When I look at this audit in its totality, as a parliamentarian I have to say I think it's reflecting on the government; it's an excellent report card.
I look at the economic action plan; that has to be an A or A-plus. Management control of small agencies has to be an A or an A-plus; regulating large banks, registered charities; facilitating flow of imported commercial goods. So I see five out of nine here, A-pluses, and a couple of Bs and Cs.
I was in the provincial parliament before and I've been here for two years. It's the most positive audit that I've ever seen for a government. One of the As is definitely Canada's economic action plan.
You answered a question from my colleague regarding the amount of spending for economic stimulus, it being probably the largest in history. Wasn't it also the largest amount of money spent over a short period of time because of the urgency of the worldwide recession?
Thank you, Madam Fraser and your team, for coming back out again to go over and review nine chapters in this audit.
As you know, I always have concerns around agriculture. I would like to touch on one, because there are going to be some follow-up questions on that.
This report basically deals with the disease portion of CFIA and how they're managing particular aspects of it. The discussion in this report was around the avian flu in Saskatchewan and B.C.
On the preparations for what might or might not happen, I'm wondering if you can give me a bit of an opinion on whether it was well managed. I know that as far as the audits, the management looks basically at the plans and procedures. I wonder if you can give me a quick answer on that, please.
:
I'm glad for those comments that you've made, and I'm also glad that they've picked up and have made significant improvements since the previous one.
I do want to go on to the acquisition of the military helicopters, though, and I find this discussion by some of the opposition a little interesting. I guess that's why the focus is on the F-35 and not the helicopters.
I'm trying to understand a little bit. This goes back actually for over a decade, the concern about the operational expenses, and I don't want to take away, quite honestly, Madam Fraser, any of the recommendations that you have, any of the concerns that you have, because those are the things that we need to learn from.
But I'm curious, quite honestly, when we talk about operational expenses. I don't know how this process for you works. Do you go back, because back over a decade ago the previous government decided to spend about a billion years to not buy anything, by cancelling a contract. So we actually didn't have helicopters.
Unfortunately, it raised--and these are not my words--an incredible amount of frustration, not only within the aerospace industry, but within our Canadian Forces, and particularly National Defence. So what we have now is that to keep these Sea Kings safe, which were to be replaced, they fly 10% or less than 10% of their time, because actually they spend most of the time in the shop so that they can be made reliable--I'm not saying they aren't—and in fact can be used to take our troops, wherever they are, whether it's in Canada or afar, there and back.
Is there any consideration of how we use those dollars in calculating the cost of what it now would be to buy, over a decade later and with increased costs, as opposed to that operation having gone forward as it should have at the time it was cancelled?
I don't know how deep you go, or is it just strictly that this is the acquisition right now, not considering that actually there was almost an emergency to fix the problem that was out there when we came into government in 2006?
And welcome to our Auditor General and her tremendous team.
I'm both encouraged and occasionally disappointed when reports come in. But of course you're doing your job. There are two things I really like about this. If there is criticism that is deserved, it's delivered. But if there are accolades and/or encouragement and lessons to be learned in best practices, that's also stated.
Generally, out of the nine reports, we have a really positive...for at least seven of the nine, so I think that's tremendously encouraging. But that doesn't, of course, delay the circumstances when we have a dilemma and/or a problem and/or a weakness. We zero in on it as well.
I'll touch on both the helicopter deal and the economic action plan to start with.
On the economic action plan, I'm wondering about a best practice--is it a best practice?--that was used very successfully for the stimulus, and that was a sort of parallel approval process. Treasury Board and cabinet really worked in tandem, at the same time, rather than in a consecutive manner in reducing the timeframe from the six months to the two months, with a tremendous amount of work, of course, by the public service. Now, is this something that we should or could consider as the modus operandi for other departments, other programs, other situations? Or do you think the emergency requirement of really getting this effective stimulus out in a very short order necessitated that action? What are your thoughts as far as going forward with regard to policy is concerned?
:
Thank you very much. It's great to see you back here again.
I must say, back home when I talk about being on the public accounts committee, the fact that I get an opportunity to speak to you becomes the most significant part.
Voices: Oh, oh!
Mr. Earl Dreeshen: I don't mean to say anything about my colleagues or the chair, but certainly you've done great work in your office.
I would like to talk about chapter 9, and then if we have time perhaps go back to some issues out of chapter 2 and perhaps chapter 3.
It's extremely important to Canadian livestock producers, because of the highly contagious nature of some of these diseases and the risks we have to all producers in Canada.... The audit clearly shows that under the government's leadership, CFIA has planned for and responded to and improved their management of animal disease situations. I'm sure that agriculture producers, as well as Canadian consumers, will be pleased the audit recognizes that CFIA is prepared, whenever the next animal disease issue occurs, and that the government will continue to give CFIA the resources it needs to safeguard Canada's agriculture and food industry.
I note here that you found in the audit that the agency has assessed animal disease risk and invested considerable efforts in developing emergency preparedness and response strategies, including an overall emergency response plan, and disease-specific plans for avian influenza and foot and mouth disease.
Would you say CFIA's emergency preparedness and response strategies are in line with what's needed when dealing with animal diseases?
:
Some of the members on the committee may recall that a few years ago there were a number of issues being raised about management practices in smaller agencies; they weren't maybe getting the level of attention or oversight that was required and there were some not very good things happening.
We recognized ourselves that we were paying a lot of attention to the larger departments and not these smaller agencies. In 2007, we started a program of picking a sample of them every two to three years and looking at some of their basic management practices over travel, hospitality, human resource management, contracting--basic financial and human resource management.
In past audits of some of these smaller agencies, we have raised issues around human resource management, for instance, or some of the financial management practices.
In this particular case, I am very pleased to say that with the three we looked at--the Canadian Forces Housing Agency, the Canadian Pari-Mutuel Agency, and the Pension Appeals Board--there were no significant issues raised. We do recommend that there be better documentation in some of their performance appraisals, but overall, they had the controls in place that we would expect and they were respecting the policies of the Government of Canada.
:
Mr. Chairman, I would like to ask Ms. Fraser one question.
Ms. Fraser, if you do not have enough time to answer, you can do so in writing.
My question pertains to chapter 1 specifically, which deals with infrastructure. Was the department able to properly assess the ability to undertake these projects during the identified time period? We know that there was a deadline. This is not the first time that we have raised alarm bells with the department and that we have drawn to its attention problems pertaining to projects that municipalities have begun or wish to begin but will be unable to complete before the deadline.
I have other questions. I wanted to know whether or not the departments considered the number of projects that were going to be undertaken at the same time and in the same region. Did they verify the availability of resources, assess whether or not there were adequate resources available in the area? If so, why did they ignore signals from the FQM and the UMQ, which are the primary organizations and associations representing municipalities in Quebec? I would also like to know whether the departments are working now, today, on an initiative to extend the deadline.
:
Thank you, Madam Faille.
Madam Fraser, if I might, I'd like to draw your attention back to the medium- to heavy-lift helicopter project. I refer specifically to page 20 of that chapter, and I do it for illustrative purposes. I like the play on words that you used in another report. There is one thing that concerns me, and it is your discussion with respect to this project and the process you outlined, a process on which at least one of the departments disagrees with your conclusions and interpretations.
We're always here to talk about openness, accountability, and transparency. I think you said, without using the exact words, that through the process, the departmental officials—and since there are three departments at play, maybe you could identify which one is most reflective of this—provided information for decision-makers that was incomplete and perhaps not totally accurate, thereby causing decision-makers to make a decision that led to an amendment to the contract in 2009. I believe you indicated as well that there was another contract amendment earlier this year, although it was not captured by your audit. I note that on page 20, even though you say that your audit began in 2006, you made reference to a decision to go into the medium- and heavy-lift helicopter contract the previous year. So this covers a five-year period.
We began by talking about and complimenting the bureaucracy, our functionaries, who have been doing a very good job. I think government members have drawn the attention to the fact that seven out of the ten audits are great, but you paint a disturbing picture of some of the officials in those departments with respect to this particular project.
I know you're going to give some really specific answers to Mr. Bachand and I believe to Mr. Shipley's questions, but do you not find that your observations with respect to the information provided, withheld, or adjusted by the departments on this project to be more than troubling?
:
Chair, I prefer to stay with the word “troubling”. I think, obviously, the committee will want to ask department officials why this occurred, who will provide their explanation of this.
I would go back, as I mentioned earlier, to the whole way these acquisitions are done. The strategy the government uses is the lowest-price compliant one. So there is a set of requirements that is put out, people bid, and then the government says, okay, we'll take the lowest price. We really question if this is an appropriate strategy when you're dealing with complex equipment and there is a recognition that there will be modifications over time. I think we recognize in this that the military itself may not have known all the modifications that were to occur, but they did know there would be modifications.
I think it would be very useful if the committee discussed how these kinds of acquisitions should go ahead. Should there be a more incremental approach as the requirements become better defined and the information becomes more accurate? It's clear in both of these projects that over time the requirements change significantly, and the costs, of course, change according to that, and yet there's a decision made at the very beginning to spend x dollars, a fixed amount. You really have to ask if that is the appropriate way to be doing this and to recognize up front that there is much more uncertainty and risk involved in these things than buying a truck. I think that's what the government really has to reconsider, and that's one of our recommendations. The government really has to reconsider, I think, the approach they use to do these acquisitions.
:
I have some very quick points, Chair.
First of all, I did give 48 hours' notice for the motion, so that's one to clarify.
Secondly, I don't think it's reasonable that on the day the department was supposed to provide the information they gave an open-ended response, saying they had reasons for the delay and not indicating what those reasons are. I don't think that's appropriate or reasonable. That's why I've now asked you, the chair, to make sure the department does provide specific reasons, if there are any, for why they're not providing the information.
As Madam Faille has indicated, this information should have been forthcoming a long time go. The fact that now we put a timeline on it, and they wait till the day of, just to tell us over the phone that they need additional time and not indicate why is not reasonable, fair, or appropriate.