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]

Wednesday, April 1, 1998

• 1535

[English]

The Chairman (Mr. Robert Bertrand (Pontiac—Gatineau—Labelle, Lib.)): Good afternoon, everyone. Welcome to the meeting this afternoon.

I have some information for everyone. The committee meeting that we were supposed to have tomorrow morning from 9 a.m. to 11 a.m. has been postponed, and we will be meeting tomorrow afternoon in a joint session from 4.30 p.m. to 5.30 p.m.

Mr. David Price (Compton—Stanstead, PC): Will both ministers be at tomorrow's meeting?

The Chairman: Both ministers, Mr. Eggleton and Mr. Axworthy.

This afternoon we have with us Brigadier-General Peter Gartenburg.

Brigadier-General Peter Gartenburg (Director General, Management Renewal Services, Department of National Defence): Yes, sir.

The Chairman: We will let you introduce the people you have with you. You have between 15 and 20 minutes to make your presentation, and then we go will go to a question period. Okay, sir?

BGen Peter Gartenburg: Thank you very much. Bonjour. Good afternoon, Mr. Chairman. I'm the director general of management renewal services, and I'm the person in the Department of National Defence who is responsible for new initiatives for service delivery.

With me this afternoon as part of my team I have Ms. Kathryn Howard; Naval Captain Yvon DeBlois; Lieutenant-Colonel Bob Ryan, who is the project manager for the alternative service delivery project at Goose Bay, Labrador; and Mr. Bob Hanson, who is a specialist in civilian personnel.

I would now like to deliver a short address to the committee.

[Translation]

First of all I would like to thank all the committee members for having invited us to come here today. I will be giving a brief address to explain how we are in the process of modifying service delivery within the Canadian Forces. Afterwards, we will be happy to answer any questions the committee members see fit to ask us.

[English]

I'm not going to take you through a lot of detail. Instead, I will do two things. First, I will briefly explain the background to the major changes that we are going through in the Canadian Forces and DND today. Second, I will set out the principles that underlie our approach to alternative service delivery, namely, operations primacy, fair and reasonable treatment of all of our personnel, and an open and transparent process.

The alternative service delivery initiative affects our personnel, both military and civilian. It has consequences for jobs, careers and families. If people have concerns about alternative service delivery, that is not surprising. My hope is that the committee will understand that we are addressing those concerns in a fair and open way.

The Department of National Defence is changing. Mr. Chairman, all the talk these days about re-engineering, downsizing and service delivery makes it sound as if the Canadian Forces and the department are more interested in management and administration than in military operations. That is definitely not the case. Our job is to provide an effective military capability for Canada within the budget given to us by the government. That's the job of all of our personnel, both military and civilian. Everything we do is directed to that end.

[Translation]

However, it's the way in which we procure the military means necessary for Canada's defence that is changing. Change is always traumatic for those affected by it. You have heard the concerns of various people and their families spoken of in the statements made before this committee.

Over the past 40 years, Canadian Forces personnel have been reduced by successive governments that were persuaded it was possible to meet Canada's security needs while spending less on defence.

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During this period, we reduced our defence expenditures by cutting military and civilian personnel, closing down installations and eliminating components with military potential that are no longer needed for responding to Canada's defence requirements.

[English]

Today, the end of the Cold War means that the military threat to Canada has changed dramatically. We have to adapt to that new reality while preparing and equipping ourselves to meet new challenges. Our role in peacekeeping, for example, has expanded considerably at the very time that the Canadian Forces have been shrinking by a third.

The budget of National Defence is being reduced from $12 billion in 1994 to about $9 billion by 1999, a reduction of 23%. We have to live with that, but we have reached the point where we can no longer meet our budgetary targets solely by reducing capabilities or closing installations. To do our job effectively, we need to do it differently. That is the reality driving new approaches to service delivery in DND today.

So what is it that we are doing differently?

In response to the government's 1994 defence white paper, the department is finding better and more cost-effective ways to provide support to operations. This is in fact the subject of our appearance here today.

Since 1995 we have been examining how we can provide support services to our military in a more cost-effective way. We are trying to reduce our support costs so that we can field the most effective military capability possible to do the job that government wants done.

Let me clarify that by “support” I mean such tasks as vehicle maintenance, building maintenance, plowing runways, driving buses, accommodation and feeding, that sort of thing, and not flying airplanes, sailing ships or battalions on manoeuvre, which are all military operations.

Support services in the department consume a large portion of our defence operating budget, almost 40%, or about $4 billion annually. This is very high, more than twice our capital budget and four times our training budget. We are trying to strike a delicate balance by reducing those costs while at the same time assuring essential support to military operations. One of the ways we are assuring and pursuing that balance is by looking at ways to transfer some support activities to alternative means of delivery.

[Translation]

"Alternative service delivery" or ASD is the expression used to designate this systematic search for new and better ways of ensuring government services. It is government policy and it is being applied throughout the public service and not only at National Defence.

ASD takes a number of forms. It may be a matter of subcontracting services, as we are doing at Goose Bay. It includes partnerships with the private sector, as is the case at the NATO flight training school in Moose Jaw, Saskatchewan. It may also be a matter of creating new government agencies, as we did for military housing. We are very demanding when it comes to resorting to a different means for ensuring a service. This means must clearly be more economical while enabling the Canadian Forces to fulfil their core missions.

[English]

After the federal budget of 1996, DND announced its priorities for ASD, beginning with a review of a number of activities at various DND establishments across the country. That list has grown to the point where we now have about 40 activities in various stages of review, ranging from food services at CFB Trenton to ship repair on both coasts. In the summer of 1997, two new areas were selected for review, the Canadian Forces supply and distribution system and support services at a number of bases across Canada.

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Understandably, the review process raises anxieties in people, both military and civilian, because it makes their future uncertain. If this process is going to yield the required results, and if we are to deal appropriately with the concerns of our people, we know we have to proceed on the basis of clear principles. Therefore, we have developed three fundamental principles for our ASD program.

First, there's la primauté des opérations, or operations primacy. That is really our military operations' raison d'etre in the Canadian Forces.

Second, there's le traitement équitable et raisonnable, or fair and reasonable treatment of military members and civilian employees.

Finally, there's la transparence, or openness and transparency throughout the whole process.

Let me talk about the first principle, operations primacy.

[Translation]

Operations primacy means that budgetary and management initiatives must not impede the effectiveness of our military operations. When the government makes a defence commitment—whether it concerns peacekeeping or search and rescue, or whether it entails sending a frigate to the Persian Gulf—we have to ensure the support services required to fulfil the commitment. We will not sacrifice either security or operational efficiency. Our Forces are not large, but we what we do, we must be able to do well.

[English]

The second principle is fair and reasonable treatment. DND is committed to fair and reasonable treatment of military and civilian personnel whose jobs are affected by any change initiative, be it re-engineering, infrastructure reductions, or ASD.

It was this department that took the lead in developing an employee transition package to deal with base closures after the 1995 budget. We worked closely with the Union of National Defence Employees to develop that.

DND has fully incorporated the Treasury Board workforce adjustment directive provisions in its alternative service delivery program to ensure maximum employment continuity for those employees who chose to work for a contractor and departure incentives for those who wish to leave the public service or did not receive a job offer.

We have provided similar force reduction programs or occupation transfers for military personnel. We have attempted to strike a balance, respecting our employees while recognizing that we are moving through a difficult period of transition.

The last principle, that of openness and transparency, is a cornerstone of the alternative service delivery process in DND. We've taken special steps to ensure that the rules and the processes are well known to everyone—our personnel, the unions, industry, and local communities. By involving them we foster understanding, build trust, and improve the alternative service delivery process.

We acknowledge the ongoing challenge to communicate effectively. We even have an Internet site on alternative service delivery to allow any interested party to keep abreast of our program.

This is our approach, Mr. Chairman—ensuring an effective military capability within our budget, supporting employees in time of transition, and engaging stakeholders, in a meaningful way, throughout the process. This is how we are dealing with all the bases and services where alternative service delivery makes sense.

[Translation]

Mr. Chairman, thank you for your attention. We will be happy to answer your questions.

[English]

The Chairman: Thank you very much.

We now go to question period. Mr. Benoit had asked, as did Mr. Hanger. I'll leave you two to fight it out.

Mr. Art Hanger (Calgary Northeast, Ref.): Yes, thank you, Mr. Chairman. There will be no fighting on this side of the table.

Mr. Leon E. Benoit (Lakeland, Ref.): Till later.

Mr. Art Hanger: Yes, we'll settle this afterwards.

We've seen several cases where uniformed personnel, mostly high-ranking officers, who were involved in negotiations on behalf of DND with this whole switch-over to alternate services will then end up with those companies right after. Now the role is reversed, and they are then negotiating, for the alternate service company, with DND. I'm curious as to what kind of guidelines have been set up for conflict of interest.

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BGen Peter Gartenburg: I'm not an expert in all of the details, but I do know there is a conflict of interest program in the Department of National Defence and Veterans Affairs. It applies to all colonels and above. There are special provisions in there that require certain actions on the part of an individual who's departing from the Canadian Forces. Each member is required to submit a certain amount of information to an individual in the department who's appointed to receive that. There are certain periods of time, for example, during which individuals can or cannot do certain things. So there is a process there. I can't elaborate on all the details.

Mr. Art Hanger: I think this is becoming quite an issue when it comes to the Canadian military and those officers who served in the military for a number of years and all of a sudden jumped into private enterprise. Many of those companies, of course, are constantly negotiating with the military, and there doesn't seem to be any enforcement of any guidelines that I know of.

I'd like to know the last course of action that was ever taken against any one soldier or previous soldier in this area, and how it was handled to prevent future such cases. But I don't see anything happening, to be quite honest with you.

I think the most recent case was General Huddleston going over to Bombardier defence services, and that's all about the Moose Jaw affair. The one prior to that was Mac Campbell from Goose Bay going to Serco. They will be directly negotiating with DND.

BGen Peter Gartenburg: The conflict of interest guidelines used in DND are those established for government as a whole for civil servants, and that's what our department uses. There are periods of time, as I mentioned, for various clauses in our department. The deputy minister reviews each case, so our department complies with all of those rules and regulations.

Mr. Art Hanger: I know my colleagues will probably have some more questions in that regard, and we'll end up coming back to those points.

The other question I want to ask you is this. You made mention on page 5 of your presentation, right in the very top paragraph under “Operations Primacy”, that whether we are talking about peacekeeping, search and rescue or sending a frigate to the Gulf, we have to provide support services required to fulfil the commitment. What alternative services will you be bringing along into a war zone, or even a potential site of conflict, just how will they be protected, and what will their mandate be?

BGen Peter Gartenburg: The way our alternative service delivery program is structured now, there are three categories of activity that we call core: combat, combat support and inherently governmental. When we deploy into a theatre of operations, depending on the type of activity there, most of those kinds of activities fall into those previous categories. Even if there is no combat, we recognize the potential is there. So when we send somebody out of the country into a theatre of operations, whether it's the Persian Gulf, as you referred to, Bosnia, Haiti, or a UN mission like that, those are what we call core functions. Those military operations have to be preserved, and our analysis of each and every alternative service delivery case looks at making sure those are preserved and protected.

Mr. Art Hanger: I'm still curious, though. In a situation like Bosnia where we have soldiers, we will have a supply site. I was at the supply depot there and observed the set-up. Of course, when I was there much of the conflict around had diminished, compared to what it was when troops first went over. I would assume that much of the alternate service delivery will be in supply.

When you have civilians in a situation where you have a conflict, even like Bosnia, how will you protect them?

BGen Peter Gartenburg: I understand your point, sir. All of our ASD projects we're working on so far don't involve the kind of activity in the theatre of operations you're referring to.

Mr. Art Hanger: All right.

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BGen Peter Gartenburg: I guess one way of thinking about it is that each military man and woman in a sense has two jobs. One is the job back at the base in Canada doing whatever their occupation specifies they do, and another job is this job deploying to the kinds of theatres you talked about.

So what we're concentrating on are those functions at the bases in Canada, those support services there. When we go through the studies of each case, we need to understand exactly the point you're making and make sure we have provisions in the theatre of operations that will allow military personnel to go where they have to go.

I can give you one example, if I refer to my colleague Captain DeBlois, who is the project manager for the supply chain project, which is the one you're interested in, sir. He can give you a little more information about how he's doing that.

Captain Yvon DeBlois (Project Manager, Supply Chain Project, Department of National Defence): As General Gartenburg mentioned, any option we develop will have to be put to the ultimate test of whether it will work in war and various scenarios leading up to war, and every delivery mechanism will have to pass those tests before it's considered.

In the supply function, one extreme is the war scenario, which is traditionally a military scenario. I wouldn't be surprised if our study concluded that those military things will still have to be done by military people. But at the other extreme of the supply function, we have people who basically work in warehouses, put material on shelves and pick material from shelves. We have people who drive trucks from Edmonton to Calgary, or from Montreal to Fredericton, which are not very military types of jobs.

So we're primarily focusing on those areas, and where we will draw the line between one extreme and the other remains to be determined. But wherever we draw those lines, they have to be put to the test of whether it will work in war.

Mr. Art Hanger: So in areas such as the trades and mechanical servicing of various kinds, there will always be a strong contingency in the military to pick up and go wherever. In other words, they won't be delivered as alternative services.

BGen Peter Gartenburg: Part of our program is to make sure that if we have to take a military component somewhere in the world as part of our tasking, then we have to preserve it.

Mr. Art Hanger: It's a question, then, of how much of a capability we're going to have. For instance, in the Bosnia situation again, double it. There will always be enough service members capable of looking after all the support required for those groups.

BGen Peter Gartenburg: We approach that in two ways. First, we look at the activities, as Captain DeBlois has talked about in the case of supply and distribution. We also look at each one of the occupations or trades you referred to. We have done and are continuing to do what we call an occupational structure review. In this planning, we recognize that if there will be one person in a Bosnia, there must be—and the ratio depends—about three to four people back at home who are capable of rotating into that theatre. So those kinds of numbers are built into what we call our force structure, to be able to do the missions you talked about.

Mr. Art Hanger: Okay. I just have one question to ask of the general.

Would you be able to supply our committee with a complete set of the conflict of interest guidelines associated with the military? They certainly apply to those going out of the service and entering into the workforce.

BGen Peter Gartenburg: Yes, sir. I'll provide that to the committee.

Mr. Art Hanger: Thank you.

The Chairman: You can send them to the clerk and we can make sure every member gets a copy.

BGen Peter Gartenburg: Yes, sir.

The Chairman: Monsieur Lebel.

[Translation]

Mr. Ghislain Lebel (Chambly, BQ): General, I have some questions pertaining to the existing contract... I think it is a de facto contract, but I'm not sure. I have never seen a contract signed by a recruit who is enlisting, and it seems there is no written contract. There is a moral contract, I think. In any case, if there is a written contract, it seems very incomplete. I have asked questions and I had some difficulty getting answers. Perhaps you could enlighten me.

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When privates enlist, their assignments are determined, of course, but what about their shifts, their weekly and monthly working hours? Are the holidays to which they have a right determined in advance? In short, are these things decided as they are in a private company, where there is usually a union and where employees know from the outset the rules of the game, the rules that will govern their hiring and their duties within the company? Do you have this type of contract in the Canadian Forces? This is my first question.

Secondly, as I seem to be addressing a human resources management specialist, can you tell me if there is, in the Canadian Forces, a description of privates' duties? We might also consider non-commissioned officers and officers, but I am mainly concerned with the rank and file. Does the type of job description exist that is found in industries and in large companies? I think I know the answer, but if it is yes, I would like someone to give us a model job description, not for all employee categories, but for several, especially for soldiers and corporals, or maybe even master corporals. You will understand why I am asking you this.

I would like to ask you what forms the basis for military remuneration, privates' pay. Parallels have been established with the public service. Does such a comparison do justice to privates' activities, especially privates who are on foreign missions, where they are required to be present and mobile at all times? Are comparisons not sometimes a little questionable when we calculate the salary of a private based on the salary of a public servant who is out of the cold, who works indoors, year round, and who works from 9 to 5, or 8 to 4? I would like you to hear me out on this. These are my first questions.

[English]

BGen Peter Gartenburg: Thank you, sir.

On the first question, relating to recruits and contracts for recruits, we have a part of the department that specializes in recruiting. I'm not cognizant of nor do I have any expertise in that area. But I can certainly follow up on that question and provide information relating to the questions you asked about contracts for recruits signing up. But I can't provide you any more than that.

I'm not an expert in personnel management, and the issues on the second question relate more to compensation, which is outside of my area of expertise as well.

But you asked about job descriptions or task descriptions. I know from personal experience that some positions do have those, while I'm aware of others that do not. But if we can provide you with some examples of job descriptions, we will certainly do that.

[Translation]

Mr. Ghislain Lebel: You are talking, General, about operations primacy and fair and reasonable treatment. I have difficulty reconciling this with the fact that the remuneration of privates is not an important part of their fair and reasonable treatment. There have been various hearings. You mention ASD for instance, alternative service delivery methods. I think that here we come down to the basic concerns of the privates who have appeared before us, particularly at the beginning of the week, quite close to here.

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You are talking about operations primacy. I understand that the army is the army and that it must fulfil its mission as an army, but isn't troop morale important? Might not poor morale impede operations? I don't think you can go very far with an army of malcontents.

[English]

BGen Peter Gartenburg: On the first issue, you refer to operations primacy as one of our principles, and secondly, reasonable treatment as another principle. In the context of the text I read, those are principles in the alternative service delivery program, looking at whether we should and can change the way we provide these support services.

The issue you spoke about on soldiers' pay and salaries is not part of the alternative service delivery program. That's dealt with through the compensation program, the department, Treasury Board, and so on. So we're not looking specifically at pay issues in our alternative service delivery program. What we're looking at is how we go about delivering the service.

The issue of morale is absolutely critical, as you have pointed out. It's one that we struggle with a lot, that we concern ourselves with a lot. Anybody like myself who has been at bases and has worked with corporals and sergeants knows how important the issue of morale is and how important leadership is, and there is no doubt that in periods of transition and change, as we are in, have been in, and will continue to be in for a while, morale is going to suffer, and it's up to all of our leaders to deal with that as best we possibly can.

[Translation]

Mr. Ghislain Lebel: Thank you. I have no other questions for the moment.

[English]

Mr. Hec Clouthier (Renfrew—Nipissing—Pembroke, Lib.): General, with regard to the ASD, ostensibly it's being implemented as a cost-saving factor. Has a comprehensive study been done at this time of what the savings are at any of the current bases, or has a study of the actual cost savings been done for other countries? I know Australia and United States have implemented some of the ASD before we have. Has there been a cost analysis done, and what is it?

BGen Peter Gartenburg: Yes, sir. We have done cost analyses. They're constantly being refined, because when one starts the process they are very rough. When we start a project, we look at how many dollars worth of annual operations and maintenance and how many personnel are in this domain of activity that we're potentially looking at. So then one starts with that figure.

As for our experience to date, we haven't progressed a large number of projects through to completion, but those that we have done to date show that when we go through this competitive process we get about 30% savings. Our allies, the British, the Australians, the New Zealanders, the Americans and some of the other countries that are doing similar programs, are finding about the same kinds of numbers—30%.

Mr. Hec Clouthier: In that 30%, would there be factored in the ERI retirement or the pension plans from the people who did decide to take retirement, or is it strictly the capital costs?

BGen Peter Gartenburg: The savings are the savings in the cost of activities. Sometimes it has a capital component; mostly it has a salary and operations and maintenance component there.

One cannot get savings at the very first day of a change in a process like this, so there are some transition costs at the beginning. The EDI and ERI that you refer to are part of those costs. So that is factored in, and when we talk about 30% savings, we're not going to experience that in year one, and sometimes not in year two, depending on how big it is. Probably about year three and beyond we will get those kinds of savings, but it does include the kind of analysis that you talked about.

Mr. Hec Clouthier: Has analysis also been taken of the result of it—forget about the cost savings—of the quality of the jobs that are being done under ASD as opposed to the quality of the jobs that were done by the civilian personnel at the individual bases before?

As you may and probably do know, one of the major complaints among people who have lost their jobs because of ASD.... They've come to me and said, “Hector, the job was done much better and much more efficiently.” I know where it's coming from. There's no question that they're going to have a certain bit of a biased view, but I've also done some of the investigating myself. In some instances, there seems to be some truth to it. There seems to be some credibility to that.

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Has there been anything done on the human resources side of it?

BGen Peter Gartenburg: Yes. You're speaking of civilian personnel here on this particular question.

Mr. Hec Clouthier: Yes.

BGen Peter Gartenburg: What I'd like to do, Mr. Chairman, is defer that question to my colleague Mr. Bob Hanson, if he could come forward and give you a response. He's an expert in civilian personnel in the areas you're referring to.

Mr. Robert Hanson (Director, Civilian Employment Policies, Department of National Defence): Yes, sir. Thank you.

I don't think we've really progressed far enough yet in terms of any of the specific ASD activities that we've undertaken so far. Certainly, it's one of the concerns that contractors provide the same quality of service at a reasonable price compared with that of former DND or public service employees. We've had very little experience so far in terms of what has actually happened in some of our ASD activities. It's a little premature to answer that question.

Mr. Hec Clouthier: Well, perhaps I'd phrase it in a different way, then. Would the same people be monitoring the new contracting out of their ASD as those who were doing the monitoring before when the civilian personnel were there?

BGen Peter Gartenburg: I think what you're getting at, sir, is that in the ASD process, one of the last functions after implementation is the verification and audit component to it. We recognize that we can't make a transition and then just walk away assuming that everything that had been planned for is absolutely guaranteed. So we have built monitoring into our program to make sure that the results we predicted are in fact being achieved.

Mr. Hec Clouthier: Well, who is monitoring it, General?

BGen Peter Gartenburg: Kathryn Howard can refer to that, please.

Ms. Kathryn Howard (Alternative Services Delivery Manager, Department of National Defence): In every instance of a contract there is a defence contract management cell that is responsible for monitoring the quality and performance of the contractor, as they would have monitored the performance of the public service or Defence providers.

Meaford may be an example that at least gives us a couple of years of performance. If you talk to the commanding officer there, he says that the service has never been better. I visited there myself. Both he and his regimental sergeant-major are very pleased with the service that contractor is providing. He's convinced that they could not have done it themselves, as they did not have the Defence resources at the time.

But as my colleagues have mentioned, these are early days, and we don't have a formal audit on Meaford yet. That process will begin. Goose Bay, of course, is very early, but there will be a formal audit one year into its implementation.

Mr. Hec Clouthier: I have one more.

The Chairman: Yes.

Mr. Hec Clouthier: When these contracts are signed—let's go back to Meaford and the Black management group—in that specific contract, would there be a cancellation clause in there if the services rendered are not up to speed, so to speak?

Ms. Kathryn Howard: Each contract is administered by Public Works and Government Services Canada, and they do include both penalty and termination clauses.

Mr. Hec Clouthier: That's fine for now.

The Chairman: Yes.

Mr. Art Hanger: Mr. Chairman, on a point of order. Mr. Clouthier has been alluding to contracts, and I think it would be incumbent upon this committee to examine that in a much more quantitative way.

I propose this motion: that this committee undertake a review of the process surrounding the awarding of the untendered contract to Bombardier for the NATO flight training school in Moose Jaw.

The Chairman: We'll deal with it tomorrow afternoon.

Mr. Art Hanger: No, it has to be dealt with now. We have to deal with that now. And, Mr. Chairman, I ask for a recorded vote.

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The Chairman: I was just informed that we don't have enough members for quorum for a vote. If you want to hang on to it, you can bring it tomorrow. We need nine for a vote. You can hang on to it, Mr. Hanger, and bring it tomorrow, and I'll be very happy to deal with it then. Thank you.

Mrs. Longfield, we have roughly three minutes left. I know that you wanted—

Mrs. Judi Longfield (Whitby—Ajax, Lib.): If I can have my first three minutes and then my next—

The Chairman: Sure.

Mrs. Judi Longfield: You said that you understood that morale is suffering. I hope you understand the extent to which morale is suffering. In every base this committee has been on, that has been top of mind. It has every member of the military wondering if and when ASD is going to affect them. And you know that, whether or not it will, it's certainly a preoccupation. That's just my comment.

We just left Trenton. We saw the ASDing of the food services at Trenton, and I have to tell you that it was one of the finest facilities that we've been to and certainly the food was of exceptional quality. But I was very upset to hear that as a result of ASDing—and this was actually one in which the in-house bid had been the winner—the cost of that food was twice what it had been. This is affecting those members of the military who live in and who are required to have all of their meals there. They are suffering the most with respect to disposable income.

If we're going to ASD and if there is a cost saving to the military, are we going to put it on the backs of the enlisted men and women? Do we factor that in when we're looking at ASD?

BGen Peter Gartenburg: We understand that you heard some comments about food services in Trenton, and I think it's important to explain the activities that are taking place and have taken place there. We did go through an alternative service delivery project, as you've stated, and the in-house bid won. You've seen the facilities.

There's also another activity, not related to ASD, and often in our own people's minds things get linked with ASD that are not directly linked.

A few years ago we had a lot of complaints from our people about the fact that when they lived on base we had what we called “rations and quarters”. Food and billeting, or accommodations, were linked together, so that if you “lived in” as we called it, you had to take the whole package. A lot of people said that wasn't fair. They wanted to live in the quarters, but they didn't want to be forced to eat their meals there. They'd like to eat at a restaurant, they said. Or often they were at the hangar away from the mess hall and they couldn't eat there. They said they were paying for meals they weren't eating.

So a decision was made that bases could, to support the members, separate those two. And what that means is that we would get into a mechanism—

Mrs. Judi Longfield: I understand.

BGen Peter Gartenburg: —where people would only pay for what they eat. That's what you're seeing in Trenton as they move to that kind of system. Most of the people are very happy with that because now they don't have to pay for meals that they don't eat.

Mrs. Judi Longfield: I was just there. Most of them are not happy.

BGen Peter Gartenburg: Well—

Mrs. Judi Longfield: They may be happy with the fact that they don't have to take the package, but they're not happy with the fact that the cost of food has gone from approximately $200 a month to $450 a month for them. When you're on a private's salary, that's 40% or 45% of your take-home pay. Is this what we expect our enlisted men and women to pay for food?

Trenton is not a bustling community. There are not a lot of places where you could nip out and get something. There isn't even a Tim Horton's or a KFC or any place around and there's no opportunity for them to prepare any kind of meal in barracks. Is this part of ASD? Do we take it in? I understand the concept, but I guess I also want to know when we're looking at ASD if part of our cost savings are to be on the backs of our enlisted men and women.

BGen Peter Gartenburg: As you do, we understand those concerns and we are trying to find out exactly what the situation is that Trenton has put in place. We are very sensitive to the kinds of issues that you were talking about in terms of how their percentage of costs associated with food varies as a percentage of their salary, but it is not directly linked to ASD. It is not the result of the ASD activity. It is a result of another initiative at Trenton.

• 1620

We're trying to get all the information we can about that so that we fully understand what's taking place there.

Mrs. Judi Longfield: Are you suggesting that Trenton is the only place where it's not room and board, as it were, combined, that it's room and/or meals? Are you suggesting it's the only one?

BGen Peter Gartenburg: No.

Mrs. Judi Longfield: Okay. Because it's the only one where they're saying their cost of food has doubled. So it's hard to explain to them that it's not as a result of ASD when that is the one where the food area has gone through ASD.

BGen Peter Gartenburg: Yes, it is very hard to explain. To my knowledge, other bases are moving to that as well, but I don't have the details of that information.

Mrs. Judi Longfield: If you could find those, I would really appreciate it.

BGen Peter Gartenburg: By all means.

Mrs. Judi Longfield: Am I over my three minutes for this section?

The Chairman: A little bit.

Mrs. Judi Longfield: Okay. I'll pick up after, if I might.

The Chairman: Mr. Price.

Mr. David Price: Thank you.

I'll pick right up on where you were going.

Mrs. Judi Longfield: I thought someone might.

Mr. David Price: First of all, at Trenton, they claim they have been given only two weeks' warning—two weeks—before it goes into effect. That in itself is almost inhumane. People who don't have any spare change to start off with get a change like that.

The other thing that's very bothersome about the Trenton set-up is that they are supposedly right now on a six-month trial with the in-house bid—or at least that's the way it was explained to us. You're saving $1 million a year right now if the in-house bid continues to go and everything works out like that. But if it doesn't, and you have to go to the second bidder, it's going to be an increased cost of $6 million over the period of the contract. According to what I heard there also, you have to take the lowest-conformed bidder. You can't back out.

Could you explain a little bit around that?

BGen Peter Gartenburg: With regard to the first question, on the raises in the cost of feeding, I can't attest to the specifics you spoke about, but it's my understanding that in fact many people have been on this new plan of feeding since last October.

Mr. David Price: They've been using a card system, but they've now been told that as of April 1, this $450 goes into effect.

BGen Peter Gartenburg: I can't give you any more information now, but I certainly will seek to get that and provide it to you.

On your second question, I'm not sure I understand. Are you referring specifically to the Trenton base?

Mr. David Price: It's the system, the way you have it set up right now. There are other things that bother me about it, but right now it's just the fact that if you have to go to the second bidder, the way your set-up is now, you have to take the lowest-conformed bidder in the thing.

Right now, the in-house services were the lowest-conformed. If they fail to live up to their contract, you have to take the next one in line, which is $6 million more.

So we're certainly not getting any cost savings there. If we start going across the country doing this, the budget is going to be going way up.

BGen Peter Gartenburg: Again, I'm not sure I understand your question other than to say that when we go into an ASD activity, there's a competitive process. All of the bids, the in-house bid and the bids for companies, are fed into Public Works and Government Services Canada. They're our government agent for contracting.

Any of the clauses and the kinds of conditions that would be the type of thing you refer to are set, one, based on the particular situation at hand, and two, based on the government rules and regulations for contracting.

But I'm not an expert in that area—

Mr. David Price: What I'm getting at is that if you have to take the second bid, you will be paying more than what you're paying now. Therefore, we're going in the wrong direction if we go like that.

BGen Peter Gartenburg: I'm being advised by my colleague that we don't have to take the second bid. We would look at the situation, and then there would be some decision as to what would be the best course of action for the crown.

Mr. David Price: So you don't have to take the lowest bid.

BGen Peter Gartenburg: That's what I'm advised, yes.

Mr. David Price: Okay.

Next, right now you're taking an in-house bid and you have military people in there who are doing the cooking, which is good. The base commander, for instance, looks to that and says, okay, if I have to deploy people, I have people with military training to send into an area.

If the in-house bid had failed, then what would have happened? You're not going to deploy private contractors. The Americans went through that, and it didn't work. They suffered with that. And surely we're not going to just follow bad examples that have happened before.

• 1625

BGen Peter Gartenburg: Food service in Trenton is an excellent example of the kind of thing you're talking about, in that when we prepared that particular ASD case, in the request for proposals each contractor had to show how they would retain inside their structure the number of military cooks we specified. So they would have had to, and they did in their bids, show how they would do this. And had they won, had a contractor won that, there would be military cooks inside that structure still there to do what you're talking about.

Mr. David Price: So this would be happening, I gather, with any others you went along with on that.

I'd like to follow up on what Hec was asking about the studies done, but go a little further than just the monetary aspect of it. Were there any short-term and long-term studies done on ASD, and did we look at the other countries in the sense of how it affects communities? This is what we're seeing happening, particularly in Goose Bay. It has a terrible effect on a community. The Americans did study communities when they did ASD. It doesn't look as if we've done that. And I'd like to see copies of those studies if they are available or if we did them.

BGen Peter Gartenburg: Certainly on the broader issues of ASD we have done lots of studies. We have worked with our allies to understand what they're doing and learned from them; and they have learned from us. I would agree that in the case of the impact on communities it was not an area we studied in the kind of depth that we did some other activities. When we closed bases a number of years ago, for each base we did a socio-economic impact study for the closure of the base. In this particular case where we're doing alternative service delivery, we're not closing the base, we didn't do socio-economic impact studies to the depth that we did there, but we are now going to do them.

Mr. David Price: That was probably one of the most important ones to do.

BGen Peter Gartenburg: We're now going to do those studies because we understand, as you've suggested, how important that information is.

Mr. David Price: That's all I have for right now.

Thank you.

The Chairman: Thank you very much.

We now go to the five-minute rounds. Mr. Benoit.

Mr. Leon Benoit: Thank you, Mr. Chairman.

I'd like to ask you some questions on the openness and transparency. In your presentation here you talk about how open the process is and how transparent. In terms of the discussions that surround the tendering of the contract, setting out the terms and conditions of the contract, and the choosing of the individual or group that wins the contract, just how much of the information regarding that discussion is made public?

BGen Peter Gartenburg: Mr. Chairman, I think what I'd ask to do is have Lieutenant-Colonel Ryan come forward, please. He was involved in the Goose Bay case, the alternative service delivery study there, and I think he can give you some comments about how we go through the RFP process and deal with the bids.

Lieutenant-Colonel Robert Ryan (Project Manager, Goose Bay, Department of National Defence): Mr. Chairman, as far as the openness or the access to the public is concerned, we kept industry, the unions and every stakeholder fully engaged up until the release of the RFP. So in the determination of how it could be done, what industry thought it should look like, what the union thought it should like, what the department thought everything should look like, we took all that information in and put it together in the development of the RFP.

Mr. Leon Benoit: Who is “we”?

LCol Robert Ryan: For Goose Bay we had a project team that was made up of Department of National Defence employees and Public Works and Government Services Canada, who were doing the procurement side of it. So they were working on the procurement side and we were working on the needs side, what we need to make sure we get, what the conditions need to look like.

• 1630

Mr. Leon Benoit: From within the department, within DND, who would the people be who were involved in that process? What ranks, that type of thing?

LCol Robert Ryan: For Goose Bay again, General DeQuetteville, chief of the air staff, was the chair of the committee. On the committee that was making some of the broad decisions, there was an ADM co-chair, a union representative, a colonel and above, if you will.

Mr. Leon Benoit: Making which decisions?

LCol Robert Ryan: How many dates, when would the RFP be released, how long would people have to respond, what percentage of the workforce should the new service provider take from our workforce—all of the terms and conditions of the contract, in general terms. Most of the terms and conditions of many of the contracts are standard.

Mr. Leon Benoit: Is the discussion that took place among the people who are involved in these groups made public?

LCol Robert Ryan: No.

Mr. Leon Benoit: So we don't have openness and transparency to that point.

My concern is that we could easily have tailor-made contracts. We've seen that, of course, with procurement, for example, of the helicopters, where the terms and conditions that are set really lead to choosing only one helicopter.

I'm wondering if the terms and conditions that are laid out by this group couldn't favour those who have retired from or left the forces and are bidding on the contract.

BGen Peter Gartenburg: I think the important thing here is that all of these kinds of issues you are alluding to are really covered by the way government contracts...not by ASD per se. When we get into, as Colonel Ryan mentioned, the mode of the department saying “Here's what our needs are”, then Public Works and Government Services Canada go through all the standard clauses and structuring and procurement mechanisms that they would do for a type of contract that suits the situation. It's not specifically oriented to alternative service delivery.

Mr. Leon Benoit: But I think there is a special concern, or there should be, when you can see people who have worked together through much of their careers in the Canadian Forces, on both sides of the issue.... One group is setting up the terms and conditions of the contract, and even choosing the group that wins the contract, and on the other hand you have the people who have worked side by side submitting a bid on the contract. There is not a degree of openness that would at least give some protection against favouritism.

BGen Peter Gartenburg: In the case of the alternative service delivery projects that we have done, first of all, the precision and scrutiny that Public Works and Government Services Canada make sure this process goes through is very tight, plus there are frequently independent reviews done on the process. On the steering committee, we bring in a person from outside the department or Public Works, what we call an honest broker, someone who can oversee to again help ensure that fairness—

Mr. Leon Benoit: Where would that person come from? How would they be chosen?

LCol Robert Ryan: For Goose Bay Madame Sauvé was the deputy minister of Ports Canada. She had some knowledge of Goose Bay but had no real input into the contracting.

Mr. Leon Benoit: How is that person chosen?

LCol Robert Ryan: It was nominated by General DeQuetteville and then was put out on the open bidding service for industry to comment. It is the same with the independent observers who were observing part of the evaluation process.

Mr. Leon Benoit: What would it take for industry to be able to reject that nomination?

LCol Robert Ryan: Industry didn't, so I'm not sure...I guess a concern by any of the industry to say this person may have a bias.

Mr. Leon Benoit: If there were concerns expressed by industry during that process, would that be made public in this open and transparent system that you are talking about?

LCol Robert Ryan: I can't speak about Madame Sauvé, but certainly for the evaluators we were looking for someone either from academia or a chartered accountant or someone who had no ties at all to Goose Bay. The chief auditor for the City of Ottawa was approached and she said she would be happy to do it. We published her name and her credentials, and we said to industry, if you're unhappy with her capabilities or qualifications, just nominate someone else that you think would be able to be the industry representative. All of the industry came back and said they thought her integrity was sufficient.

• 1635

The Chairman: Thank you, Mr. Benoit.

Mr. Hanger, I notice that now we have enough members for quorum. Would you like to make your proposal again, sir?

Mr. Art Hanger: As it is written there, I think we should have a recorded vote.

Mr. George Proud (Hillsborough, Lib.): Can I hear it?

Mr. Art Hanger: It's nice to see the Liberals actually coming here to participate in the committee meetings.

Mr. Leon Benoit: It's good that they would show that level of concern.

Mr. Art Hanger: Yes.

Mr. Pat O'Brien (London—Fanshawe, Lib.): Well, Mr. Chairman, we've had hearings at which there were no Reform members.

Some hon. members: Oh, oh.

Mr. Pat O'Brien: If you want to play hardball, we'll play hardball.

An hon. member: None of them were at the last meeting.

Mr. Art Hanger: For the purpose of a recorded vote, I'm again going to move my motion that this committee undertake the review of the process surrounding the awarding of the untendered contract to Bombardier for the NATO flight training school in Moose Jaw.

The Chairman: Is there any debate? It will be recorded vote.

[Translation]

Mr. Ghislain Lebel: Is it possible to intervene regarding the proposal?

The Chairman: Yes, that's what I asked.

Mr. Ghislain Lebel: I would like to ask a question to the person who put forward the proposal. Are there other companies besides Bombardier that are qualified to take on this type of training, to perform these function? Do you know of any others?

[English]

Mr. Art Hanger: I didn't catch everything he said. Was there a question directed to me? What was it?

[Translation]

Mr. Ghislain Lebel: You are tabling a resolution asking that there be a review of the process surrounding the awarding of a contract to Bombardier.

[English]

Do you understand me now? I want to know if Bombardier is the only company that could supply this service there.

Mr. Art Hanger: That's a good question, and I think it remains unanswered. I would like to know the answer to that, too. If it's untendered, how would one know?

The other point in question, too, is the fact that there is a claim that several participating NATO countries have allegedly signed up, but there's no evidence of that. I would like to know exactly what's at stake here for the taxpayer should this operation not get off the ground.

There are a lot of questions to be answered, and that's one of the reasons why this motion has been put forward.

The Chairman: Mrs. Longfield.

Mrs. Judi Longfield: Just for clarification, this was a request for proposals, so it's on a tender per se, is that correct?

BGen Peter Gartenburg: You're referring—

The Chairman: No, you have to address—

Mrs. Judi Longfield: Okay, this was just for clarification. This was a request for proposal; it wasn't a tender.

Mr. Art Hanger: I understand it was just granted.

Mrs. Judi Longfield: That's why I wanted clarification. I assumed it was an RFP.

Mr. Art Hanger: It was untendered. There was no bidding process involved.

Mrs. Judi Longfield: Okay, it was a request for proposal. So, Mr. Hanger, you would know that requests for proposal don't necessarily mean the lowest bidder is awarded.

Mr. Art Hanger: It has nothing to do with that.

Mr. Leon Benoit: It wasn't put out for tender.

Mr. Art Hanger: We know nothing of—

Mrs. Judi Longfield: Tender and proposal are two different things. Tender is a sealed bid.

Mr. Leon Benoit: Who cares?

Mr. Art Hanger: It doesn't matter.

Mrs. Judi Longfield: There is a big difference. Having dealt with both requests for proposal and tenders—

Mr. Art Hanger: We want an examination of the process.

The Chairman: Excuse me. Judi, we'll let you finish, and then we can go back to Mr. Hanger.

Mrs. Judi Longfield: Okay. Just for clarification, I was just indicating that this wasn't a tender; it was a request for proposal. As such, a request for proposal does not necessarily mean it's going to be the lowest bidder. In a request for proposal, there are many things that come into play. As I say, frequently it's not the lowest bidder.

Mr. Art Hanger: There was no request for proposal. This contract was awarded without such a process. We want an examination of the entire process that led up to it.

[Translation]

The Chairman: Are there any other questions?

[English]

Mr. Art Hanger: There are an awful lot of unanswered questions.

[Translation]

The Chairman: If there are no other questions,

[English]

I'll just read Mr. Hanger's proposal: “that this committee undertake a review of the process surrounding the awarding of the untendered contract to Bombardier for the NATO flight training school in Moose Jaw”.

It will be a recorded vote.

• 1640

(Motion negatived: nays 6; yeas 4)

[Translation]

The Chairman: Mr. Lebel, have you any other questions?

Mr. Ghislain Lebel: No.

[English]

The Chairman: Mr. Richardson.

Mrs. Judi Longfield: Didn't I have a few minutes left?

The Chairman: We can come back to you after, Judi.

Mr. John Richardson (Perth—Middlesex, Lib.): Thank you very much, Mr. Chairman.

As you probably know, the ASD has become quite a contentious proposal. Some of the observations brought back from Trenton yesterday by the members of this committee left us to wonder if something went wrong on the way to the market. There may be an answer to it, but certainly I'm going to get this on the record, because if it's wrong, something went wrong.

I'd like to know, when the cost of food was doubled for our airmen in Trenton, what was the cause of that? Was it the tendering process and the cost of that tender that bumped their cost of food up to the range of $400 to $450 a month? If so, we would like to hear back on this committee about that. It was put on the table here, and it may clear the air if we can get an answer as soon as possible. It isn't one that would be a resounding morale feature if that were the situation.

The other features that I noticed are coming through is that there are ASDs that seem to be working quite efficiently and are meeting the needs of the base where they're operating. Could you enlighten this committee? Would you name one or two of those ASDs that you know are operating effectively in terms of the contract?

BGen Peter Gartenburg: On your first point that ASD is contentious, you're absolutely right, sir. ASD has become a lightning rod for a lot of concerns. Our constant struggle in communication, in a period where there's a massive transition and change, is to let people understand what the source of that change is. Therefore ASD has become, in the view of many of our members, the stimulant that has caused much of this change. In fact, it's the effect, not the cause. Whether it's re-engineering, or ASD, or the directed downsizing that we had with the 1994 white paper, all of those things have led to change, and sometimes people mix up that cause and effect.

As for the case of food services, to the best of our knowledge—and I indicated that we would try to provide you some more information, because I think it's important, as you say, to clear the air—the changes in the cost of food at Trenton is not the result of the ASD competitive process that we spoke about. In fact, it is the result of the decision in the department, on behalf of the members, to allow the rations and quarters to be separated and to allow people to pay for what they eat, as opposed to being locked into a fixed amount per month. So for many people, that reduces the cost of their food, and as I understand it, in Trenton and bases that are implementing this, there were various options for food plans. I can't give you any more specifics than that now, but we will get that information for you.

As to success stories on ASD, I guess there are various ones we could choose. My colleague Ms. Howard spoke of the case in Meaford, where the range there went through an alternative service delivery project—a range and training area that provides support to the army militia—and they are very satisfied with the results of that. While the flight training at Portage La Prairie in Manitoba started before the official ASD program, it has all the elements of ASD as we know it now, and again the air force is very happy with the reductions in the costs and the quality of the training that they're able to provide there. The fleet maintenance facilities in Halifax and Esquimalt are going through that process.

• 1645

So there are changes in a lot of areas. Indeed, there are very many success stories, such as the publications depot here in the Ottawa area, where the in-house bid won. I was out there for the official opening. The employees are very happy with what they have been able to achieve.

Mr. John Richardson: Maybe the piece of paper I have is dated, but it states that seven initial sites were selected. Maybe that introduction dates this, because it means Canadian Forces Base Borden, Gagetown, Gander, Montreal, and some of these have been wiped off the list as I know it now and have been advised by a person who knows. Others that have been put on that aren't on this list.

This document emanates from the Department of National Defence. Have the initial seven changed and been enlarged, or do I just have a document that's out of date?

BGen Peter Gartenburg: The specific project you're talking about is called the site support services project.

Mr. John Richardson: That's right.

BGen Peter Gartenburg: It was initiated by the department, starting in October or November last year. My team was directed to look at whether there were opportunities at other bases to go through an ASD process, similar to the techniques that have been used at Goose Bay. Based on some preliminary analysis, we selected the seven sites. We were then tasked to visit each one of the sites and start scoping the amount of work and size of activity. We've been through that process. We have to remember, though, that this is only one project and there are alternative service delivery activities going on at virtually every base in Canada, outside of this specific project.

We have about 40 projects on the go, as I mentioned, some of them in Halifax and some of them in Valcartier, in research and development, etc.

Mr. John Richardson: That's fine. I think this was under site support, so that was a specific area, not a general one.

The Chairman: Mr. Price.

Mr. David Price: I probably have some questions for Colonel Ryan, to maybe just clear up a little what happened at Goose Bay on the bidding process.

My understanding was that all the bids were on category two, and then at the end it was changed to category three, but not everybody was aware there was bidding on category three. Now SNC-Lavalin is suing. Could you explain why it's suing and maybe a little about how this set-up went?

LCol Robert Ryan: You are referring, sir, to the types of offers available to the contractors that take on our former employees. From the outset, all the contractors had the opportunity to bid on type one, type two, or type three. We had developed a spread sheet that would transfer the costs of those decisions to the bottom line of their bids.

Type one offers are the ones that are typically in-house bid offers. They're status quo, if you will, so they cost the least as far as workforce adjustment. They would transfer the least to the bottom of the in-house bid. Type two would be second, and then type three.

From the very beginning, all bidders could gauge what strategy they wanted to use, as far as what wages they would pay and what penalties they would incur. There were never any changes in mid-process and I don't know of any suit from SNC-Lavalin.

Mr. David Price: The understanding I had was that category two would be the type of bid you were really looking for, and two weeks near the end of the process the company that got the bid was asked to bid on category three.

LCol Robert Ryan: No, sir. In actual fact, I was expecting type three bids because we expected a fair amount of seasonal work.

Mr. David Price: But the in-house bidders were advised they should go in category two because that was where they would have the best chance.

• 1650

LCol Robert Ryan: Again, category two gave you less of a penalty, so depending on your strategy, because we were going to apply your penalty, type three gets you the biggest penalty, so it goes at the bottom, and type one gets you the least penalty. In their strategy they had those options.

In the RFP we pointed out that we thought there could be a lot of seasonal work, which would automatically translate to a type three offer. And throughout the bidding process, we had some type threes, some type twos and the in-house bid, bid type one. So with respect to a change of policy throughout the process, there was no change of policy, sir, and as far as litigation from SNC-Lavalin, none that I'm aware of.

Mr. David Price: Okay. What about the problem of the “professional” people, let's say, now cleaning toilets?

LCol Robert Ryan: Certainly the most contentious point in Goose Bay...we had over 70 individuals who were employed in clerical administration or administrative support. The new service provider was looking for about 15. And when they got through the hiring process of interviewing those 70 and picking the 15 they were looking for, we still had individuals who wanted work, work of any sort.

And because getting an offer didn't limit your options, it was not up to us to not let you have as many options as you could. Some of them wouldn't be great options, but at least because you got an offer you wouldn't be limited.

So we went to the service provider...and cleaning had already been subcontracted and in our workforce we had no cleaners. The new service provider was going to have to find a new set of cleaners, if you will. We told the provider that some of our individuals needed offers regardless of their type and we told him to make those offers. It doesn't impact their status at all and at least it gives them one more option.

Mr. David Price: Okay. I have just one other quick question about the interview process they went through. There were a lot of problems with that because there was a short period of time for the interviews. And once they did get through the interviews, they didn't know what was going on for a long period of time, with a very short delay at the end to take a package, if they were going to take a package. What's the situation with that right now? A lot of people, last time I talked to them, were left really in the air with that. And that is not the contractor's fault. It comes back to us, really.

LCol Robert Ryan: We got put in the situation where the sunset dates for the workforce adjustment directive, the early retirement incentive, were yesterday. And in the workforce adjustment package that is one of the better options. You need to give people 60 days to make that decision, so with having an announcement right before Christmas and starting the process in January, we had a very limited time to get people all their options so they would have 60 days in which to make some of those decisions.

It was the intention to make sure that people didn't lose this ERI option, even though having more time to review less options is probably not—

Mr. David Price: Because they couldn't make a decision. They hadn't heard from the company, so therefore they couldn't make a decision.

The Chairman: Mr. Price.

Mr. David Price: Sorry.

The Chairman: Mr. Hanger, do you have a question?

Mr. Art Hanger: I do indeed.

The Chairman: Five minutes.

Mr. Art Hanger: Thank you very much, Mr. Chairman.

In reference to the Goose Bay changes too, I know you just sat down, Lieutenant-Colonel, but you may or may not be able to answer this particular question. It deals with the agreement. I understand that the agreement struck with the civilian employees there was that a full 70% of those affected would be hired back by the new service provider. Has that in fact happened?

LCol Robert Ryan: The new service provider was required to make up 70% of his new workforce—

Mr. Art Hanger: That's 70% of his new workforce?

LCol Robert Ryan: —from our old workforce.

Mr. Art Hanger: Okay.

LCol Robert Ryan: What that translated to in his proposal was that he needed to make about 225 job offers. To date we understand he's had about 240 offers.

Mr. Art Hanger: But he had no provisions there as far as pay levels go, or anything of that nature.

LCol Robert Ryan: That's correct, sir.

• 1655

Mr. Art Hanger: That was left strictly up to him to decide what was—

LCol Robert Ryan: It's what the market would bear, and then what he would pay would be penalized back for the top-ups that we would have to incur. So all the top-ups that we incurred because of whatever wage package he decided on were added to the bottom of all the bids.

So if you paid 100%, the in-house bid effectively had a small workforce adjustment penalty, if you will, put on the bottom of their bid, whereas those with less attractive salaries had a higher number put at the bottom of their bid. That total was the part of the evaluation that was the determinant.

Mr. Art Hanger: Is this the same thing that's going to happen in Moose Jaw? What's going to happen in Moose Jaw?

BGen Peter Gartenburg: If you're specifically referring to the Moose Jaw case and the civil servants, the company there has chosen a type two offer. That has certain stipulations. Once the company chooses the type two offer, it has certain stipulations associated with it.

Again, there are stipulations in the percentage of the workforce in that 70% of the new workforce has to be hired from the affected employees. It also stipulates, once they select type two, what the average salary would be associated with that workforce.

Mr. Art Hanger: Is there a salary provision in there, or is it the same provision that was in the percentage? There's sort of a compensation package offered then by the military to those who have to take a loss, if you will.

BGen Peter Gartenburg: In the case of Moose Jaw, the employer would have to provide an average of 85% of the salary. We understand that in fact the new service provider is going to provide more than that. In fact, the people it engages will be at 100% of their former public service salary.

Mr. Art Hanger: Is that a provision in the agreement?

BGen Peter Gartenburg: The provision of the type two offer is for a minimum of 85%.

Mr. Art Hanger: Why is there such a difference between the two service providers as far as wages are concerned?

BGen Peter Gartenburg: In each case, as Colonel Ryan mentioned, the bidders have choices as to what they will bid. So on the one hand, they can give higher-level offers. It costs them more on the one hand, but then our transition costs are greater, so there's some compensation there. So there's the choice for companies and bidders to pick the options they're looking for.

Mr. Art Hanger: What else is going to happen in Moose Jaw? I understand the small jet planes, of course, will no longer be serviced there. It will strictly be a flying school. But what exactly is going to take place when it comes to jobs? What will be the final product?

BGen Peter Gartenburg: For several years, in fact, we've been providing flying training at Moose Jaw using a fairly conventional military airbase approach. The instructors are military. The support services are provided by a mix of military and civilian personnel. We're flying the Tutor jets we own in the training program.

In the new arrangement, in fact, we are buying services and, as part of a package, aircraft as well. So the Tutors will eventually be replaced when the contract goes into effect. The aircraft that are part of the contract will be used. The flying training will go on. Military instructors will do the training as before.

The ingredient that's most beneficial to Canada is that we will not just have Canadian pilots being trained there, we'll have whichever allies sign up for the program. So we'll have a few instructors from those nations, as well as students.

Mr. Art Hanger: How many other nations have—

The Chairman: Last question, Mr. Hanger.

Mr. Art Hanger: —signed up for the program?

BGen Peter Gartenburg: It's my understanding that three nations at this stage have signed up, but there's a very aggressive program to try to recruit more.

Mr. Art Hanger: Have they signed or have they just indicated that they find it an acceptable form of training?

BGen Peter Gartenburg: I can't give you precision on just what—

Mr. Art Hanger: You can't tell me whether they've actually signed or not?

BGen Peter Gartenburg: I can get that information for you.

Mr. Art Hanger: If you could, please, I'd appreciate it.

The Chairman: Thank you, Mr. Hanger. Judi is next.

• 1700

Mrs. Judi Longfield: We know that the exercise of ASD is to find a better, more cost-efficient way of doing things. In the best of all worlds, if we could have our own people be able to deliver those in that kind of way, that to me would be the best solution.

With that in mind, what are we doing either financially or in any other way to encourage and assist in-house bids? Specifically, I'm wondering if these people are given time off to prepare, because the preparation of a request for a proposal or a tender is not something that most of these people would be doing on a regular basis and they're competing or bidding against commercial organizations, for which this is part of their operation; they have teams of people who do this. What are we doing to help balance the scales, to give every opportunity to be able to present a proposal that would be accepted?

BGen Peter Gartenburg: Certainly on the first part we have worked with our own people. They are our colleagues and our hearts go out to those folks. We understand, though, that as we go through this time of transition and change, we have to look at every possible way of wringing the most out of every dollar, so that's why we're into this kind of program.

As for the specifics of handling in-house bids and the assistance we give to those, and it's considerable, I'd like to ask Ms. Howard to comment on that.

Ms. Kathryn Howard: The best example probably is Goose Bay, where the in-house team was full-time. This is not something people can do in their own time after hours, as you have indicated. I can't give you the specifics of the number of people, but I've met a number of them and there were at least five, including union membership.

They are given training by my organization and our Canadian Forces Management Development School as well to give them training in business case analysis, benchmarking and cost analysis. They do include a member on their team to do all the costing, they will engage consultants, and all the funding and the accommodations are provided.

To be fair to industry, where they have incremental costs, those costs are included in their bid. They tend to be very low. The costs of their own salaries and their own accommodations are not added to their price. In fact, the in-house bid in Goose Bay partnered with industry, with a British firm, to help them in the development of their bid.

We try to ensure there are no unusual roadblocks. We developed what we call the ASD costing guidelines, which were a set of rules and procedures to ensure that the playing field was as level as possible so that the in-house bids would not be disadvantaged by arbitrary costs. For example, industry would like us to include a portion of the salary for the Chief of the Defence Staff as part of the in-house bid, and clearly we have focused on only the avoidable costs that would result should that activity cease. So all of the indirect costs are not added to the bid.

Mrs. Judi Longfield: What about inventory that's left at the time of that ASD transfer? Is the assuming provider charged for the inventory that it would assume?

Ms. Kathryn Howard: It would be split, madam, into at least two groups. There are some that are very small and it would be considered government-furnished equipment or government-furnished facilities, and that would be neutral to all bidders, whether it's an in-house bidder or—

Mrs. Judi Longfield: No, I'm talking about after the bid has been awarded. You're provided with a space in many cases; in some cases a renovated space, as in the case of food services at Trenton. In this case it was an in-house bid, but if it were Versa Services or Beaver or one of the others, would they be charged back some of costs of renovating that facility?

Ms. Kathryn Howard: All of those costs, including inventory, would have been included in the RFP, so all bidders would have known which portions they would have to pay and which portions would be provided.

Mrs. Judi Longfield: Say we were looking at ASDing fire services, for example. A lot of equipment goes with that kind of operation, so I assume the existing inventory would be sold and the new company would either buy the existing inventory or bring its own in. Is that the case?

• 1705

Ms. Kathryn Howard: We are subject to the crown assets disposal regulations, so Public Works would advise us on the appropriate rules.

Mrs. Judi Longfield: What I'm leading to, I guess, is that a number of municipalities have ASD'd, as it were, garbage collection and a number of other things. They have disposed of their packers, all of that kind of equipment, and have gone to a private company that has provided all that, brought it all with it. Five years down the road, when the costs quadruple and the municipality is then faced with having to take back the service itself, it now is in this unbelievably difficult situation of having to acquire all of those assets from scratch.

Are we looking at that possibility? As I say, it's happening. A municipality continually, as it's using its equipment, puts a certain amount aside in reserve to purchase new equipment. Once you've ASD'd it, then there is no equipment reserve per se. If the provider ceases to be a provider, there is nothing left.

BGen Peter Gartenburg: I understand the question, but what I'd like to do is ask Colonel Ryan to come forward. Again, he's only focused on Goose Bay, but I think perhaps the example of how they dealt with Goose Bay may be useful in response to your question.

Mrs. Judi Longfield: Okay.

LCol Robert Ryan: Ma'am, on exactly the point you take, we looked at all the high-value items. Were we to dispose of them through crown assets and not get very much for them, what position would that put us in when we went to retender in five years?

What we did was to say that if it's at Goose Bay, which is even worse at getting things in there, anything over $5,000 we're keeping. We're providing to the service provider for activity only within the statement of work. The service provider will do inventory on the day of hand-over, and we want it back in the same condition five years from now. It's the service provider's responsibility to maintain it to that degree.

So at the end of five years, we will get back five fire trucks, an ambulance, and four dump trucks.

Mrs. Judi Longfield: But there's another component to that, always adding.

LCol Robert Ryan: Certainly.

Mrs. Judi Longfield: Five years from now, that truck is still out of date.

LCol Robert Ryan: Exactly. We have a fire truck that in the life cycle will be replaced three and a half years in. The air force has identified one at another base. So we will be putting that fire truck in to make sure that Goose Bay, at the end of five years, has enough assets to take it back internally or to retender to another contract.

Mrs. Judi Longfield: Thank you.

The Chairman: Mr. Proud.

Mr. George Proud: Thank you, Mr. Chairman.

I don't know if this question has ever been asked, and I want some clarification on it. At Gagetown, New Brunswick, as I understand it, when this base started some 40 years ago or whenever it was, at that time when the government military bought out the people who were living there—farmers, lumber people, and all of the businesses that were there—they were also guaranteed jobs at the base.

I wonder if all of the commitments have been lived up to, if that's the case. What's happened? Was that just the people they bought the properties from or were their families guaranteed this? Could you give me some clarification?

I don't know this for sure, but I've been told by pretty responsible people that this was the case when this happened. Could you find out for me what is the status of that now?

BGen Peter Gartenburg: Yes, sir, I'll check and let the committee know.

The Chairman: That's it?

Mr. George Proud: Yes.

The Chairman: Mr. Price.

Mr. David Price: Has a type three offer been accepted anywhere else except for Goose Bay, or is it going to be used anywhere else?

BGen Peter Gartenburg: I'll ask Mr. Hanson to come forward and talk to the issue of types.

Mr. Robert Hanson: As Colonel Ryan indicated when he was up here a little while ago, one of the main reasons for not establishing any minimum requirements with respect to types of job offers in Goose Bay was the expectation that a majority of the work would be seasonal in nature, and therefore employees' salaries would be considerably lower than what we would expect them to be in the public service. It was on that basis that no minimum requirement was established for Goose Bay, for example.

The other major one under way right now is Moose Jaw. There is a requirement for a type two job offer there.

Mr. David Price: Is there any other, though, that you can see?

Mr. Robert Hanson: Those are really the two major ongoing ones right now. The scoping hasn't been done on the rest of the sites. No HR framework has been put in place yet for the rest of those. We'll be doing that in discussions with the unions, which will be starting shortly.

• 1710

One of the things that's impeding us a little is that public-service-wide the unions are in negotiations right now with the Treasury Board on a new workforce adjustment directive. We're waiting quite eagerly to find out what the results of those negotiations are. Once we know that, we'll be able to move ahead with the unions.

I think it's safe to say that Goose Bay has taught us some lessons about how we should approach some of the future ones.

Mr. David Price: If we compare Trenton and Goose Bay with regard to the help that was given with consultants to set up their in-house bid, was it pretty well the same set-up for both? Trenton seemed quite happy with the way it went, whereas Goose Bay...of course, one won and the other lost. That can make a difference.

BGen Peter Gartenburg: Is your question, sir, just referring to the help given to the in-house bid?

Mr. David Price: That's right, the finances for the consultant. Was basically the same set-up used in both?

BGen Peter Gartenburg: Okay. We've talked about the Goose Bay one, so the question is about Trenton.

Would you respond to that, Kathryn? Were the same kinds of services provided there?

Ms. Kathryn Howard: Yes, sir. I can't give you the actual specifics on what they did avail themselves of, but all in-house bids were made the same offer of service and support.

I had one of my officers working with the Trenton in-house bid team and I know they were very pleased with the services they received. But as for whether they engaged a consultant, I don't have that specific—

Mr. David Price: Yes, they did. But they were happy with the whole set-up at Trenton.

Thank you.

The Chairman: Mr. Hanger.

Mr. Art Hanger: Thank you, Mr. Chairman.

You mentioned ASD and other bases that maybe haven't been subject to this process. There's a lot of fear out there, fear of job losses or decreases in pay. How do you go about calming some of these fears? Is there anything you've set out in the process that will address the concerns of not only the military personnel but of the civilian personnel as far as how they feel toward this downsizing and this alternative delivery?

BGen Peter Gartenburg: I think the most significant thing is good communications. And it's an issue that we constantly try to improve. We have a little magazine we call the Defence 2000 News, which goes out every month and talks about all the changes going on in the department. ASD is always featured prominently in there. We have a new departmental newspaper called the Maple Leaf, which has articles on alternative service delivery. We prepare questions and answers on ASD and send them out through the chain of command.

Just recently my staff held an ASD practitioners workshop where we brought people in from all bases and spent three days, I guess it was, discussing those issues. We have a union-departmental consultative forum on ASD that in the past has been meeting about every six months or so, I guess, where there were meetings to discuss ASD. We have communiqués that go out through the chain of command.

So we're doing our very best to try to provide as much information as possible to people. That's the key, we think: good communication.

Mr. Art Hanger: There still seems to be a lot of fear and concern out there in spite of this line of communication, especially in the unions on the civilian side. Some of them feel they haven't had legitimate opportunities to really involve themselves, even in some of these in-house bids. They feel they've been shut out of the process.

BGen Peter Gartenburg: Yes, sir, you're absolutely right. And it's evident that military and civilian people at bases get information from different sources. So they will take information they get from other sources as well as ours and come to their own judgment, I guess. We attempt to give them as much information as possible, factually, openly and honestly, so that they will know the difference between truth and falsehood, between rumour and fact.

Mr. Art Hanger: I guess no one can really see where the bottom line is on some of the delivery of services at this time.

I'm kind of curious. You have a budget that I think is sitting at about $10 billion right now.

BGen Peter Gartenburg: Yes.

Mr. Art Hanger: And it's going to go down to $9.2 billion.

• 1715

BGen Peter Gartenburg: Yes, as I understand it, it's going to about $9.2 billion for 1999.

Mr. Art Hanger: All right, so there are going to be substantially more cuts in some for or another. In total, what is the amount that the department expects to save through alternative service delivery?

BGen Peter Gartenburg: Our target for the ASD program was a $350-million savings by the year 2001. Obviously, whether we achieve those or not depends on the number of projects we have under examination and the progress of those projects through the process.

Mr. Art Hanger: How close are you to the target?

BGen Peter Gartenburg: So far, our savings have been in the order of $50 million per year. Our program started in 1995 in terms of generating the policy, the process and all those sorts of things, but we are in fact really very near the beginning in terms of putting projects through to competition. In fact, we just have four projects that have moved through the full process into competition. As I mentioned before, one can't expect to see savings immediately because there are in fact some transition costs before you start to get those savings.

Mr. Art Hanger: Thank you.

The Chairman: Mr. Clouthier.

Mr. Hec Clouthier: General, considering the fact that one of the questions I asked you earlier was whether or not there has been a detailed analysis of the ASD delivery, and considering the fact that mainly the civilian employees are very concerned about the ASD, I know there are approximately seven selected sites now where ASD is currently being implemented. Is that the end of it for the time being?

Coming perhaps more from the field of business than from the field of politics, I would suggest that, in my business, I wouldn't make a wholesale change just for the sake of making a change. I would want to have some kind of transition period wherein I could see if this was for the betterment of my particular company. So if it's not clear yet whether it's for the complete benefit of the DND and its employees, is there some program in place to say that we're going to slow down on this for the time being?

BGen Peter Gartenburg: The issue of benefits, I guess, is judgmental to some extent. Certainly on the financial side, there is ample evidence that we are in fact making savings through the projects that have gone to competition so far.

In the analysis process, which is very detailed and exhaustive for each project, everything—not just financial issues, but operational support and the human issues, the personnel issues—is very much a part of that equation. As I mentioned, there have been a number of projects, about forty, that have gone through completion, others are in process, and more will come. In fact, the department's position is that in due course all of what we call non-core activity would be reviewed and scrutinized.

Of course, one can't do that in one, two or three years, because of the size of the activity. It will take a long period of time, and I suspect that we will eventually be in a mode similar to that of many companies, organizations and governments, trying to do continuous improvement. We will constantly be looking for the best way of doing business.

Mr. Hec Clouthier: One of the factors that I believe should be taken into consideration is.... Just because we say we've saved $50 million because of the cost factor on the one hand, there's still the other hand. These companies that take over the ASD are not in it to lose money.

Let's go to Trenton. I'm not aware of it, but I know my colleague Judi Longfield indicated that the cost of the food was escalated there. So really, then, on the one hand we could be saving money on a capital investment or a capital expenditure, and on the other hand the companies that take over could just escalate the prices by the time that would be taken into consideration, whether it's food, maintenance of buildings, or repairs of stores.

Perhaps upon reflection, it might be time to take it easy for a minute and to take a look at this thing, because there are other costs incurred. Certainly, the DND may not be outlaying as much money initially, but on the other side, our employees, our soldiers, could actually be paying more for the services provided.

• 1720

BGen Peter Gartenburg: While ASD is new—the methodology is relatively new in government and the department—in fact, we have been contracting activities out to private companies as long as I've been in the air force and Canadian Forces. The example that I know best is the contracting of aircraft maintenance to a number of companies across the country. If we were starting out today and that work was being done by DND, we'd be talking about ASDing or potentially contracting out that activity. In reality, it's been contracted out for many years. And so each one of those contracts in due course comes up for renewal and all the provisions are there to ensure that the crown gets best value for dollar and that we're protected from the kinds of things you talk about.

Mr. Hec Clouthier: I agree with you in one regard, General, but I'm going back to my own particular base in my area of Petawawa. I'm from the lumbering industry, and sure, they've contracted out, because I've secured contracts on the base with the lumbering industry. The difference is that this is a specialized area. There were not people on staff with CFB Petawawa who had the capabilities to extricate the logs vis-à-vis the lumbering, the same as you're talking about with regard, perhaps, to the aircraft engineering. But in many instances, the way it's coming down now to the nitty-gritty, so to speak, as far as stores, carpenters and plumbers are concerned, I'm just saying I'm a little concerned that perhaps we could be moving a little bit too fast on it and not taking into consideration the human factors that are there. That's it; it's just a comment.

The Chairman: The last question goes to Mr. Hanger.

Mr. Art Hanger: Thank you, Mr. Chairman.

Was it your area under management renewal services that set up the Canadian Forces Housing Agency?

BGen Peter Gartenburg: Ms. Howard advises me that, no, it was in fact set up even before the management renewal services function was incorporated and it was under the assistant deputy minister for personnel.

Mr. Art Hanger: So there's no oversight by your office or your area of this.

BGen Peter Gartenburg: No.

Mr. Art Hanger: Thank you.

The Chairman: That's it?

Mr. Art Hanger: That's it.

The Chairman: Thank you very much, General. We'll be awaiting the documents that you were asked for.

BGen Peter Gartenburg: Yes.

The Chairman: The meeting is adjourned.