General items: Standing Committee on Public Accounts—February 13, 2023
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Opening statement
By: Paul Thompson, Deputy Minister
Public Services and Procurement Canada
Standing Committee on Public Accounts
Office of the Auditor General Report on Arctic waters surveillance
February 13, 2023
(Word count: 800)
Thank you, Mr. Chair.
Public Services and Procurement Canada welcomes the Auditor General’s report and is committed to working with its partners to ensure Canada’s Arctic waters are safe and secure.
And we are in full agreement with the Office of the Auditor General that such equipment must be acquired in a timely manner.
For Public Services and Procurement Canada, that means supporting our federal partners with the procurement of equipment and capabilities needed for effective Arctic water surveillance, which is being done through Canada’s National Shipbuilding Strategy (NSS).
The National Shipbuilding Strategy is one of the largest and most significant endeavours undertaken by Canada.
The NSS is focused not only on equipping the Royal Canadian Navy and the Canadian Coast Guard with much-needed vessels, but also on strengthening Canada’s shipyards and rebuilding Canada’s marine industry which is an important source of high skilled jobs.
That includes small- and medium-sized businesses which make up some 90% of Canadian marine industry firms.
Mr. Chair, the shipyards that are awarded contracts under the NSS are responsible for sourcing things like materials and technology for their respective shipbuilding projects.
Through the provisions of the government’s Industrial and Technological Benefits Policy, which focuses on generating economic benefits here at home, hundreds of Canadian businesses are securing that work.
And those business are growing—investing in innovation and getting traction in export markets.
National Shipbuilding Strategy challenges
While acting as an economic driver, and while successfully delivering a number of vessels, as well as completing needed repair and refit work, the strategy also faces some significant challenges.
Due to the pandemic and other global events, we have several new factors to deal with—such as inflation, commodity pricing, and supply chain disruptions that have affected the cost and availability of materials.
These issues are exacerbated by labour shortages.
Mr. Chair, the report from the Office of the Auditor General is quite valuable as we work to counter the impact of these challenges.
I would like to give an update on the action plan which addresses the report’s recommendation provided to our department.
Action plan
Mr. Chair, we welcome this new report from the Office of the Auditor General.
Part of our Management Action Plan to address the reports findings outlines ways to make sure delivery schedules are more accurate, including by making improvements to how we monitor and report on the progress of the projects.
The goal is to identify potential delays and cost-overruns earlier in the process.
The action plan maps out continued efforts to ensure that we are properly and effectively integrating schedule, costs, and scope in how we measure performance.
With ongoing and regular review of this integrated information, we are better able to identify and intervene earlier to mitigate potential issues with project costs and delivery timing.
Third shipyard
In addition to the implementation of this Management Action Plan, the government’s efforts to acquire equipment in a timely manner is also supported by the integration of a third shipyard into the National Shipbuilding Strategy.
Bringing on a third shipyard is a significant factor in addressing the concerns raised in the Auditor General’s report under discussion today.
Specifically, the third yard will be responsible for building 1 of 2 Polar icebreakers and 6 program icebreakers for the Canadian Coast Guard.
In June of this year, the Government of Canada announced the beginning of negotiations with Chantier Davie of Lévis, Quebec, to become the third strategic shipbuilding partner under the National Shipbuilding Strategy. That process is ongoing.
Contracts for each polar and program icebreaker will be negotiated following the signature of an umbrella agreement with the third yard.
And of course, the lessons we have learned from the revised approach to project management, costing and scheduling will be applied as we draw up and manage those new contracts.
Conclusion
Mr. Chair, every effort is being made to finalise the complex and multi-step third shipyard qualification process.
It is essential that this process, as well as subsequent contracts for vessels to operate in the Arctic, provide value for the Government of Canada and all Canadians, and we are working diligently to ensure that is the case.
Mr. Chair, I think it is also worth noting that, as we have seen around the world, shipyards typically increase their efficiency over time as they mature—and Canadian shipyards are no exception.
This is particularly true with longer production runs of ships.
For example, Canada has seen good progress in the Arctic and offshore patrol ships program, with 3 ships delivered so far and the cost per ship decreasing.
As we continue to deliver on the National Shipbuilding Strategy, and as the Canadian industry continues to gain more experience along the way, we should start to see even more efficiencies.
Mr. Chair, I can tell you that Public Services and Procurement Canada will continue to work with its partners to mitigate the project delivery risks for the NSS—so that the Royal Canadian Navy and the Canadian Coast Guard get the vessels they need to do the job.
Thank you. I am happy to take your questions.
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