Proceedings of the Standing Senate Committee on National Finance
Issue 44 - Evidence, June 18, 2002 (Morning meeting)
OTTAWA, Tuesday, June 18, 2002
The Standing Senate Committee on National Finance met this day at 9:32 a.m. to examine the Administrative Contract at the Goose Bay, Labrador airfield.
Senator Lowell Murray (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, the matter under consideration is timely and of some urgency because the Goose Bay, Labrador airfield is currently used by some of our allies. There is a service contract in place with Serco Facilities Management Incorporated that ends in 2003. A request for proposal, RFP, to renew or set up anew that contract was due to be released yesterday. One of the first questions to our witnesses will be whether the RFP has been released and whether we can have copies of it.
Our first witness panel is from the Department of National Defence. Mr. Jim Richardson is responsible for the re- tendering of the contract for the Goose Bay, Labrador airfield. He is accompanied by Mr. Frank Young. As well, we will hear from Colonel Alan D. Hunter, who was the operations officer at 5 Wing Goose Bay from 1990-94. Since 1998, Col. Hunter has been chair of the Goose Bay operations subcommittee and, in that capacity, he chairs the annual meeting of operations representatives from the five NATO nations that train at the base. We will also hear from Col. Robert Bertrand. There are also additional uniformed and non-uniformed witnesses to assist our panel in the event that the questions become too technical.
Mr. Richardson, please proceed.
Mr. Jim Richardson, Director, Major Service Delivery Procurement, Department of National Defence: Honourable senators, by way of introduction I will briefly outline the history of the project to provide contracted support services for the base at Goose Bay. I will make two key points about the current contract and about the proposed contract for those support services.
Allied pilots use the Goose Bay base primarily for low-level flying training. The Canadian Air Force has limited operational need for Goose Bay. We currently have agreements with Germany, the United Kingdom, Italy and the Netherlands to use the base until 2006. In 1997, the base was identified for alternative service delivery, ASD, because the base was not directly supporting a Canadian Forces operational role and because Canada and the allies at Goose Bay were facing severe budget constraints. In 1998, after a competition, the Canadian government awarded a five-year site support contract to Serco. The contract is worth $150 million for the five years and includes the cost of the successor rights decision. It covers the period from April 1, 1998, to March 31, 2003. As has been mentioned, we are in the process of seeking proposals for a new 11-year long-term contract. The request for proposal was released yesterday and will be available today through the government on-line tendering system. That is a short summary of the history and status of the contracting for the Goose Bay project.
I should like to make two key points about the current contract and about the future contract. First, we believe that contracting out site support at Goose Bay has been successful. It has sufficiently lowered the cost of running the base so that the allies have been able to continue their training at Goose Bay; at the same time, it has offered high-quality support services. With the contracting out, the cost for the site support work was reduced from an average of $45 million per year to $30 million per year, a saving each year of about $15 million. This cost reduction has made using Goose Bay a more attractive option for our allies, who needed cost reductions in order to keep their training at Goose Bay affordable.
Second, we did learn some lessons from the first contract experience and we are applying those lessons to the contract renewal, including building in new requirements to provide workforce stability. This time around, we have consulted more closely with the allies, with industry and with the local community. We have acted on the concerns of the local community and we have added requirements in our request for proposal that bidders hire at least 90 per cent of the workforce from the local community. Furthermore, we have specified that the number of employees must be at least equal to the current contracted workforce level of approximately 300 and that bidders must plan for salaries, benefits and human resource policies and procedures that ensure workforce stability. Any bidder who cannot meet these requirements will not be accepted. We recognize that workforce stability and cost are important to the allies.
Honourable senators, with those brief comments, I would ask Mr. Young to speak to the current situation with respect to his duties and the allies.
Mr. Frank Young, General Manager, Goose Bay Office, Department of National Defence: Honourable senators, I am pleased that this committee is addressing allied flying at Goose Bay. Having personally addressed allied training in Canada from a DND policy perspective since 1981, and having been responsible for a host of related tasks as general manager of the Goose Bay Office at National Defence Headquarters, NDHQ, since 1990, I may be in a position to help provide information of use in formulating your conclusions and recommendations.
My terms of reference and those of my office are embodied in an NDHQ instruction that I have left with your clerk, and copies will be made available to you as an annex to this presentation.
I do not wish to consume the few minutes I have by listing all the duties that I have in my office. Let me simply say that, as general manager, some of my responsibilities include: ensuring that government direction — and that relates to cabinet direction, four cabinet directives over the past 15 years — are incorporated into DND plans and programs at Goose Bay and that allies understand and accept that direction. I am also responsible for addressing allied needs as raised at international conferences. It has been indicated that Col. Hunter is chairman of a subcommittee on operations, which has representatives from allied ministries of defence, MODs. There is another subcommittee that deals with infrastructure to meet those operational needs, and yet a third subcommittee dealing with finance. All three of those subcommittees, which have representatives from allied ministries of defence, report to my main committee, an international participants' committee, where we address issues that cannot or are unable to be resolved at the base level between the base commander and allied detachments.
I also oversee and direct all bilateral and multinational negotiations with allies regarding their use of Goose Bay and its training areas. I promote and market the use of Goose Bay to current and prospective military forces. I implement broader government guidelines on all environmental matters, and I try to enhance relations with Aboriginal stakeholders in the area.
As a last general comment before focussing on what I am advised are two areas of interest to this committee, I should like to give a synopsis of this allied program outside of the context of the contract Mr. Richardson has just alluded to.
Today, the air forces of the United Kingdom, Germany, the Netherlands and Italy train at Goose Bay under the provisions of a 10-year memorandum of understanding, MOU, that I helped negotiate in 1996. Under the terms and provisions of that MOU, allies are spending about $70 million annually to conduct this training. In addition, the Department of National Defence spends over $20 million annually to cover the cost of its deployed operating base, to pay for a very limited amount of CF training and to cover a number of other responsibilities for which there is no paying client.
The Canadian government supports this training and DND's involvement of the program for three clear and supportable reasons. First, it enhances the collective defence capabilities of our allies. Those are not just words, honourable senators; it is reality. In 1990, when the Gulf War broke out, it was the Royal Air Force units at Goose Bay that immediately left for the Middle East, where they were used effectively. Second, it ensures good diplomatic relations with NATO allies. Third, it is perhaps not altruistic, but realistic, to indicate that this training provides jobs and business opportunities for Canadians, all while protecting the environment and Aboriginal interests.
I will leave with the committee clerk a PowerPoint presentation that addresses allied training from policy, operational, financial, Aboriginal, environmental and marketing perspectives. I am also leaving with the committee clerk a CD version for your use.
Rather than get into all of those areas, let me focus on what I believe are the two areas of chief interest to this committee that fall within my purview — that is, allied plans for the future, as I know them, and marketing Goose Bay for allied use.
With respect to allied plans for the future, it is already a matter in the news — some of you from Labrador have seen the Labradorian — that the Royal Netherlands Air Force is thinking about possibly leaving Goose Bay. The facts are these: The Royal Netherlands Air Force has completed a draft study calling for consolidating all three of its training venues in North America into one central location — El Centro, California. If approved by the Dutch ministry of defence, it would end Royal Netherlands Air Force training at Goose Bay on or before the expiration of the current MOU in 2006.
I wish to underscore for this committee that the study has not been approved at the highest level of the Royal Netherlands Air Force, let alone its own ministry of defence, and that the results from that review may be entirely different from the study's recommendations. The Dutch decision is expected this summer, in July or August.
With respect to the plans of all other air forces, the Royal Air Force of the United Kingdom, the German air force and the Italian air force are interested, in principle at this time, in continuing to train at Goose Bay under a new 10- year MOU, beginning in 2006, even if the Dutch leave, provided that there are further increases in efficiencies and effectiveness.
Let me just touch on those two categories. With respect to efficiencies, the other allies I mentioned want to know that the share of common costs that they will have to assume along with the Department of National Defence, because of a possible Dutch departure, will not be too high. Common costs are something we all share. If the Dutch leave, we will be expected to pick up a share of that. When I say ``we,'' I mean all three allies and the Department of National Defence. The allies will also want to know that we can achieve further efficiencies in economies of scale, possibly by bringing in a new military user.
Lastly, on money issues, our allies will want to see our negotiating posture on the new proposed MOU to replace the current accord that expires in four years.
With regard to effectiveness of their training, the allies want to see it increased. That means they want to have new activities approved. They have not yet quantified and described them to us, and we have yet to run them through federal environmental reviews. There are also training systems that they are thinking of acquiring, and funding issues and financing are paramount.
This, then, represents the current allied thinking of our clients and how we in DND are trying to meet their needs.
I wish to point out that the current government direction, and I am using the word ``government'' with a capital ``G,'' calls for the DND to promote flying at Goose Bay, with up to 18,000 sorties a year, of which 15,000 a year can be low level. For the past five years, allied training, despite our best work, has amounted to one-third of that amount. In short, there is room to grow.
What are we doing to grow allied training? There are three initiatives. The first is to keep current customers happy.
We try to do that by resolving or at least addressing all issues raised at our international committees — the main one, which I chair, and the three subcommittees. In that way, we aim to sort out major problems before they become fatal. We have been successful with that. While I cannot provide you with all transcripts of the minutes of the main committee, I can provide excerpts to you. The closing statements of the most recent international conference, which closed just last week, testify to allied satisfaction with the way we do business. We have received a fair amount of allied correspondence expressing their appreciation of DND and its efforts and of the committee structure we have put in place, including, I might add, most recently by the Royal Netherlands Air Force. In short, we must first keep our current customers satisfied.
We must also promote more use of Goose Bay by those allies. We try to do that in a number of ways. We have tried to orchestrate pre-financing training systems and have carried out environmental studies on supersonic training, which the allies are thinking of doing, and we want to be ready to accommodate them. My office is activity involved in developing plans in concert with our colleagues from the Province of Newfoundland and Labrador, who I see are with us today, in developing plans for using new laser-guided practice bombs. We have also been promoting allied consideration of new training activities, such as combined air operations, something that would be of interest to prospective clients who are not there now, such as the French air force.
This year, the base and the department have facilitated the establishment of mock targets in Goose Bay and the training area. We have established a new scoring system for trial, and we are opening the way for the use of remote piloted vehicles. We will also take advantage of initiating a growth committee. We tried that before and failed. Now we are taking advantage of establishing a growth committee that would be led by the top air force officers of allied nations and the Department of National Defence. My superiors will undertake that initiative this summer. Finally, we carry on briefing all Canadian ambassadors and attachés to allied countries to ensure they understand, when they go to their country, how important this training is to our nation.
Third, we try to attract new potential clients to Goose Bay. Our office stayed in touch, for example, with the Italian air force after its 1995 trial with Goose Bay. Its decision not to return did not convince us to give up. In the late 1990s, we proposed a business case to our senior officials in DND to pre-finance an adjacent ramp that DND would build to attract the Italian air force to come to Goose Bay, if they built a new hangar. The Italian investment over a period of time would ensure that the DND share of common costs would be reduced within five years to easily amortize that $2 million investment.
We have taken a number of initiatives. When I negotiate an MOU, I ensure that there is a category A section in there for our allies. This means that, in our promotion of Goose Bay to a prospective client, the client comes in on a trial basis to Goose Bay without having to pay support costs. The client pays only the fuel and food costs it uses during its trial.
We have other provisions in the MOU to make it attractive to participants who do not now train at Goose Bay but who wish to try it out. We provide the customary briefing packages for visiting attachés and ambassadors. Over the last two or three years, we have briefed high-level representatives of at least six nations, including Turkey, Greece, Spain, Sweden, France and the United States.
Our office has tried to have the service provider help in marketing the base as well. It would be in the service provider's interest, as well as ours. With the release of the RFP that went out yesterday afternoon or this morning there are stated provisions in that document for a company to do this marketing — provisions that were not in the previous request for proposal. We will now have the company that would be the service provider at Goose Bay helping us to market Goose Bay.
Finally, we work together with the NATO flying training program in Western Canada and with the staff at Canadian Forces Base Goose Bay to promote allied training. For example, yesterday a plane carrying the Secretary General of NATO and some NATO ambassadors stopped en route to the United States in Goose Bay. Briefings, along with information packages prepared by the base and the town, were distributed to all visitors. I wish to compliment the town. It has been actively involved in supporting allied training at Goose Bay.
These are some of the current initiatives we are undertaking to market Goose Bay. These are some of the plans that allies now have with regard to their future interest in that base.
Senator Rompkey: First, I wish to thank members of the committee for being here and for attending to a very serious issue. It is important not only to Labrador but also to the province that I represent.
This should be addressed to Col. Hunter because it is a fundamental point. I think it would be worthwhile to establish the strategic role of Goose Bay for the Canadian Forces first of all. Bearing in mind that Goose Bay provided a very strategic role in 1942, and after that during the Cold War, what is the strategic role of Goose Bay for the Canadian Forces today?
Colonel Alan D. Hunter, Director, Air Force Employment, Department of National Defence: Honourable senators, the primary mandate of Goose Bay is to promote the flying program of the NATO nations who are signatories to the MOU. The benefits that the Canadian Air Force derive from this agreement include an opportunity to conduct flying training with our NATO allies, a deployed operating base for CF-18s and a staging base for CF aircraft flying to and from Europe.
However, I should point out that if the allies were to terminate the memorandum of understanding and cease flying operations at Goose Bay, there is no rationale from an air force perspective to retain the wing and to maintain a CF presence at Goose Bay. All of the military benefits that are currently derived from 5 Wing Goose Bay could be met at other Canadian facilities in a much more cost-effective manner.
Senator Rompkey: That last point is a question that maybe we should examine later on, the use of Goose Bay by the Canadian Forces. To summarize the answer, the strategic role of Goose Bay at the moment is to support the allied training that is there. If the allies were to leave, the Canadian Forces would have no use for Goose Bay; is that right?
Col. Hunter: That is correct, senator.
Senator Rompkey: That puts it in perspective. That is why the hearings are important.
I want to ask Mr. Young about the cash-flow situation at Goose Bay — that is, the provision of funds by the Canadian Forces because DND devotes a portion of its budget each year to Goose Bay. However, the allies pay for Goose Bay. Can you give us an idea of what is the net gain, if any, by the Government of Canada at Goose Bay?
Mr. Young: As I indicated in my remarks, the allies invest, on average, about $70 million per year for their training at that base. In addition to that $70 million, there are costs to keep the base as it is, for which there are no paying clients and for which greater efficiencies could perhaps reduce those costs. DND has to pay some money for those initiatives. We also have to pay for some limited training by the CF at Goose Bay — not much — and for supporting a deployed operating base there that Col. Hunter alluded to. We pay about $20 million.
So, there is $70 million paid by allies together with the $20 million that is paid by DND or Canadian taxpayers. Therefore, there is a net benefit to Canada of about $50 million.
Hence, when I sign a new multinational MOU — or the last one — over 10 years, you are looking at $500 million of offshore money as a net benefit coming into this country. That is over and above the diplomatic benefits that we receive. That is over and above the enhancements we make to the collective defence capabilities of our allies.
Senator Rompkey: What happens to the net benefit? Where does the money go?
Mr. Young: The money that allies spend at Goose Bay — we have to look at it as the money that they spend. As I said, we have an operational infrastructure and financial subcommittee. The planners from the allied MODs formulate the kinds of operations they want to carry out at Goose Bay a year and a half in advance, and then they are costed at the financial subcommittee.
Once the estimates are approved, the allies undertake to provide quarterly payments in advance to DND, and these payments are attributable to the overall estimate. That money is supplemented by DND. In that regard, I would be best advised to turn the floor over to our financial manager and director, Col. Bertrand.
The bottom line is that $70 million is paid out quarterly, in advance, based on forecast estimates. At the end of a year, after an audit is done, we determine whether we owe them a bit or they owe us.
Senator Rompkey: Does the operation break even, lose money or make money?
Mr. Young: The country makes money. The country makes $500 million over 10 years, or $50 million a year.
The Chairman: Those are economic benefits, Mr. Young. What Senator Rompkey is asking about is the cost to the federal government — and if he is not, I will.
Mr. Young: It costs DND $20 million a year at Goose Bay. That is all I can tell you. Perhaps Col. Bertrand can expand on that.
The Chairman: It costs DND $20 million annually, but they operate on a cost-recovery basis with the allies.
Mr. Young: That is correct.
The Chairman: Do they recover costs or do they make money on it?
Mr. Young: Mr. Chairman, we do not make money on it; nor are we supporting allied training. The allies are paying the full cost for their training. Having said that, there is a delta between keeping the base open and maintaining a deployed operating base, for which DND must obviously make some investments.
Senator Rompkey: The account stays within DND, however; it does not go to the Consolidated Revenue Fund. Is that correct?
Mr. Young: That would be Col. Bertrand's area.
Colonel Robert Bertrand, Director, Air Comptrollership and Business Management, Department of National Defence: Senator, you may have heard the term Consolidated Revenue Fund. In effect, it is a ledger used to track the expenses. It is all cost recovery. There is no net revenue on this account. It is subsidized to a certain extent by the department, and the allies pay the rest of the expenses.
Senator Rompkey: How many Canadian Forces personnel are there in Goose Bay now, and what are their jobs?
Mr. Young: There are some 94 military personnel at Goose Bay. They are there because we need people at the base to exercise a number of functions that are government functions and that cannot totally be contracted out.
The tasks and functions include ensuring Canadian Forces command and control and ensuring the quality assurance of the service providers' delivery of goods and services. They are also there to provide some functions that our allied clients do not wish to see contracted out. Allies do not want to see contracted out, for example, the base rescue force. They are happy to have that provided by National Defence. The single biggest unit in military uniform at Goose Bay is the base rescue force.
Senator Rompkey: You said that you have already saved $15 million a year. Are there more savings to be made?
Recently, an arrangement was made with the British whereby the use of civilians was able to save money to them in part of their operations. Are there additional savings to be made, as there have been in the past, according to your testimony, by using civilians more than military?
Mr. Young: We are governed by two criteria in contracting out. First, the government has mandated certain tasks as the responsibility of Canadian officials and representatives. Exercising Canadian Forces command and control is clearly one. We cannot contract that out.
The second criterion is that which our cash paying clients want contracted out. We have to listen to our customers if they are saying that they do not want to contract out a given good or service; we have to maintain a capability to provide it, if they are prepared to pay for it.
The Chairman: I have a note; I cannot vouch for its accuracy. My note says that it costs $70 million annually to run that place. DND contributes $20 million, and the allies contribute $50 million. Is that about right?
Mr. Young: That is about right. The allies spend closer to $70 million to the cost of running the base. DND spends $20 million plus. In fact, the allied and DND expenditures overall amount to $90 million.
The Chairman: What is the cost of running the place?
Mr. Young: Ninety million dollars, yes.
Senator Kinsella: I have three areas that I would like to explore. First, what is the approximate current book value of the capital assets for all of the base, from land to hangars to runways?
Mr. Richardson: I do not have that information. We would be able to dig it out, but it is not available at hand.
Senator Kinsella: Could you give me a ballpark figure, please?
Mr. Richardson: I am advised that the total value of the assets is estimated to be about $1 billion.
Senator Kinsella: Second, the Serco contract is worth $150 million. Was it a five-year contract?
Mr. Richardson: Yes.
Senator Kinsella: That is about $30 million a year?
Mr. Richardson: That is correct.
Senator Kinsella: We are looking at an 11-year contract for the new one, which would be $330 million over 11 years, if it is in constant dollars of the previous contract. You are looking at 11 different fiscal years. Is that the magnitude of that contract?
Mr. Richardson: Yes, we are looking at an 11-year contract. We are looking at a longer-term contract for several reasons. We have done some refinement of the current contract to make it more precise. We have also added some elements that we think will help improve some efficiency. We will transfer the commercial vehicle fleet to the contractor and that contractor may then have to replace and amortize these vehicles over a longer period of time. Another factor in going with a longer-term contract is to have some stability past the next MOU, which be put in place in 2006, and bring us closer to the MOU.
We are adding a couple of features to the contract. We are adding an energy management feature that we hope will help drive down the costs of the energy and the utilities at the base. We are also moving into the contract some items that have been outside the contract. We expect the likely contract value will exceed $30 million per year for 11 years; but on an apples to apples basis, it is effectively the same amount while having placed more work into it.
Senator Kinsella: As we all know, NATO has not been shrinking in size; it has been expanding. Six years ago, there were far fewer members of NATO than there are today. Some of the new members are countries that have significant air forces, in terms of size and assets. Taking that into consideration, as well as the post-September-11 world, how are you factoring in the demand for expanding or the opportunity for marketing, in light of those two significant considerations?
You have mentioned, Mr. Young, France, which has one of the largest air forces in Continental Europe. However, there are those larger countries that are the new members of NATO with large air forces. Spain, as an older member, has a significant air force.
As a layperson, I do not understand why only three or four NATO partners would be involved to date. Unless on the horizon there is a complete revolution in the equipment used by the world's air forces, it is my understanding of the planning of the major air forces and manufacturers that this kind of a base will still be required. Anti-terrorism training has become a new demand. What are the opportunities there?
Mr. Young: First, I want to thank you senator. You have raised a couple of salient points. Yes, expansion of NATO has occurred dramatically over the last several years. Regrettably, an increase in the number of NATO nations does not necessarily presuppose that we have a potential client because a potential client usually has to meet three criteria.
First, they must be able to pay. Many of the new NATO nations to which you have alluded are not necessarily in a position to support a foreign military training program of its air force abroad. Countries such as Poland and Hungary, which we are glad to see in NATO, have emerging economies. Training outside the country is an expensive endeavour.
Second, they must be able to play. By that I mean they must be able to train in a manner that meets their own operational doctrine. If that doctrine does not include carrying out the type of training that is done or could be done at Goose Bay, they would not be interested in coming there at all. If we can find ways in which we can make it meet their requirements without sacrificing environmental criteria or otherwise, we would do so, and we have made that clear to the attachés to some of these new NATO countries.
Third, that it must be permitted. We do not limit the use of Goose Bay by any government directive or departmental policy of which I am aware to only NATO countries. They could just as easily be non-NATO, providing they are allies or friendly nations, of which there are a number. Again, we have not been able to attract some of those countries to Goose Bay.
These are some of the reasons why, although NATO has expanded, we have not yet benefited as much as one would believe.
You raised a second point about September 11 and whether it has had an impact on the training at Goose Bay. I expect it will have. I do not think governments — and this is my personal opinion — have had the opportunity to increase defence budgets to allow them to do more training either at home and/or abroad. That will happen, and it will help ensure that the allied defence forces will have a better chance to train. I know that the financial crunch that all allies are facing is severe.
Lastly, I return to the main point that I want to stress. While it is important for us to attract new customers, I feel the way to grow Goose Bay is to maximize the potential for our current customers and get them to use it more by adapting to new technologies and the new types of warfare, whether it be in Afghanistan or Kosovo. There are new threats not envisaged during the Cold War, as you can appreciate, sir. That requires new training techniques. The Royal Air Force wishes to use laser-guided practice bombs that can be used at high or medium altitude. In the past at Goose Bay, allies trained at low level. Now they are thinking of training at medium altitude and releasing laser-guided bombs from some distance away.
I see that as where our focus probably should be while keeping an eye out for potential clients. However, there are not as many as the new expansion of NATO has given us.
Senator Banks: I cannot make the numbers you have talked about so far add up. I will ask for some instruction, please. I have a piece of paper from the Library of Parliament that says that the Serco contract is now at $27 million a year. Senator Kinsella mentioned $30 million. Which is correct?
Mr. Richardson: The value of the contract without the HST is $147 million, or approximately $150 million. When you divide that by the five years, we are at the $30 million per year mark. That includes all the amendments, of which there have been 10, and there was a recent amendment this year. That is completely up to date.
Senator Banks: Whereas it may once have been $27 million, it is now closer to $30 million.
Mr. Richardson: That is correct.
Senator Banks: With respect to the total operating costs and recovery and what the allies pay, does the Government of Canada recover any part of that $30 million?
Mr. Richardson: Some of the $30 million is recovered from the allies as a common cost. Approximately $21 million of that $30 million is a common cost — the services that the contractor provides from which the allies benefit.
Senator Banks: That portion would be close to $9 million, I gather, because you said our net cost is $20 million.
Mr. Richardson: Speaking on an annual cost basis, if the contract is $30 million, we recover about $20 million of that from the allies each year as common costs.
Senator Banks: Our net cost is $10 million?
Mr. Richardson: Some additional amounts of that contract are dedicated costs for each ally depending on their footprint and on the amount of flying they do. A small portion of that contract supports the Canadian Forces presence, the Air Force, which is at Goose Bay.
Senator Banks: Can you tell me what the net cost to the Government of Canada is for operating Goose Bay as it is now, please?
Mr. Richardson: It is $20 million per year, the numbers that have been identified. It costs the Department of National Defence approximately $90 million a year to operate Goose Bay. Some of those costs are the $30 million in the contract.
Senator Banks: We recover $70 million?
Mr. Richardson: Yes, senator.
Senator Banks: Mr. Young, you said that you were unable to say what they are but you must have had some discussions with the allies about what future uses might be that are not yet permitted or contemplated in the contract. You have mentioned one of them being medium- and high-level bombing, for example, which I presume are now precluded by the contract; is that correct?
Mr. Young: They are not precluded; we are just trying to ensure we have our environmental house in order.
Senator Banks: How important is that? I will make a broad assumption that low-level flying no longer has a profile in air combat. Given that it no longer has the significance it once had, is that among the considerations that the allies are making when considering whether to continue to use Goose Bay?
Mr. Young: Indeed, senator, you are right. I will defer comment and be corrected, as I should be, by Colonel Hunter, who is an operator's operator. I am not. If you are asking me as an individual who might be able to tell you what the allies are thinking in terms of training and the person who has to clear the way in negotiations with the allies about what it is they want to do at Goose Bay, in that regard the things they are looking at, not next year, not even perhaps the year after, but certainly under the new MOU, would be programs of the following type that they are not now doing at Goose Bay. Over and above the use of laser-guided practice bombs, which is done at mid-altitude, 15,000 feet, and not low level, they have talked about doing supersonic training at medium altitude. They are not doing that at Goose Bay.
Senator Banks: That means big bangs.
Mr. Young: Not necessarily. We have done environmental studies. A couple of years ago, we funded the transportation of Innu stakeholders out West when we conducted supersonic trials with Dutch aircraft. To their surprise and pleasure, they noted in some cases, depending on the height of the aircraft and the topography in the region, they might hear anything from a large thunderclap to nothing.
There is thought being given to having Apache helicopter training at Goose Bay. That brings with it environmental considerations of another type, which we will have to address. There is much thought about doing more night flying, using night-vision goggles or NVGs. There has been some discussion involving Goose Bay and more adventure training. That has always been talked about but never done. It involves people on the ground carrying out survival training and various land-based activities. There has also been some discussion of having remote offshore sea training that would land at Goose Bay.
These are the types of trainings that are done. However, allies have failed to quantify their plans to us, despite repeated requests to do so, so that we can put those programs through the necessary environmental processes and so that we can cater to any infrastructure requirements that we would need to have in place for those programs to be conducted.
Allies are working with us, and the good news is that two months ago at strike command in High Wickham, where I had a meeting with the allied MODs, a senior official with the Royal Air Force proposed, as I mentioned in my remarks, that there be a top-down approach to growing Goose Bay at the two-star level. Long-term training requirements at Goose Bay were set out, as envisaged by the allies. Once those requirements were set by the higher levels, the lower staffs and the respective MODs, together with us, would take measures to ensure that we are ready — rather than us do what we were trying to do before which was to push up the straw.
Senator Bolduc: Serco was established in 1995; correct?
Mr. Richardson: Serco is a multinational corporation; it operates in many countries. I believe they have been around much longer than 1995. They have a Canadian operation that addresses needs beyond National Defence, but they are a multinational corporation. They do billions of dollars of business worldwide focusing on value-added service contracts and facilities management.
Senator Bolduc: Was the 1997 contract here their first one in Canada?
Mr. Richardson: They were a subcontractor to Bombardier in the Portage contract for the flying training, which was contracted in 1990. I believe they are a subcontractor as well. They primarily are doing air traffic control and other services. They are also a subcontractor to Bombardier on the NATO flying contract in Moose Jaw and Cold Lake.
Senator Bolduc: In the last five years, have you evaluated their performance?
Mr. Richardson: Yes, we have. The contract — and this was a new feature of the Goose Bay contract — includes a performance incentive arrangement. Part of the money is put aside, and each month the quality assurance team, the contract monitoring team from Goose Bay, looks at the performance of the contractor in 23 different work areas. The team looks at their management, the quality, the flexibility and the performance, and makes an assessment. Three times a year, that performance is then rolled up and examined by senior level committee, which includes National Defence and Public Works people. Over the four years of the contract, the performance of Serco has been superior, based on that regular and rigorous assessment. The performance has been good.
Senator Bolduc: You are satisfied, the allies are satisfied, I suppose?
Mr. Richardson: I think the allies are satisfied with the performance of the work. They are also pleased that the costs have gone down.
Senator Bolduc: Are they expecting additional diminution of the costs?
Mr. Richardson: Perhaps Mr. Young could add to that. Certainly, the allies, along with Canada, are looking for as much savings as is possible. A significant component of the contract is labour. It is difficult to reduce that. Indeed, we would not want to reduce the costs for that because that is a key element in the workforce stability.
We will be trying to gain some additional efficiencies with the allies. More certainly, they would like to see the costs lower. We are doing everything we can to keep them at the lowest possible level.
Senator Bolduc: Are the Dutch thinking of leaving because of the costs or because of an administrative reorganization such that they would train all their people at the same spot in California?
Mr. Young: That is a good question, senator. I confess that I am not permitted to get into the specific reasons for which the Dutch are thinking of leaving. They have given those reasons to me. I would not be misadvising you if I gave you the following information.
The Dutch are leaving because of, as you correctly indicated, sizeable cost reductions of consolidating in one venue as opposed to three in North America where they now train, one of which is Goose Bay. Second, the natural question you might have is: Why not consolidate in Goose Bay? A couple of factors are involved. In general, it is because they want to do more warm winter training as opposed to training primarily at Goose Bay, which is done mostly through a six- to eight-month period. They wish to do that in warm winter training. They also wish to do some types of training that are not now done at Goose Bay. As I indicated, allies fly low level; the Dutch are thinking of doing other kinds of training, as was discussed. Presently, it is mostly low level. The Dutch have always done more high-level and mid- altitude training.
Those are the two primary reasons. We have no control over the climate or the type of training that allies do, which is generally why they are leaving.
Senator Bolduc: If the Dutch think like that, is there any possibility that the Germans or the Italians would think the same thing in that regard?
Mr. Young: The Germans, the British and the Italians are thinking about doing more mid-altitude training and other types of training. For that reason, I have asked the Dutch, if their study leads to a decision to depart Goose Bay, and that is a big ``if,'' to do at least two things. First, I have asked them to defer the withdrawal; second, I have asked them to phase it down. In return, we will keep the door open on than memorandum of understanding so that if allied training changes and becomes akin to what the Dutch want to do, they have an option to, perhaps, return in full force at Goose Bay.
Senator Bolduc: In the type of training that you provide and that you organize, do you have any competition? If so, where? For example, why are the French not there?
Mr. Young: The French do training in North Africa and in one of its islands in the Mediterranean. The Germans train in the United States, and they also train over the North Sea, as do the Dutch. The Dutch, as I have indicated, have three training venues.
The United Kingdom is interesting. It still conducts something in the order of 90,000 training sorties, most of which are low level over the United Kingdom, primarily over Scotland and Wales. Our own client is, in a way, a competitor. We are competing with its own training venues in its own country. The training venues are on various continents and spread out.
Senator Forrestall: I have a series of question, which, I suppose, are supplementary to those that have been asked. I will work my way backwards.
With respect to Goose Bay, do we try to sell the fact that it has clean air? That is to say, it is not cluttered with electronic transfusions, high-speed data, and so on, because it is one of the world's most glorious remaining clean-air sites.
Mr. Young: In a briefing package that I have left, which is in PowerPoint, a hard copy and a CD, there are a variety of advantages site specific to Goose Bay. Clean air that is free of a lot of traffic is a highlight. Your question, sir, rightly implies that there is a fair amount of air traffic in most other parts of the civilized world, as, indeed, there is, in Europe, being the case in point. We can provide opportunity for allied clients to come to Goose Bay where air traffic of a civilian nature is extremely low. We provide 100,000 square kilometres of air space, 100,000 of which we guarantee for use at any one time. That is a significant amount of air space. I can take the countries of the Netherlands and Belgium and fit them inside and have room left over for this city and a lot of other cities. Clean air space — and free from congestion is also a key factor.
There are also a couple of other factors on air. People do not realize — however, Senator Rompkey, and others who are here from Labrador do — that Goose Bay is not on the coast of Labrador. In fact, it is not. It is some distance from the coast.
That means it is clear and free from fog. We have clear visibility 95 per cent of the time. It may be cool at times of the year, but from a pilot's perspective it is fog-free.
Senator Forrestall: It is fog-free for night flying. That is a potent tool. I might suggest as a layman, if I dare, that that is a good argument to put to the Dutch and others. Because of the high-speed data link transmissions from California to Europe, the Americans themselves have had to give up much of the activity they carried on 20 years ago in the desert. Why stay there and do that work when they are already using Cold Lake and have been for a number of years? Are we using these arguments to try to persuade the Dutch? Is that a factor in their consideration?
Mr. Young: Is it a factor with the Dutch in what regard?
Senator Forrestall: Have you impressed upon the Dutch this transmission problem? They talk about pollution, which, for certain purposes, is a problem for the United States. It is not so much ours yet, although some day it may be. Are we saying to them, in a positive sense as an argument, stay here, maintain your place at Goose Bay, and you will always have access to it?
Mr. Young: Indeed, senator, without denigrating the competition, we promote the benefits. That has been one we have been promoting and reminding our Dutch friends of, as well as other allies.
Senator Forrestall: Goose Bay, along with the Standing Force Atlantic, remains two of the principal doors that we have left as an entrance to the NATO table. I do not know who should answer this question, but it does concern me to some degree. What would happen to this door were we to have to shut down? Presumably the Canadian Armed Forces would mothball it. It would keep a maintenance force on hand, but if we were to lose our clients in 10 to 15 years' time, we would not carry on. What impact would that have on our relationships with our NATO allies?
Mr. Young: I will give you my personal view. There have been many editorials and comments in public fora about the fact that Canada does not carry its weight in NATO, financially and perhaps in other ways. The one thing this country has done historically for our allies is to provide airspace, whether it was the pilot training program conducted during World War II or today. We have space. That is something we can provide. We have an eagerness to ensure that we give our allies an opportunity to train in ways that they might not be able to. That ensures our safety as a member of a collective alliance. That is something on which we would lose out if that training program were denied to a client who wanted to come and be there.
That is aside from the significant adverse economic effect if allies were to leave. We can talk about numbers of $90 million being spent at Goose Bay. I am sure people around the table can appreciate that, in the three economic studies I have commissioned, all of those independent studies showed that the amount that that generates in the economy and region is far greater than $70 or $90 million. It is in the order of $120 million-plus a year. I might point out that the goods and services used and paid for at Goose Bay do not sit there. They flow to Baie-Comeau and other communities in Quebec. The bottom line is that we would lose out ourselves. Most important, we would lose out in the NATO fora of providing a great venue for our allies to enhance their capabilities.
Senator Forrestall: May I draw the assumption that there would be an impact if they were to leave? Given today's circumstances, it would be critical if they were to leave tomorrow.
I sometimes wish the union were at the table with you so that I could ask you both to comment on the question. This matter is of such urgent importance to Happy Valley—Goose Bay and I think must be of major importance to you gentlemen. How are your relationships with labour? Would you classify them as ``good''?
Mr. Young: The union, as you can appreciate, is a union that belongs to Serco. It is not a union for our department. We are not the employer any more, as you know.
To answer your question, our relationship with labour and the allies is, at this point in time, excellent, in my point of view.
I will give you several indications. There are some people here I have the good pleasure of working with from the town, province and base.
When the strike occurred several years ago, relations were at an all-time low. From an allied perspective, I was sitting in a room with several two-star, foreign officers who have air forces training at Goose Bay. They complained about two things: the angst that the permanent detachments felt being subjected to that strike, and the damaging operational impact that that strike caused by interrupting their training programs. They made the underlying point that costs are costs are costs. If they are too high, we may not be able to pay them, but we will try to pay them. However, if we do not have good relations with the labour unions there and if we do not have a stable workforce, we may have to consider options.
Frankly, honourable senators, the language that was spoken one-to-one in that room was much more blunt than that. Stable relations are important. Let me say that relations are not only stable right now, they are very good. On the front of Happy Valley—Goose Bay City Hall are flags, just as on my business card, of each of the nations at Goose Bay. Those flags were put up with the money, resources and effort of the town, the labour union and National Defence to show allies how much we appreciate them. We have an Allied Appreciation Week in which the union participates. Relations are good right now. We have to keep them that way.
Senator Forrestall: Has anyone ever made any inquiries about cruise missile testing?
Mr. Young: No, they have not.
Senator Forrestall: Have we raised that question ourselves with our NATO allies?
Mr. Young: No, we have not.
Senator Forrestall: Why is that?
Mr. Young: There are a plethora of initiatives out there that the allies have talked about that they want, they have thought about, they have looked at and are focused on. That is what we try to get them to address and quantify. Cruise missiles are not used by many nations, in any event. We focus on what they tell us they believe are their long-term needs. Cruise missiles are not one of them.
Senator Forrestall: What are the prospects of Apache helicopter training at Goose Bay?
Mr. Young: There are two issues. Will the allies have the resources to carry out that training? Several of them have a significant inventory of helicopters and an operational doctrine that requires a fair amount of training. There is the prospect that that would happen. The major problem could be either their cost or inability to pay for it and support it overseas; that may require additional hangarage.
The second issue be more of a challenge, of an environmental nature. Environmental studies that I have been involved in show that caribou react one way with a jet flying overhead and a totally different way when a helicopter starts flying toward them. As you probably know, helicopters can have a more damaging effect than fast-flying jets. We must look at the environmental issues there as well. It is doable if there are appropriate mitigation measures in place, and there would be, of course.
Senator Stratton: The Germans pulled out of Shilo Base in Manitoba. They conducted tank and artillery training there. They had quite a set-up. I think there were five-year contracts there.
How long are the contracts here? Do you have a contract? Is it yearly?
Mr. Young: Are you speaking, senator, of the contract with the service provider or with the allies, which is in the form of a memorandum of understanding?
Senator Stratton: I am speaking in regard to the allies.
Mr. Young: I was involved in writing the memorandum of understanding, or the contract, as you referred to it, with our German army friends in those years at Shilo.
The MOUs in which I am involved with allied training in Canada, before in the West and now with Goose Bay, are 10 years normally. That is a standard. There is a provision in there for extensions.
This is a copy of the MOU on our Web site. That is a document that I review regularly with the allied MODs. It sets out their requirements, the infrastructure support that will meet those requirements and the cost. It also lays out some environmental criteria. We review this document. It is a living and dynamic document. We work with our allies to keep it up to date. To answer your question, though, the time frame is normally 10 years.
Senator Stratton: When is the decision due with respect to the Dutch?
Mr. Young: This summer, which is two and a half years before the current MOU expires.
Senator Stratton: You always worry in a situation such as this. The U.S. are courting the Dutch to do all their training in the States. Is it a level playing field? Are we talking about the U.S. being the U.S. with enticements or the potential for that taking place? One always has to ask that question.
Mr. Young: Senator, I do not know the answer to that question. I feel like a football coach who looks at the opposition and tries to guess their game plan but comes to the realization that I have to make sure that my own team has its house in order and plays its game the best it can. We try to maximize our benefits and go that route.
Senator Stratton: You have seen no evidence of the U.S. using enticements on the part of the Dutch or others?
Mr. Young: I have not.
Senator Stratton: That is important to know.
If the Dutch pull out from the base, what about the others? It seems inevitable that, if the Dutch pull out, there could be a domino effect with other countries pulling out. I am sure you would agree with that.
You look at the future and you try your best at marketing. Yet, it is not hard to understand. It has been difficult to entice other countries. Since the end of the Cold War, the new evil empire is the Middle East. We have the wrong climate for that.
My concern is that the base will shut down. Where our training then take place in Cold Lake?
Mr. Young: I will let Col. Hunter address that. However, I will pick up on your point of whether there will be a domino effect. I discussed that with representatives of the allied ministries of defence two months ago in the United Kingdom and through several conference calls before and after. There are two impacts with a possible Dutch departure, and I do stress it is only if the Dutch leave: operational and financial. From an operational perspective, the type of training that the Dutch do, that they would obviously no longer do if they were not there, would not adversely affect the operations of our allies. From a financial perspective, there is an impact. All costs that the allies pay are in two forms, namely, the direct cost to support their own training, that is, food in their crews' stomachs, and the common costs that are shared by everyone. If the Dutch leave, the dedicated costs of the amount of money they spend are a loss to the community, but they are not imposed on the allies.
The Dutch share of the common cost for maintaining the runway that everyone uses would have to be picked up by DND and the others. We have done a rough estimate of what that impact would be. I do wish to stress ``rough.'' In dollar amounts, it would equate to close to $5 million a year — which is what the Dutch are now spending per year at Goose Bay for common costs. Those costs would have to be picked up by the allies and DND. That is odious. The other three allies have told me that it should not be fatal if we can continue to achieve efficiencies and increase our effectiveness.
Col. Hunter: The fighter training would continue to be done in Cold Lake, Alberta, and Bagotville, Quebec.
Senator Stratton: Why would the allies stay? I am sure you have gone through this as well, but if those countries remain, why would they remain rather than going somewhere else? One would think that, if the Dutch go, the other allies have got to start thinking about it. Why would they stay? What are our big selling points?
Mr. Young: There are three types of advantages. In each category, there are 10 or 20 of them. They are in a package I have left with your clerk. They involve site advantages, financial advantages — with or without the Dutch — and they include policy and managerial advantages.
In terms of site advantages, there is a 130,000 square kilometre airspace in which to fly, of which 100,000 is guaranteed at any one time. We have practice target areas. We have runways, facilities and infrastructures that are incredible, such as an 11,000-foot main runway, so long that NASA uses it as an emergency strip if they ever have to bring a shuttle down. Our airfield has capabilities that are not found in other places. I will not bother you with the details, but there are many site advantages.
It is actually close to Europe and our major client. We think of it being across the Atlantic, but that is a pond by comparison. If the allies want to train in the southwestern United States, where the Dutch are thinking of, they will have to go twice the distance to get down there. When you are rotating air crews every two or three weeks, that gets expensive. We have a lot of site advantages.
We also have some financial advantages. We have a dedicated focus group on resolving allied concerns. I wish to stress that we have government support that promotes allied flying. We have a province that we are working with hand-in-glove that has been helpful. We have many good things that are attractive to allies.
Senator Stratton: Thank you very much and good luck.
Senator Doody: In terms of the $20-million Canadian government cost, that is not necessarily the total Canadian government involvement in Goose Bay, is it?
For instance, does the government have international obligations vis-à-vis Goose Bay being an alternate landing field for cross-Atlantic flights, for example? On September 11, Goose Bay was there and, fortunately, accepted a number of overseas flights. I would think there has to be, from time to time, a search and rescue presence in Goose Bay. Obviously, there is a civilian aircraft use. It is a distribution centre for the coast of Labrador. You say that there is not much civilian traffic, but that is relative to other airports. In terms of the population of Labrador, it is a very significant part of their economy and lifestyle.
Does the Government of Canada have to finance some of these other obligations? They would still have to have runway maintenance and air traffic controllers, all that sort of thing, whether or not there was a military presence. The military presence seems to be a bonus or advantage to the Government of Canada to keep them there. Is that not a correct supposition?
Mr. Young: I will address your first question and see if I can get to your second. Is DND's expenditure in the amount of $20 million all-inclusive, or does it take into account these other things you have mentioned? The answer is that it does take these into account. The helicopter, or SAR capability, at Goose Bay is actually called a ``base rescue force.'' It is there to help our allied clients, in the event that, unfortunately, one of their air crew go down, pick them up. We also use it for search and rescue in Labrador in those events where there may be a civilian difficulty. The costs incorporate all that and DND's share of the cost of the runway and whatnot.
Senator Doody: Whether there is a military presence or not, these costs would still be there; correct?
Mr. Young: They may be able to be reduced in some ways, for example, if the Canadian Air Force decided to do away with its deployed operating base at Goose Bay. That might bring down the cost that DND is spending for maintaining the deployed operating base, which is in that figure. There are ways to reduce the amount, but there would still be costs that we would need to maintain.
Senator Rompkey: Perhaps there is a NORAD commitment, too.
Senator Doody: Is there an international commitment for a secondary or alternate landing field for civilian aircraft that experience problems, or for some reason or other are forced to land other than at their destination? Does Canada have an obligation, or is it just convenience that Goose Bay and Gander are available?
Mr. Young: There is a humanitarian element. An aircraft with a requirement to land would never be denied.
The air traffic at Goose Bay is mostly civilian. Canadian Forces Base Goose Bay may be a military airfield; however, close to 70 per cent of all air traffic at that base is civilian. The reason for that is that Goose Bay is the main venue through which people from outside Labrador land and then travel on to all the other communities and hamlets in Labrador with which Senator Rompkey is most familiar. The civilian air traffic is a big component of that.
Senator Rompkey: Could you distinguish between local and international?
Mr. Young: I am not in a position to do so. I do not know that distinction.
Senator Doody: Do you know if Canada has an agreement with foreign countries to provide landing facilities in the event of an emergency?
Mr. Young: I will turn the floor over to Col. Hunter, who may have some information.
Col. Hunter: There is no such agreement to maintain Goose Bay as a diversion field. It is more a situation of convenience that it is there, so it can be used if an aircraft has a problem.
Senator Doody: Not so long ago there was a much-publicized series of incidents with the Innu population in the area. There were sit-ins and problems of that sort. It has since faded from the front pages of the press. Has that problem been resolved, and has it in any way affected your relationship with your clients?
Mr. Young: That is a good news story. I remember the sit-ins of 10 years ago. Yesterday, I was precluded from preparing for this committee because I was on a conference call for three hours with representatives of the Innu Nation on progressing a process arrangement between DND and the Innu Nation on ensuring that they have access to a proposed buffer area that we want to use, which has at its centre a training program for laser-guided bombs.
The Innu have been working constructively with us on this matter. I will give you an example of a case in point. When the allies wanted to use laser-guided bombs, we needed a large area as a buffer in which we could restrict public access. The Innu normally would have opposed this. Their leader, Peter Penashue, said that if DND were to fund an environmental review they would conduct that review in an objective and independent manner. He promised that it would be delivered on time, in full and that it would be based on fact, not fiction. I agreed to the deal and we shook hands on it. That was a year ago.
DND funded that study, which was provided on time and in full. Their study showed that we could accommodate their interests and ours, provided we could modify the use of laser-guided bomb training program in certain ways. I submitted that report to the Province of Newfoundland and Labrador, together with our own environmental review. This showed that the Innu Nation was working constructively and positively, and I am pleased with this new relationship.
Does that mean we will not have arguments? We undoubtedly will from time to time. However, we are embarking on a good relationship and I am pleased with the progress we have made.
Senator Doody: Will Voisey's Bay have a significant impact on Goose Bay?
Hon. Senators: Yes, in a number of ways, with pressures on the airfield and infrastructure. There are people here who can address that better than I, however. Air traffic will go up and will be significant both in the training area and at the airfield. There will be economic competition. Every time an ally wants to construct or modify a building at Goose Bay, we will be competing with skilled resources in that part of the province to get that building built on time, in full and as required, because the developers at Voisey's Bay will be looking for many of those same skilled workers.
The Chairman: Our next panel is the Union of National Defence Employees. I believe Mr. MacLennan has an opening statement.
Mr. John MacLennan, National President, Union of National Defence Employees: Honourable senators, I should like to open by thanking this committee for providing us the opportunity to speak about Goose Bay. It is near and dear to the hearts of our members, and also to the hearts of the members of the community of Happy Valley—Goose Bay.
In the Department of National Defence, we represent approximately 14,000 public servants as well as private-sector employees. The employees who work at Goose Bay are in our membership. We have followed Goose Bay from day one, and we are still following Goose Bay and what the future of Goose Bay will be as it unfolds, specifically now with the new RFP going out.
With me is Mr. Randy Ford, who is a local president from Goose Bay. He will make our presentation to this committee, as he knows intimately the workings of Goose Bay, the transition from public sector to private sector, and what went wrong and what went right. In our opinion, Goose Bay is the worst best example we can use of privatization in the Department of National Defence.
With that opening, I will rely on Mr. Ford to make a presentation to the committee.
Mr. Randy Ford, Local President of Serco Employees, Union of National Defence Employees: I should like to open by saying that the text you have in front of you took me a bit of shaving. I tried to cover as many points as I possibly could; however, I am sure you can appreciate that the topic is wide and varied. I will read the text, and I will be willing to accept questions after. I hope to cover as many things I possibly can. I see some of my colleagues from the community and the province here. I am sure they will touch on anything I miss. I will read directly from the text and open the floor up for questions.
I should like to thank Senator Rompkey for providing me the opportunity to make this address. I will try to express some of the many concerns that we as a whole community share. I hope that nothing I say will be construed as an endorsement of alternative service delivery, ASD, because nothing can be further from the truth. Indeed, I believe there will come a time when the government of the day will look at this and view it as a total failure. All they need do is remember why the public service was created in the first place. Having said that, I am also a realist, and I fully understand the problems that we have to resolve today.
To get to this point, I will give you a brief history. The Goose Bay airfield was constructed by the U.S.A. in the early 1940s. This gave many Labradorians who could secure a job on the base an opportunity to earn a decent wage and enjoy a better standard of living. This in turn led to a mass migration of people from all parts of Labrador and beyond. My family was one such case. They moved from Voisey's Bay to Goose Bay, having never seen a plane, to take advantage of the opportunities there, and they have been in Goose Bay ever since.
During this entire time, and even through the roughest of times, Goose Bay survived at no cost to the taxpayers of Canada. I think this is key and leads one to wonder why DND would pick Goose Bay to introduce ASD.
If they wanted to hold this up as an example of how ASD is good, then they failed miserably in all areas of the process. Evidence of this major snafu can be found in Chapter 27 of the November 1999 Auditor General's report. This report lists many of the shortcomings of the process from beginning to end. Without getting into the specifics, I should like to mention a couple of topics the Auditor General addresses.
The total disregard for the well-being of the workers is blatantly obvious. They did not have a viable business case. They failed to set targets. They did not provide a baseline cost that could be verified. The report goes on to many other shortcomings, so I guess the question is, where do we go from here? I would say the answer to that depends on how we approach the problem.
It cannot be stated strongly enough that Goose Bay is a money-generating entity and should be respected as such. I will not provide the numbers here because all we need to point out is that, over the last 50 some years, the base has provided our community with decent jobs that allowed us to be contributing, tax-paying citizens who were not a burden to the Canadian public. Over the past 10 to 12 years, things began to change. It is not a coincidence that this happened when DND took over the reins of power. They took great strides in building up the base's viability so that they might have a chance to win a bid for a full-fledged NATO base. As soon as they knew that this was not going to transpire, things rapidly took a turn for the worse.
While everyone is aware that the department has had fiscal restraint imposed upon it, I feel this provided the perfect opportunity to lay the groundwork that would further their final objective — to close down Goose Bay.
My theory goes like this: The department has made no secret about the fact that they do not want to be in Goose Bay. They have to be there to provide a service to the allies, but as soon as the allies leave, the department will not be far behind. If you were to walk around the base today, you would see that it is a mere shadow of its once large and vibrant self. At one time, it could accommodate 12,000 soldiers and their families.
The department continues to let the infrastructure deteriorate and continues to tear down buildings. This makes it increasingly difficult to attract new customers, and I think this is exactly what the department needs to reach their final objective. It might also be worth mentioning here that the department has not, nor do they intend to, replaced any of the infrastructure that they destroyed.
The department should also recognize that they did not pay one penny for the creation of the infrastructure. It was given to them by the American government just before they were priced out of town.
We all need to come to grips with what, if any, purpose is served by having an unwilling partner running our base. We all know the dissatisfaction that has been expressed by our allied friends with the level of service they receive from DND. In a package I will be leaving with you, you will find a number of presentations that have been made to the minister as well as other documents that will provide you with more in-depth information with regard to some of our major concerns and how we would like to see them addressed.
The department will use the argument that they have expended $26 million on a base they have no use for. That may be true, but look at this for a moment. This total is equal to .2 per cent of the national budget, which concentrates the bulk of its spending in the West, Ontario and Quebec. I think that DND should spend money in all parts of Canada, since taxes are being paid in all parts of Canada. When you couple that with the fact that the numbers of military members they have from the east are disproportionately high, which reflects the regional disparity already present, I think the department, if not the Government of Canada, has a moral obligation to spend more dollars there.
Let me give you a quick example of the reluctance of the department to see Goose Bay succeed. On June 10, 20002, an article that appeared in the local paper left every one scratching their heads. It tells the story of an F-18 squadron that stopped over in Goose Bay to refuel. There is nothing so unusual about that. However, where they were going? They were on their way to Denmark to take advantage of a rare opportunity to train with the allies.
This leads me to another drawback we have with the current structure, the Goose Bay project office. These folks have been charged with the marketing of the base. I am led to believe that they have no interest in doing this with any level of aggressiveness. For example, while the base commander was busy tearing down PMQ's, the GBO were telling the French that there was no room at the inn. This does not seem like a very effective approach to marketing to me.
Since my time is limited, I will try to put some perspective to the message that I would like you to get from this. In order for us to grow the business here, the service provider has to be given the ability to tackle some of the concerns of the allies.
As long as the department is a reluctant partner in this operation, we will never be able to succeed. As long as the marketing is left to GBO, the number of customers will not grow. If the department wanted to contract out, that is what they should have done. Right now, they spend $1.3 million to do quality assurance under a performance incentive fee that has a cap of $1.6 million. This is an unnecessary expense that could be passed on to the allies in the form of savings. If the department is unwilling to leave the operation solely in the hands of the service provider, perhaps they should put a squadron of planes there and become a participating partner. If the do not opt for that, then maybe it is time to move on and let some other entity run and grow the business.
In closing, I should like to point out a few things that are paramount to our success. The infrastructure and all that it has to offer must be marketed in a vigorous manner or we risk losing some of our current customers, which could, in turn, lead to a domino effect. For the department to be of any aid to us, it should become full partners and put planes in the hangars they already have there. If the department chooses not to fly, then we should seriously consider our options. Maybe a Crown corporation or a locally run authority should take control.
As I mentioned earlier, we are no burden to the Canadian taxpayer. It would be a real shame if the Government of Canada let the Department of National Defence force these jobs out the door so they can achieve their objectives and take no consideration for the brutal effects they have on the people who work there and the community and the province as a whole.
I hope that I have raised enough questions that, through my answers, I can clarify and somewhat enlighten you on the subject. I am hoping the people who talk after me will hit on anything I have missed. I thank you for your time and look forward to answering any questions you might have.
Senator Rompkey: I was interested in the line, ``Let some other entity run and grow the business.'' We did not get a chance to explore that with DND. I was going to ask them if they had considered other alternatives to the present arrangement. There is an administrative arrangement at Goose Bay now. Are there alternatives? If so, what are they? I was interested in that point in your presentation. You alluded to a Crown corporation or a locally run authority. I should like to explore that and give you some time to amplify that.
Mr. Ford: I do not think the concept of a separate entity running the base is that far-fetched. The efforts to privatize must lead to economic efficiencies and cutting out some of the red tape, and certainly the department's hand in this has done none of that. Let me use the example of the firefighters on our base. The present service provider can get those firefighters trained in Stephenville for one third of the cost they are being forced, I guess you could say now, to pay to get those people trained in Trenton. DND will not recognize any other training in this field, so the company would have to use DND facilities to train their employees at an inflated cost. This is an area where we could save money.
Let me give you another example, to do with the cable arrestor gear, when DND were running the base. The cable arrestor gear is used to arrest aircraft that are in trouble. The cable crosses the runway. While the department was running the base, on-site Serco staff did the servicing and overalls. I do not know what changed since then, but now it is shipped to Trenton and back to us. We had exactly the same people working on exactly the same equipment. That is another inefficiency that I can see.
Another entity would not run the base in this way. Another entity would permit the service provider to take advantage of the less costly training available in Stephenville. The cable arrestor gear can be done locally. Coincidently, for them to remove the cable arrestor gear, ship it to Trenton and then have it shipped back costs $400,000; it could probably be done in the neighbourhood of $70,000 on the ground.
A Crown corporation or a locally run authority would be a potential stakeholder. They would be more inclined to a more vigorous kind of marketing. It does not matter to DND whether they are there. DND is not aggressively pursuing the marketing aspect of it, which is something that we need to do. If the Dutch decide to leave and the associated common costs of running the base are passed on to the remaining allies, my fear is that, eventually, it will cost them right off the base. DND is not on the same wavelength as we are on when it comes to that. They do not recognize the efficiencies that could be achieved, or perhaps they do not want to recognize them. In my opinion, they do not want to relinquish the reins of power.
Senator Rompkey: Do you know of any studies that we could review? Has anyone explored the alternatives? Do you know of any additional information that we could have or where we could look for it?
Mr. Ford: Unfortunately, I do not know of any. However, I can tell you that if the ASD process had been handled correctly from the beginning all of these things could have been done at the outset. Many different avenues were available through ASD — an employee takeover, an in-house bid or a Crown corporation. All of these avenues were available and set out. They options could have been explored at the outset, but the Department of National Defence chose not to do that.
I believe that the in-house bid should have won the contract, but the department had already decided that that bid would not win, regardless. The low-ball bidder then created the havoc that was to follow in the wake of the 1999 strike. I do not believe that the bitterness has completely disappeared from the community. For the most part, everyone feels the hangover effects of that and it should not have happened in the first place. Unfortunately, it leaves us with no documentation of any study on that issue. Perhaps we should do that study ourselves.
Senator Rompkey: I am interested in civilian versus military jobs. It seems to me that that is where the savings have occurred in the past and possibly in the future as well. With respect to the firefighters, for example, to whom you just eluded, how could that be affected? Could you tell me the cost of a military person doing the job versus a civilian person doing the job? I understand that, recently, for example, the RAF was able to make significant savings in areas of the operation. Currently, there are 40 fewer RAF personnel in Goose Bay and civilian personnel have taken up the resulting slack.
Could you give me an indication of civilian cost versus military cost? Could you elaborate, apart from the firefighters, on other ways in which you think civilian jobs could be increased at Goose Bay?
Mr. Ford: I will defer to Mr. MacLennan to speak to those costs, but I know the difference is significant. Could you repeat the second part of your question, please?
Senator Rompkey: You talked about how costs could be affected in the area of firefighters, for example. I am looking for other ways in which costs could be affected. I gave the example of the RAF, which has recently reduced the number of personnel at Goose Bay by 40 per cent. Thus, the cost of that particular area of their operation has been cut by almost one half, I understand.
Mr. Ford: That is my understanding, as well. If we first look at the quality assurance, QA, portion of it, we will see that there are a number of civilians who, in my opinion, are well enough versed in the operation to effectively carry out all the functions currently being handled by uniformed personnel. If my figures are correct, they spend $1.3 million to do QA on a performance incentive fee that has a cap of $1.6 million. That is an unnecessary expense that could be passed on to allies in the form of savings.
Mr. MacLennan could verify that the annual cost for a uniformed staff is about $100,000, where for a civilian staff it is around $70,000. You could replace, for the sake of argument, 100 uniforms with 30 civilians and reap astronomical savings.
Senator Rompkey: Cost savings can be achieved by increasing the civilian workforce at Goose Bay.
Mr. Ford: In my opinion, yes, they could be.
Mr. MacLennan: This union has always maintained to DND that we see static military positions right across the department, not just at Goose Bay. We have gone through the access to information process to obtain the figures, which we will present to the House of Commons National Defence and Veterans Affairs Committee, about departmental deployments since the Korean War — since our inception under the United Nations and NATO. To date, we clearly know, because we have the figures and the data, that DND has only deployed 4,500 military abroad, at any given time. That figure includes peacekeeping or peacemaking roles. The military personnel in static positions on bases will never see any peacekeeping or peacemaking action. The costs for employing military are much higher because our members do not receive specialized pay, although they do receive isolation allowance in Goose Bay. The costs of employing a public servant is definitely much cheaper than employing a military.
There is a complement, according to the 1994 white paper, of 52,000 regular, combat-capable Armed Forces personnel. If only 4,500 troops are deployed abroad today, common sense would tell you that you would need another 4,500 troops at home to replace those 4,500 that go abroad. Another 4,500 troops would be needed in training theatre, along with the accompanying administrative support staff, so you would be looking at a total of 30,000 regular Armed Forces personnel.
In Ottawa alone, there are 8,500 regular Armed Forces personnel. They were not hired to carry brief cases but to carry bayonets. This occurs in virtually every base across Canada. Some people will spend 20 years in uniform and never see a peacekeeping activity. That is common right across the country in other bases.
Senator Rompkey: Is your union located at Cold Lake?
Mr. MacLennan: We are in every base across the country.
Senator Rompkey: Could you tell us about the comparisons between Cold Lake and Goose Bay in terms of their air functions?
Mr. MacLennan: I have been to both, and Goose Bay is colder.
Senator Rompkey: Why do they call it Cold Lake?
Mr. MacLennan: In Cold Lake, there are more regular Armed Forces personnel and reservists than there are public servants who provide the administrative support. Right now, there is something happening with the Air Force support concept to address that. Cold Lake has a population of military personnel that is greater than the population of public servants who work there. That is clear.
It also flies in the face of credibility for public servants. There are certain levels in the organization they can go up to, then there is a military organization chart that they have to leap over as a public servant, after which they are in a bureaucratic stream of the department's organizational chart.
It comes back to the argument that if you have 52,000 combat capable Armed Forces personnel — which is what the 1994 white paper said, let us use them all for what they were hired to do. When a base is privatised, there are still military personnel working on that base. I can understand that the need for some military personnel there, for some quality assurance and management, et cetera, but not to the degree we are seeing. It is not cheaper to keep uniformed personnel in jobs like electricians, carpenters or plumbers.
Senator Rompkey: Mr. Young talked about marketing the base, but my understanding was that, as part of the contract, Serco would do some marketing as well to attract more clients. Can you talk about that at all?
Mr. Ford: My understanding is that, as part of the initial RFP, the service provider was to do some marketing. When I raise this question with Serco themselves, the answer has always been that their hands are tied by the GBO, that the department does not allow them the flexibility to market in the manner they would like to. To be honest, I have seen no evidence they have been doing any.
Senator Rompkey: It is in the contract, is it not?
Mr. Ford: It is part of the RFP, yes.
Senator Rompkey: Is it part of the contract that Serco will do some marketing of Goose Bay?
Mr. Ford: Yes. The RFP had been opened so many times since it has been let that I would not dare to guess at the numbers of it. Things have changed. I would not say, comparatively speaking, it is even close to the same document it was when it was let in the beginning.
Senator Bolduc: How many people in your union are in Goose Bay?
Mr. Ford: Our local represents about 300 people: full-time employees, part-time and seasonal.
Senator Bolduc: What is the total active population on the base?
Mr. Ford: Just under 8,000 at present.
Senator Bolduc: I mean people working on the base.
Mr. Ford: There are probably in the neighbourhood of 500.
Senator Bolduc: How many employees are working for Serco?
Mr. Ford: They have approximately 360 employees. We represent 300 unionized employees. Their air traffic control and management people are not unionized, so that represents the difference.
Senator Bolduc: Are the people you represent for the most part in maintenance?
Mr. Ford: We do building maintenance, roads and grounds, airfield maintenance and things of that nature. We are responsible mostly for common areas. The things that would be charged to the allies are common area.
We also do dedicated work for the allies when they request it, and this leads me to another problem. The bureaucracy the department has in place has at times made it difficult for us to react to the immediate needs of the customer. Let me give you a case in point.
Last August, the officer in charge of approving work requests to the allies went on vacation. He left instructions to have the work request log e-mailed to him each evening, whereupon he would respond by 11:00 a.m. the next morning with what is approved and what is not. It is shameful. I spoke with a building officer from the Italian Air Force, who put it to me this way: Why did he need the Department of National Defence to tell him how to spend his own money? He had people in Rome that would tell him if he spent too much. I could not give him an answer.
Senator Bolduc: Do you subcontract from Serco?
Mr. Ford: It depends on the scope of the work. In the case of a major project, there are departmental guidelines as to what we should and should not do. If it reaches surpasses a certain dollar figure — and I stand to be corrected on this but I think it is $30,000 — we do not touch it. It is sent out to tender. It will be picked up by a local contractor in most cases, or through the regular tendering process.
This makes it difficult to serve our customers and to keep them satisfied. These are the things we have to address. We have to ensure that our customers are completely satisfied with the services they are receiving. I do not think they are dissatisfied as such with the work being done. They are very pleased with the labour force and with the professionalism and quality of work they receive.
Senator Bolduc: If you do not have formal relationships with Serco, there must be some informal ones. What type of exchanges do you have?
Mr. Ford: Myself with Serco?
Senator Bolduc: Your employees and Serco employees.
Mr. Ford: I represent the Serco employees. A local of the Union of National Defence Employees has a small contingency working in a civilian capacity to provide support for core functions on the base. Some of those might be supply, but the majority are quality assurance, QA. They QA the contract as they see fit, I guess.
As to Serco and ourselves, our customer is the DND, not the allies, so we should approach things that way. If someone goes to fix a hole in the wall and an ally asks if we can repair a doorknob at same time, we do not have authority to do that. This is another area where the inefficiencies are inherent within the system.
The Chairman: With whom is your collective agreement?
Mr. Ford: Serco. We are faced with many impediments in an attempt to satisfy the customer, to encourage them to go back home and tell other countries that Goose Bay is, indeed, the ultimate place to do flight training.
Senator Bolduc: I have a question for Mr. MacLennan. If memory serves me well, the Department of National Defence had something in the order of 85,000 or 90,000 people working for it. There were approximately 60,000 military and 30,000 civilians. The department is now down to 60,000 military and 15,000 civilians, if I understand correctly.
There have been cuts in both groups, but perhaps more on your side than the other. You are saying that, because of the power structure of the department, the military had the high-end, and that is why you were cut.
Is that your way of doing things? The civilians could do some of the work done by the ministry. Have I understood you correctly?
Mr. MacLennan: That is right, senator. Thank you for recognizing the unfairness that was done to the public servants, the people I represent. In 1994, the military had a regular Armed Forces complement of 75,000.
Senator Bolduc: I was thinking in terms of 1984, or something like that.
Mr. MacLennan: In 1987, we had a membership of 32,000 public servants. The reduction was a result of various downsizings, the base closures that were announced in 1994. Some of it has been absorbed through privatization, which does not really complement 100 per cent of your workforce. Yes, there is an imbalance there, which goes back to what I said originally. There are military personnel in static positions that will never move.
Senator Bolduc: I am not an officer, but is there a possibility that they use military personnel to do some civilian work so that, in case of an emergency or war, they can do the job? If there is no one else to do it they will do it themselves. Is that the idea of having, perhaps, some military personnel doing civilian work?
Mr. MacLennan: We have the military working beside our members doing exactly the same job, yes. The excuse we are given from the department is that the military need those skills to be kept up so that when they are deployed they will be able to continue doing their job as an electrician, a mechanic or a plumber.
However, when you see the numbers that are not being deployed and that are posted in and out of those positions on the base — we have done an extensive report with the department's own figures on the numbers that have been deployed from 1994 up to September 1 —
Senator Bolduc: I do not wish to get into a big discussion with you about their use of the people. You talk about 35,000, so another 20,000 are not there. Perhaps they do some other type of job. We are not only involved in peacekeeping; we are also in NORAD and NATO, outside of the peacekeeping activity. Maybe there are another 5,000 or 10,000 people working there.
Mr. MacLennan: There are other military personnel working in embassies around the world, but it is not a large number.
Senator Bolduc: That does not add up to 55,000.
Mr. MacLennan: The numbers that they are using do not add up.
Senator Banks: Mr. MacLennan, I would be very grateful if you would send to the clerk of this committee the pages from the white paper that talk about 52,000 combat-capable personnel.
Mr. MacLennan: I should have been clearer: The 1994 white paper referred to 60,000 combat-capable. However, there are only 52,000 available, as there are other restrictions on the personnel.
Senator Banks: Would you send us the copy of the white paper that talks about 60,000 combat-capable personnel?
Mr. MacLennan: I certainly will do that.
Senator Banks: Mr. Ford, is the contract under which you now work with Serco a succession of a contract that previously existed?
Mr. Ford: The collective agreement?
Senator Banks: Yes.
Mr. Ford: We had to renegotiate the collective agreement after successor rights were achieved in 1998. There was a six-week strike —
Senator Banks: Was the strike against Serco or against DND?
Mr. Ford: It was against Serco, supposedly. As things turned out, the department once again — unable to keep themselves out of the picture and not willing to relinquish the powers — took it upon themselves to start doing some of our work. The military personnel were certifying that the arrestor gear was our work while we were on strike. With the garbage removal, they shut the base down completely. At that time, our hospital and our schools were on the base, although the schools were closed because it was during the summer time.
The department interfered in what was a Canadian right to strike. If the department decided that it wanted to go the route of ASD, then it should have been aware of the possibility of labour unrest, particularly when the successful bidder was a low-ball bidder. That tore every bit of dignity out of the people who were there.
Senator Banks: If personnel are on strike at a military air base, the arrestor gear should not be operated; is that correct?
The reason we have military personnel doing those things is, in part, so that if there is a strike, the job can still be done.
Mr. Ford: That is a fair statement except that in the collective bargaining process one of the first things to be hammered out is an essential services agreement. The company did not see fit to ask these people; we had to oppose them. They did not ask anyone to do garbage collection; they did not ask anyone to run the steam plant; they did not ask anyone to operate the arrestor gear.
Senator Banks: When does the present contract expire?
Mr. Ford: It expires on June 30. We are presently in collective bargaining.
Senator Banks: This coming June 30?
Mr. Ford: That is correct.
Senator Banks: Are you negotiating with Serco?
Mr. Ford: We are negotiating with Serco at present.
Senator Cools: Who is Serco? Who are they, and what are their principles? It seems to be a mystery organization.
The Chairman: They are the people who provide the services to the base under a contract with DND.
Senator Cools: Will we hear any witnesses from Serco?
The Chairman: I think not.
Senator Cools: Maybe we should.
The Chairman: The issue is that the contract will expire next year and an RFP has been issued this week, leading to a renewal or otherwise of that contract.
Senator Banks: Do you have any knowledge of whether Serco will, or is unlikely to, respond to the RFP to continue providing the services?
Mr. Ford: I know that they will be.
Senator Banks: Do you think that the community — you mentioned this, Mr. MacLennan, by way of an example — could do a better job in the way that some airport authorities across the country have demonstrably done their jobs?
Mr. Ford: In effect, yes, I think that is a good model, the way the airports were handed over. The Goose Bay Airport Corporation is doing an excellent job and is showing profits. That is good. If that is any indication, that might be the route we must take.
Senator Banks: Will the community respond to the RFP? You must buy a ticket.
Mr. Ford: I will let Mr. Peck respond to that.
Senator Banks: Do you have any knowledge of that being afoot?
Mr. Ford: No, I do not.
Senator Banks: I wish to observe that you said it operates at no cost to Canadians. There is no such thing, Mr. Ford. There is not now. At moment, the cost to the Government of Canada — it is not a net cost — is about $3,000 a head at Goose Bay, and that is not extraordinarily high. The federal government spends all sorts of money in every community in the country. It is never at no cost.
Mr. Ford: When the Canadian government puts in $26 million at the beginning of the year to generate $115 million in GNP, I do not think that is much of a cost to the Canadian public.
Senator Doody: I have a couple of short questions for Mr. Ford concerning the allegation that DND is not particularly anxious to stay in Goose Bay. The first thing that struck me in Mr. Ford's statement is that the base was given to the department by the American government just before they were priced out of town.
Senator Doody: Who priced them out of town?
Mr. Ford: The Department of National Defence.
Senator Doody: They were charging a rent or there was a lease arrangement of some sort with the Americans? The Americans originally owned the base; they gave it to the Canadians; and the Canadians, according to your statement, priced them out of town.
Mr. Ford: That is correct.
Senator Doody: The other allegation I consider to be serious and would like some elaboration on is that the Goose Bay Office allegedly told the French there was no room at the inn. Does that mean that the French wanted to establish a presence at Goose Bay but were told there was no room for them?
Mr. Ford: Yes, that is my understanding. The French participated on a limited basis last year. Some of the things they were looking for were not there. However, that does not mean we could not achieve those changes at some point in time to accommodate them. It is my understanding that the GBO said this to them: ``There is not a lot of room, so the first thing you will have to do is stick up your own barracks.'' At the same time, the Department of National Defence is tearing down PMQs, private married quarters, and other infrastructure around the base. It really limits what you can do. How can we attract new customers when we do not have enough accommodation in place? What are we going to do? Are we going to put them in tents?
The department has said that perhaps an entrepreneur will come in and build barracks, in a private capital investment sort of deal. I find that a very difficult sell. I cannot imagine a company investing money without some guarantee of at least recouping its initial costs. The GBO in this particular case is very much a hindrance. It is shameful and nothing less.
It is a shame that Mr. Young spoke before me, because he may have been able to respond in a different manner. I am sure he would give you a different answer than I would. I have to stand on my ground. My information sources tell me this. I have no reason to believe that it is not true.
The Chairman: Honourable senators, did you want to add anything to that, Mr. MacLennan?
Mr. MacLennan: If I could make some closing remarks: We know that the transfer of the public service jobs to the private sector was terrible. The first set of negotiations between Serco and our union was not done that well either.
We are currently going through a request for proposal process again. We are striving in any situation with the Department of National Defence for complete transparency. This committee has given us the opportunity to do that.
We have put a request into the department to be observers to the evaluation committee as they evaluate the bids. We have been denied that request.
We have done this in the past with the supply chain project and the Goose Bay contract last time it was let. We signed disclosure agreements because of proprietary rights. The position that the department has taken not to allow us as observers only on the evaluation process of this tendering is unfair. We have a right to see that because it is our people who will be affected by the new employer or whoever will win the contract.
We put forward a second proposal to the department regarding the bidders' conference in July in Goose Bay. We have been denied access to that, also. It is important that we have a dialogue with our union. We will continue representing these people. We have been denied access to the bidders' conference, also.
There is a public outcry for transparency, especially in the contracting out of anything in government. Denying us the opportunity to be part of the evaluation committee and also the bidders' conference is unfair. It only makes me more suspicious that something is being covered up when we are denied access to those two important functions. Public Works has made that ruling. National Defence has supported it.
If anything could be done through this committee to have better cooperation on that aspect, we would appreciate it.
The Chairman: We will take that on board.
Honourable senators, when we thought we had finished with the witnesses from DND, there were two senators who wanted a second round. If the witnesses from DND are still in the room, we could bring them back to the table for about 10 minutes, if it is the wish of honourable senators to do so.
Senator Cools: It is our wish.
The Chairman: Thank you both.
I would ask Mr. Richardson, Col. Hunter, Mr. Young and Col. Bertrand to please return to the table.
You do not need to be introduced, again. I am sure you share our pleasure that we have some more time.
Senator Rompkey: I want to give our witnesses the opportunity to comment on some points that were made. First, I should like comment on the application of the French to use Goose Bay. How that was treated, and how did it evolve?
Second, I would like comment on the situation of the bidders' conference in Goose Bay and the denial of the union's request to attend that conference.
Mr. Richardson: Honourable senators, let me address the question of the union participation. The union can participate in the bidders' conference. That is not a problem. That happens the middle of next month.
With respect to the evaluation, the union and the employees work for Serco. It is inappropriate to have employees from one company sit in on the evaluation of bids from other companies. There could be other unions and players involved. There would be concerns about fairness.
It is important to note that the union members here work for Serco. They work for a private company. What would be their motivation in looking at the bids for other companies? We must ensure that the process is fair, equitable, and that there is no perception of bias.
Senator Rompkey: On the other hand, the community at Goose Bay now is a pretty permanent community. We are into third generation. The workers who are at Goose Bay are the same ones who worked for the Americans and DND. If they are not those people, they are children of those people. I do not see that changing. Whoever gets the contract will have employees who are the people who have houses, businesses, schools and churches in the community, and would have had them since the 1950s.
It seems to me that it is not a valid argument to say that there could be some other people working for whoever wins the contract. There may be another union, I do not know. I would think that it would be the same people.
Mr. Richardson: It may well be. Normally, if there were a service contract that was being re-tendered, we would make no specifications about the employees. At Meaford, we would tell the contractor who was required. We would not tell them who to hire or how to work. Recognizing the circumstances at Goose Bay, we have taken the unusual steps of stipulating that 90 per cent of the workforce must be hired from the local community. They must be experienced in this work.
In recognition of the fact that there are about 300 full-time employees, the contractor must effectively employ 300 full-time employees. We feel that we are addressing the needs of the employees and the local community.
Nevertheless, the current workforce works for Serco. If there is another company that comes in, they will have to hire a large number of folks from the local community, but they may bring in other folks.
Senator Banks: Would there not be rights of succession?
Mr. Richardson: I do not know.
The Chairman: Are those rights not involved already?
Senator Rompkey: There was an issue regarding rights of succession. The courts ruled that there was, in fact, a right of succession. There was an amendment to the contract.
Mr. Richardson: That is correct. As to whether there would be a subsequent right of succession, I do not know. That is really up to the companies that are involved in the bidding to take a position.
Senator Rompkey: If the problem were that a certain union is working for a certain company, would there not be some other way that the workers could be involved? You have said that 90 per cent of the workforce has got to come from the local area. In fact, as I made the case earlier, the chances of other people coming to Goose Bay when people have already had their homes there for some time is not realistic.
There must be some way that the workers, perhaps represented by a union, could be present at the bidders' conference.
Mr. Richardson: It would be highly unusual. We will be engaging a fairness monitor. That will be an independent third party that has significant experience in the tendering and evaluation process. They will be looking over our shoulder — National Defence and Public Works — as we go through the process to ensure that it is fair, honest and in accordance with the rules.
Beyond that, it becomes very difficult to have the employees from one particular company, not withstanding that they may end up working for another company should another company win, in the evaluation room looking at what is proceeding.
The evaluation will be done in accordance with the request for proposal. We will have it monitored. It must be fair for all of the companies involved.
Senator Rompkey: Mr. Chairman, I wish to give Mr. Young a chance to comment on the application by the French.
Mr. Young: Thank you. I appreciate that, Senator Rompkey. By the way, I should like to correct three other matters that I believe are errors, as well as speak to the interpretation on the French. Let me respond to points made by union representatives.
National Defence or the Goose Bay Office did not price the Americans out of town in 1990. The United States Air Force never used Goose Bay for flying training as did the British, German, Dutch and Italians.
The Americans helped found that base in 1939 first because of World War II and second, during the Cold War, to maintain American forces in Europe. As well, they used the base for NORAD purposes. However, they never trained there.
When the Cold War ended in 1989-90 and the Berlin Wall came down, they had little compassion for maintaining large forces in Europe, as you all know, nor for maintaining bases such as Goose Bay to support those forces. Consequently, unlike the British, the Germans and the Dutch, who were there at the time — the Italians were not — the Americans saw fit to reduce their costs and leave Goose Bay. That was a global decision, not strictly pertinent to Goose Bay.
Second, let us be clear on ASD and why it was brought about. In 1995-96, we negotiated a new MOU with allies, one that was dramatically different than the earlier MOU. In the MOU I had been involved with in 1996, common costs were based on simplicity, that they would be shared equally. If there are four participants in Goose Bay, we will split the common cost 25 per cent. The beauty of that is it is clear, transparent and easy.
The Chairman: Why did you need ASD to do that?
Mr. Young: Just a moment, sir. Please stay with me. The point is that it was unfair. It was unfair because each time the British wanted to run off and do an international boy scout initiative, like the Gulf War, they were not training at Goose Bay, yet they were compelled to pay 25 per cent of the common cost.
As a result, in 1996 we developed a new MOU, two years before ASD, Mr. Chairman, in which we were going to apportion common costs based on use. The Germans said: ``We realize that is fair, but that will raise our costs through the roof because we use it more than any other air force.'' It is true, they do. Their costs did go through the roof.
We had to implement ASD quickly because the Germans, under the new MOU of 1996, based cost on use. We had to find some way to reduce cost. That is the main reason ASD was applied. Otherwise, we may have had a domino effect. May I remind you, the Italians were not there then. It would have really affected the remaining two allies.
Third, the suggestion that I in any way, shape, or form told the French, ``Do not come, we do not have room for you,'' is wrong. I take that personally and professionally as misleading.
I worked very hard to bring the Dutch into Goose Bay in 1986. As well, I worked hard to get the Italians there first in 1995 and then permanently in 1999 and 2000. I did tell the French that, unless I could work with other allies there and the Canadian Forces to find spare capacity in infrastructure, there was no room in infrastructure. Bear in mind, the British had just lent their spare capacity to our Italian friends. They are using half of hangar 8 and half of 7. The British have no more spare capacity. The Germans do have some, and this year they will be using it to accommodate French deployments this summer of transport aircraft.
The point I wish to make is that we have loads of room in the air, which is a point that was made before, that we market Goose Bay on, Senator Forrestall. However, we have now limited infrastructure. It is not because we are tearing down facilities there wantonly. The base commander is trying to reduce the excess infrastructure.
Senator Bolduc: We were supplied with the 1999 report of the Auditor General. I read those reports carefully, generally. I must say that on that aspect of national defence, I knew there was subcontracting, but I was not aware of that to the extent I can see here.
The Auditor General was not terribly impressed in 1999. It was, I must say, a relatively new thing. Now we are in 2002. Did you get some feedback from the Auditor General about ASD? He had made a recommendation in his report.
Mr. Richardson: Honourable senators, the Auditor General has done a follow-up report on ASD that I believe will be released this fall. I have not seen the full details of it with respect to Goose Bay. He did have some concerns about the savings not being what we had originally hoped they would be. He made comments about harvesting the lessons learned, which we are working on. We have certainly tried to do that in Goose Bay and apply them.
He made comments about some of the rigour of the baseline analysis. I, along with some of my colleagues, would not agree. We disagreed with the Auditor General. They are entitled to their opinions from their perspective.
What is relevant from the point of view of Goose Bay is it was early on in the ASD process. It was one of the first bases where we went from a public service workforce to a contractor workforce. It was a bumpy start; there is no doubt about that. We have learned some lessons. We think we are applying them correctly in the re-tender so that we can gain all of the efficiencies that are needed to keep the allies there.
Senator Forrestall: Mr. Young, have you responded to a letter from Mr. Ford, dated March 25, 2002, in which he asks pertinent questions about the training of United States air crews for their C-130s?
Mr. Young: I responded to Mr. Ford's letter to me, if it is the same one you are referring to, senator. I think I provided a three- or four-page response on a number of the initiatives we are taking and to the various points he raises. I am not sure I know the point you raise specifically.
Senator Forrestall: Did you make an active bid with the Americans for the Hercules training, as we know it?
Mr. Young: If my memory of that letter is correct, there was an allusion in Mr. Ford's letter to training possibly being conducted at another Atlantic coast community.
Senator Forrestall: Summerside.
Mr. Young: Summerside, by American forces. I do not know if you have seen my response to that letter; it was a full and forthright response of three or four pages. I will provide it to your clerk. I would like you to see it. In it I indicated that I was not aware of that training program. I am not even sure it exists.
I have been in touch with our American colleagues, briefing United States officials at the embassy in Canada about the prospects of all sorts of training at Goose Bay. They are aware of that. I have given their attaché a three-hour PowerPoint presentation on the benefits of training at Goose Bay. They are considering it, along with many other places. It will be tough to bring them in. Puerto Rico has now withdrawn their facilities for air force training. That provides us with an opportunity.
The Chairman: That is it, honourable senators. Thank you for your forbearance coming back to the table.
Mr. Richardson has told us that the Auditor General has revisited the situation as far as ASD is concerned and perhaps specifically with regard to Goose Bay. He did have reference to Goose Bay in particular.
If that report is out in time, we will have an opportunity to take a look at it, and it will become part of the documentation before the committee. We might wish to comment on it in our report, provided we can do all of that before July 12.
The committee adjourned.