Government of Canada/Public Works — June 13, 2012

National Fighter Procurement Secretariat Now Operational

GATINEAU, QUEBEC--(Marketwire - June 13, 2012) - The Honourable Rona Ambrose, Minister of Public Works and Government Services and Minister for Status of Women, today announced that the National Fighter Procurement Secretariat is now operational. The Secretariat will ensure that due diligence, oversight, and transparency are applied so that the Royal Canadian Air Force acquires the fighter aircraft it needs to complete its missions at home and abroad.

The Terms of Reference have been finalized, and they will guide and shape the work going forward, detailing who will do what, and how. The aim of the Terms of Reference is to set in place an improved governance and coordination structure, strengthen due diligence, and commit departments to transparency through more timely and effective communications. The Deputy Minister-level Governance Committee will present its conclusions to ministers in support of the Government's decisions on how to move forward with the replacement of the CF-18 fleet.

"I am pleased to announce that the Secretariat is operational and will play the lead coordinating role as the Government moves to replace Canada's aging CF-18 fleet," said Minister Ambrose. "As stated in the seven-point action plan, the funding envelope allocated for the acquisition of a new fighter aircraft will remain frozen and Canada will not purchase replacements until further due diligence, oversight, and transparency are applied to this acquisition."

A Deputy Minister-level Governance Committee has been established as the key decision-making body for the oversight and coordination of the work of the Secretariat. This committee will be chaired by the deputy minister of Public Works and Government Services and includes senior officials from the Department of National Defence and Industry Canada, and ex-officio members, including the National Security Advisor to the Prime Minister, and members from the Privy Council Office, the Treasury Board of Canada Secretariat, and the Department of Finance Canada.

In addition, two eminent Canadians who are external to the public service have been confirmed as members of the decision-making body. These independent members will further strengthen the impartiality of the decision-making process. Joining the committee in this role are L. Denis Desautels, former Auditor General of Canada (1991-2001) and a recipient of the Order of Canada; and Dr. Kenneth Norrie, an economic historian and professor of economics at McMaster University.

"I am very pleased that Mr. Desautels and Dr. Norrie will assist with this important work," said Minister Ambrose. "Their considerable experience providing informed, independent points of view on matters of public policy is welcome and will result in additional due diligence in support of the project."

The National Fighter Procurement Secretariat is led by a newly appointed executive director, and supported by a small team drawn from departments with responsibility for this acquisition.

Please visit the National Fighter Procurement Secretariat website for additional information.

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BACKGROUNDER

National Fighter Procurement Secretariat

On April 3, 2012, the Government of Canada announced a seven-point action plan in response to the findings and the recommendation in Chapter 2 of the 2012 Spring Report of the Auditor General of Canada. As a part of this action plan, the Government of Canada announced the creation of a National Fighter Procurement Secretariat within Public Works and Government Services Canada.

The Secretariat is primarily responsible for the review, oversight, and coordination of the implementation of the Government's seven-point action plan. The action plan will ensure that the Royal Canadian Air Force acquires the fighter aircraft it needs to complete the missions asked of it by the Government, and that Parliament and the Canadian public have confidence in the open and transparent acquisition process that will be used to replace the CF-18 fleet.

The work of the Secretariat will be guided by the Terms of Reference, which establish an improved governance and coordination structure, strengthen due diligence, and commit departments to transparency through more timely and effective communications.

Due diligence

The Secretariat will ensure that enhanced due diligence is exercised throughout the implementation of the action plan as follows:

  • The results of the Treasury Board of Canada Secretariat-commissioned independent review will help set a consistent life-cycle costing framework that will be used to report costing estimates for this project;
  • Contracting policy due diligence will also be validated by the Treasury Board via joint Department of National Defence/Public Works and Government Services Canada submissions for project and contracting authority; and
  • A validation of all the steps taken to date in the acquisition process will be conducted and independently verified.

Governance

The key decision-making body for the oversight and coordination of the action plan is a Deputy Minister Governance Committee (DMGC). This committee will be chaired by the deputy minister of Public Works and Government Services. The core membership includes:

Ex-officio members include:

  • Michael Martin, Deputy Secretary to the Cabinet, Operations, Privy Council Office;
  • Michelle d'Auray, Secretary of the Treasury Board;
  • Louise Levonian, Associate Deputy Minister, Department of Finance Canada; and
  • Stephen Rigby, the National Security Advisor to the Prime Minister.

Decisions of the Deputy Minister Governance Committee will be made by the core members. An Interdepartmental Assistant Deputy Minister-level Steering Committee is charged with the management and implementation of decisions arising from the deputy minister committee and other items that may arise throughout the implementation of the action plan.

A newly appointed executive director will lead the Secretariat with staff drawn from Public Works and Government Services Canada, the Department of National Defence, Industry Canada and the Treasury Board of Canada Secretariat.

Use of third parties

The Deputy Minister Governance Committee will also include two eminent Canadians who are external to the public service and who will provide unbiased support and advice, reinforcing the impartiality of the decision-making process. Joining the committee in this role are:

  • L. Denis Desautels, former Auditor General of Canada (1991-2001) and a recipient of the Order of Canada; and
  • Kenneth Norrie, an economic historian and currently a professor of economics at McMaster University.

In addition, non-governmental independent third parties will be called upon to enhance openness, impartiality and transparency. As set out in the seven-point action plan, the Treasury Board of Canada Secretariat will "commission an independent review of the Department of National Defence's acquisition and sustainment project assumptions and potential costs for the F-35, which will be made public". Other third-party independent advice and reviews will be sought as determined by the governance committees.

NATIONAL FIGHTER PROCUREMENT SECRETARIAT

GOVERNANCE TERMS OF REFERENCE (TOR)

PURPOSE OF TERMS OF REFERENCE

1. The purpose of these Terms of Reference (TOR) is to define the governance structure for the oversight and coordination of the Government's Seven-Point Action Plan in response to the Auditor General's 2012 Spring report on Replacing Canada's Fighter Jets, herein referred to as the National Fighter Procurement Secretariat (NFPS) action plan. Following completion of the NFPS action plan, the DMGC will present its conclusions to Ministers in support of the Government's decisions on how to move forward with the replacement of the CF-18 fleet.

AIM OF NFPS

2. The objective of the NFPS action plan is to ensure that the Royal Canadian Air Force acquires the fighter aircraft it needs to complete the missions asked of them by the Government; and, that Parliament and the Canadian public have confidence in the open and transparent acquisition process that will be used to replace the CF-18 fleet.

OVERVIEW OF THE GOVERNANCE STRUCTURE

3. The key decision-making body for oversight and coordination of the NFPS action plan is a Deputy Minister (DM)-level Governance Committee (DMGC). This Committee will be chaired by the DM of Public Works and Government Services Canada (PWGSC). The core membership includes DMs of PWGSC, National Defence (DND) and Industry Canada (IC). Decisions of the DMGC will be taken by the core members. Privy Council Office (PCO), Treasury Board Secretariat, the Department of Finance and the National Security Advisor to the Prime Minister are ex-officio members. The DMGC will also include two independent members from outside the public service. Ex-officio and independent members will observe and provide a challenge function to inform the decision-making of the DMGC. Senior military personnel will also be called upon to inform and assist the work of the DMGC.

4. The work of the DMGC will be supported by an Interdepartmental ADM-level Steering Committee (ISC) charged with the management and implementation of decisions arising from the DM-level committee and other items that may arise throughout the implementation of the NFPS action plan. A full-time Interdepartmental Secretariat will be established within PWGSC and project teams will be established, as required. Annex "A" of this document provides additional information, including the roles and responsibilities of each of these governance bodies.

DEPARTMENTAL ROLES AND RESPONSIBILITIES

5. The Minister of Public Works and Government Services is responsible and accountable to Parliament, under the Defence Production Act (DPA), to administer the DPA and has the exclusive authority to buy or otherwise acquire defence supplies and construct defence projects required by DND. As such, the Minister of Public Works and Government Services is accountable and responsible for the acquisition of defence supplies, the resulting contracts and agreements, including the planning, solicitations, negotiations, award, management, and related decision-making in order to ensure that the acquisition activities are administered in accordance with the applicable laws, regulations, policies, procedures and directives. Public Works and Government Services is also the lead department responsible and accountable for the National Fighter Procurement Secretariat coordination activities.

6. The Minister of National Defence (DND) is responsible and accountable to Parliament for the conduct of the Canadian Defence Services Program, in accordance with the National Defence Act (NDA), and acts as project and technical authority for the acquisition of defence supplies. To fulfill this mandate, the Minister of National Defence is responsible for defining defence requirements, the planning and execution of all project management activities, as well as the provision of specialized advice, assistance and services to PWGSC during the implementation of the acquisition process. In fulfilling these duties, DND will support the governance structure detailed in this document and outlined in the Action Plan.

7. The Minister of Industry Canada (IC) is responsible to continue to identify opportunities for Canadian Industry to participate in the Joint Strike Fighter program global supply chain, and other potential benefits for Canada in sustainment, testing, and training. Industry Canada reports on the Industrial Participation opportunities offered and secured by Canadian companies. In fulfilling these duties, IC will support the governance structure detailed in this document and as outlined in the Action Plan.

TRANSPARENCY AND IMPARTIALITY

8. The use of non-governmental independent third parties will be called upon to enhance openness, impartiality and transparency of the Governance structure as follows:

  • The DMGC will include two independent members from outside the public service;
  • TBS will commission an independent review of DND's(1) acquisition and sustainment project assumptions and potential costs for the F-35, which will be made public; and
  • Other third party independent advice and reviews will be sought as determined by the DMGC and/or ISC.

PUBLIC AND PARLIAMENTARY REPORTING

9. The work of the Secretariat and of the various Committees involved in the NFPS action plan shall be done with transparency and openness to ensure appropriate public disclosure. As such:

  • The DMGC will approve reports to Parliament;
  • PWGSC, through the Secretariat, will develop a protocol for approval by the ISC and the DMGC, to meet the objectives of open, informed and transparent communications of activities related to the NFPS action plan; and
  • The Secretariat will ensure the creation and maintenance of a dedicated website, and ensure a coordinated approach to the posting of information relating to the NFPS on departmental web spaces.

DUE DILIGENCE

10. The DMGC, the ISC and the Secretariat, along with TBS, the Department of Finance and PCO, will collaboratively ensure that due diligence is performed throughout the implementation of the NFPS action plan as follows:

  • The provision of independently verified annual costing updates regarding the Joint Strike Fighter program;
  • The results of the TBS commissioned independent review will help set a consistent costing framework that will be used to report costing estimates for this project;
  • Contracting policy due diligence will also be validated by the Treasury Board via joint DND/PWGSC submissions for Project and Contracting Authority; and
  • A validation of all the steps taken to date in the acquisition process will be conducted and independently verified.
  • This validation encompasses the acquisition process for the first two phases and six steps as outlined in the Auditor General's report:
    • Identification Phase: Capability deficiency identified
    • Options Analysis: Operational requirements defined; Total project life-cycle costs estimated; Risks assessed; Options analyzed; Procurement strategy proposed.

SECRETARIAT

11. The Secretariat is responsible for the coordination of the implementation of the Government Action Plan referred to in Annex "B" herein.

Membership

12. A PWGSC Executive Director (ED), who is accountable to the ISC for the overall coordination of the implementation of the NFPS action plan, will lead the Secretariat. The remaining Secretariat members are drawn from PWGSC, DND, IC and other departments. These members are responsible to the ED for implementation of the NFPS action plan and responsive to their respective departmental authorities for departmental requirements related to the NFPS action plan.

13. The working relationship between the members of the Secretariat is cooperative. The ED has tasking authority over seconded employees of all other departments. The ED will be kept informed of issues emanating from other departments that might affect the NFPS action plan.

NEXT STEPS

14. Following completion of the NFPS action plan, the DMGC will present its conclusions to Ministers in support of the Government's decisions on how to move forward with the replacement of the CF-18 fleet.

AMENDMENTS

15. It is agreed that these TOR may be amended as necessary and with the consent of the core members of the DMGC: François Guimont, Deputy Minister, Public Works and Government Services Canada; Robert Fonberg, Deputy Minister, Department of National Defence; Richard Dicerni, Deputy Minister, Industry Canada.

ANNEX "A"

DEPUTY MINISTER GOVERNANCE COMMITTEE (DMGC)

A1. The DMGC is responsible for:

  1. Interdepartmental coordination of the implementation of the Government Action Plan outlined in Annex "B" of this document, including the presentation to Ministers of any resulting conclusions;
  1. Oversight and due diligence, including but not limited to areas of costing, acquisition process and resulting industrial benefits from the project;

A2. The DMGC shall:

  1. Ensure transparency and provide as and when required briefings and related information to Ministers; and
  1. Oversee, review and approve the preparation of any documentation to be presented to Ministers for discussion and decision, and to Parliament.

A3. DMGC meetings will be held as required, but normally not less than once every two months. The core members will reach decisions by consensus and within the context of their departmental accountabilities, as detailed in paragraphs 5, 6 and 7 of these Terms of Reference. Core members or the Associate Deputy Minister for the same department shall be present for items requiring DMGC decision.

ADM-LEVEL INTERDEPARTMENTAL STEERING COMMITTEE (ISC)

A4. The ADM-level Interdepartmental Steering Committee (ISC) is accountable to the DMGC.

A5. The ISC will include a core membership of ADM-level (or equivalent) representatives from key stakeholder departments as determined by the Deputy Minister of their respective department. The following departments/agency will comprise the core membership of the ISC:

  1. PWGSC (Chair);
  1. DND; and
  1. IC.

A6. The ISC may also include ex officio membership at an equivalent level from the Department of Finance, Treasury Board Secretariat and Privy Council Office and any other agency/entity that will provide advice and expertise to aid the core membership in its decision-making role.

A7. The ISC is responsible for:

  1. Ensuring the efficient and effective management of the NFPS action plan in accordance with the scope approved by the Government;
  1. Reviewing the risks and the associated mitigation strategy identified by the Secretariat; and
  1. Providing updates and recommendations to the DMGC, as required.

A8. ISC meetings will be held as required during the implementation of the NFPS action plan, but normally not less than once a month.

SECRETARIAT

A9. The organizational structure of the Secretariat will be reviewed periodically to assess the requirements to implement the NFPS action plan. Positions will be staffed in accordance with the requirements of the NFPS action plan as it progresses.

A10. In the overall implementation of the NFPS action plan, the primary tasks of the Secretariat are to:

  1. Review, oversee, and coordinate the implementation of the NFPS action plan, as described in Annex "B" of this document;
  1. Ensure that a validation of all the steps taken to date in the acquisition process is conducted and independently verified;
  1. Development of short term, medium term and long term plans for the implementation of the NFPS action plan;
  1. Inform the ISC regarding progress in the implementation of these plans, highlighting potential risks, issues and/or changes to plans that would impact the achievement of the NFPS objectives;
  1. Provide regular updates to the ISC;
  1. Each department remains responsible for their respective communication activities, and all communication activities will be coordinated through the Secretariat. PWGSC, through the Secretariat, will develop a protocol for approval by the ISC and the DMGC, to meet the objectives of open, informed and transparent communications of activities related to the NFPS action plan;
  1. Monitor the international environment and developments, engage as appropriate, and inform ISC and DMGC as required;
  1. Ensure effective coordination of the activities of all participating government departments in implementing government direction with respect to the NFPS action plan;
  1. Refer interdepartmental issues that cannot be resolved within the Secretariat to the ISC for resolution;
  1. Provide the following support to the DMGC and to the ISC:

    1. Coordinate and produce the minutes of the DMGC and ISC meetings;
    2. Monitor and manage key risks as identified by the DMGC and ISC;
    3. Prepare or assist in the preparation of regular updates to Ministers and to Parliament, as appropriate, with respect to various elements and phases of the implementation of the NFPS action plan;
    4. Prepare or assist in the preparation of various reports, including reports to Parliament, as required.

A11. Throughout the implementation of the NFPS action plan, it is envisaged that the relationship between the Secretariat and the various departments will include open and interactive communication and reporting on the status of implementation and the progress of its key milestones.

A12. The Secretariat may establish Working Groups for specific tasks.

OTHER

A13. All written correspondence involving the NFPS and all other NFPS- related reports initiated within PWGSC, DND, or IC, and which may have an impact on the NFPS action plan or on the coordination role of the Secretariat shall be provided to the Secretariat. The Secretariat will ensure that the other members of the Governance structure receive copies of reports containing subject matter that might affect them.

A14. A cost recovery agreement for the operation of the Secretariat will be negotiated between PWGSC and DND.

A15. To the maximum extent practicable, Secretariat staff shall be co-located. The accommodations shall be sufficiently secure to facilitate the handling of sensitive and classified documentation and activities.

A16. It is agreed that PWGSC will remain responsible and accountable for the operation of the interdepartmental Secretariat.

ANNEX "B"

ACTION PLAN

B1. In response to the Auditor General's 2012 Spring report on Replacing Canada's Fighter Jets, the Government announced on April 3, 2012 the following action plan to address the Auditor General's findings and recommendation:

  1. "The funding envelope allocated for the acquisition of the F-35 will be frozen;
  1. The Government of Canada will immediately establish a new F-35 Secretariat within the Department of Public Works and Government Services Canada. The Secretariat will play the lead coordinating role as the Government moves to replace Canada's CF-18 fleet. A committee of Deputy Ministers will be established to provide oversight of the F-35 Secretariat;
  1. The Department of National Defence, through the F-35 Secretariat, will provide annual updates to Parliament. These updates will be tabled within a maximum of 60 days from receipt of annual costing forecasts from the Joint Strike Fighter program office, beginning in 2012. The Department of National Defence will also provide technical briefings as needed through the F-35 Secretariat on the performance schedule and costs;
  1. The Department of National Defence will continue to evaluate options to sustain a Canadian Forces fighter capability well into the 21st century;
  1. Prior to project approval, Treasury Board Secretariat will first commission an independent review of DND's acquisition and sustainment project assumptions and potential costs for the F-35, which will be made public;
  1. Treasury Board Secretariat will also review the acquisition and sustainment costs of the F-35 and ensure full compliance with procurement policies prior to approving the project;
  1. Industry Canada, through the F-35 Secretariat, will continue identifying opportunities for Canadian Industry to participate in the F-35 Joint Strike Fighter global supply chain, as well as other potential benefits for Canada in sustainment, testing, and training, and will provide updates to Parliament explaining the benefits."

(1) Noting that acquisition and sustainment assumptions received from the US Joint Strike Fighter program office will not be included in this review.

Contact Information

Michelle Bakos
Office of the Honourable Rona Ambrose
819-997-5421

Media Relations
Public Works and Government Services Canada
819-956-2315

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