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Opening Statement to the Standing Senate Committee on National Security and Defence

6 December, 2004

Sheila Fraser, FCA
Auditor General of Canada

Mr. Chairman, Honourable Senators, thank you for inviting us to discuss our audits that are applicable to national security and national defence. With me today are Assistant Auditor General Hugh McRoberts, as well as Peter Kasurak and Wendy Loschiuk, principals in our office responsible for audits related to national security and national defence. Recently, we provided a letter to the Committee listing a series of issues from previous and current audits. My opening remarks today will refer to some of these issues.

National Security

The main issue facing the government regarding national security is not “what to do?” but “how to do it.”

The 2001 Budget established the overarching goals of keeping Canada safe, keeping terrorists out, and keeping Canada’s border open to legitimate travellers and trade. Our audit found that nearly all the $7.7 billion allocated in the 2001 Budget for improved security was spent furthering these goals.

What is more difficult is to develop structures to direct government efforts. When we began the audit, at least 16 agencies were involved in delivering or directing national security programs. Our audit found the most common failures were a result of stovepiping responsibility or, simply, the complexity caused by so many agencies being involved.

Better co-ordination among intelligence and security agencies was needed. We found that the government did not have a management framework that would guide investment, management, and development decisions and allow it to direct complementary actions in separate agencies or to make choices between conflicting priorities.

We also found deficiencies in the way intelligence is managed across the government. A lack of co-ordination had led to gaps in intelligence coverage as well as duplication. The government as a whole had not adequately assessed intelligence lessons learned from critical incidents or follow-up on improvement plans. The government made structural changes to address these issues and adopted its first-ever National Security Policy.

The government had failed to improve the ability of security information systems to communicate with each other. Projects that would have helped deal with increased demand for fingerprint identification had not been funded by the Public Security and Anti-Terrorism (PSAT) initiative. The Real Time Identification system (RTID) project has since received additional funding, but it may have difficulty in completing its work within the amount allocated to it. As well, integrating IT projects across several organizations will be challenging.

Criminal intelligence data were not being used to screen applicants for clearance to restricted areas at airports. This means that security clearances were issued without checking applicants for criminal association. A memorandum of understanding signed by the RCMP and Transport Canada to facilitate information sharing is the basis for improvement, but procedures and information systems must be updated to move forward.

Border watch lists used to screen visa applicants, refugee claimants, and travellers seeking entry into Canada were in disarray. The Canada Border Services Agency and the RCMP committed themselves to a number of improvements to improve the updating of watch lists. It may be opportune to now inquire as to the extent of progress made in these matters.

The government has responded to the challenge by adopting its first national security policy to direct the development of an integrated security system. It has also consolidated many security agencies into the new department of Public Safety and Emergency Preparedness Canada under a single Minister. Legislation is now before Parliament to define the roles and powers of these new institutions.

Mr. Chairman, this committee may wish to consider whether the government is making adequate progress in integrating security programs. I shall be reporting on additional elements of the 2001 Budget initiative – emergency preparedness, marine security and air transport security – in the Spring of next year.

National Defence

My Office has a long history at the Department of National Defence and I appreciate this opportunity to talk about some of our work. As you know, we just recently reported on the Upgrades to the CF-18 fighter aircraft. Perhaps I could talk about those findings first.

From my earlier statements I think you know that overall I am satisfied with the results the Department of National Defence has achieved so far in this program. Phase 1 is within costs and the aircraft that are currently coming off the production line are meeting the expectations of the Department. In fact, upgraded aircraft are now being flown at Canadian Forces Base Cold Lake and Base des Forces Canadiennes Bagotville.

Of course, the program is not without its problems and we found that there are delays in two of the upgrades – the simulator acquisition and the cockpit display. Staff shortages and problems in getting projects approved contributed to these delays. National Defence needs to improve its project and risk management in order to better cope with problems that can cause delays. In that sense, the upgrade of the CF-18 is not unlike other major equipment projects we have looked at.

For example, in 1998 we looked at six major equipment purchases at National Defence and found then that the Department needed to improve project management and the way it identified and managed risks. We re-visited our 1998 work two years later and were encouraged by how improvements were being made. But in 1998, in 2000 and again in 2004 we have consistently found that National Defence cannot ensure that the right people with the right skills are available for major equipment projects.

Nevertheless, the CF-18 project team worked very hard to get Phase 1 of the modernized aircraft into operations. Phase 2, however, could be more challenging to manage. I would like to see the Department strengthen its ability to manage the difficulties that it could reasonably expect to encounter in Phase 2 or in any major acquisition project. Senior management needs better information on how well projects are performing and on whether risks are being addressed.

Phase 2 should be completed by 2009. After that, the Air Force expects to get at least eight years of flying time with its upgraded fighters. If the upgraded aircraft are not in service by 2009, the Air Force will not be flying these aircraft for the expected eight years. The longer these aircraft can be used in their modernized version, the more value the Air Force will get out of them. Therefore, National Defence should be assuring this Committee that it will be able to deliver fully upgraded aircraft on time.

Once these aircraft are fully modernized and delivered to the squadrons, there should be assurances that the Air Force will optimize their use. That is, there should be pilots to fly them, technicians to keep them maintained, spare parts, and funding.

We expressed concern before about the shortage of maintenance technicians for the Canadian Forces. In 2001, in our chapter on In-Service Equipment we reported that there were too few technicians for the jobs required, and many that were available did not have the qualifications needed. And in 2002, in our chapters on Recruiting and Retention and on the NATO Flying Training contract we reported on the shortage of pilots. I am still concerned but encouraged by the Department’s response that it is putting additional funding into training for more technicians and recruiting more pilots.

We have reported on other concerns that affect acquisition at DND. In 1998, we looked at six major acquisitions at National Defence and the capital budget for buying equipment. In 2000, we looked to see if National Defence had taken action on our 1998 recommendations and were encouraged by some improvements. And in 2003 we reported on the Challenger Jet purchase. I would be happy to talk about any of these findings.

We have also expressed concern in the past about information provided to Parliament on the readiness of the Canadian Forces. National Defence faces many challenges that impact readiness. For example, we have reported in several audits on the recruiting and retention problems the Canadian Forces is facing and how a lack of people, especially skilled people, can affect operations. The impacts of ageing equipment that become more costly to maintain but less and less operational is another area where better information could aid Parliament.

Mr. Chairman, your Committee has taken great interest in determining whether the Canadian Forces can do the job they are being asked to do, and whether they can transform to meet new demands. These are questions we have asked in the past and will continue to pursue. We are looking now at one aspect of transformation and will be reporting our findings in April 2005.

Mr. Chairman, that concludes my opening statement. We would be pleased to answer any questions from the committee.