June 15, 1943

NAT

John Ritchie MacNicol

National Government

Mr. MacNICOL:

The understanding was that water wras to be pumped from the Saskatchewan river a distance of some seventy miles to Moose Jaw and that the airport was to be supplied from Moose Jaw. One of the reasons why that piping and pumping was done, I understand, was to supply Mossbank. That is not correct?

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LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

No. At the Mossbank site water was obtained, by drilling within one and a quarter miles of the site, but it was so highly mineralized that it was unfit for human consumption and it was necessary to continue test drilling, gradually getting farther and farther away from the aerodrome. An adequate supply of potable w'ater was obtained near Johnston lake some seven and a half miles away. This supply was developed by the drilling of a permanent well, the installation of pumping equipment and the construction of a seven and a half mile wood stave pipeline to the airport, and the airport has been supplied from this source since the fall of 1941.

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NAT

Grote Stirling

National Government

Mr. STIRLING:

I had hoped that the minister would reply to the request of the hon. member for Lake Centre for his views as a member of the government with regard to the closing up of the crown companies when the time arises. I wanted in connection with that to make this suggestion to the minister, that he would take into account the fact that several of these crown companies are engaged in operations which bring them into competition with existing industry. There was a variety of reasons why the crown companies were set up. Sometimes they were to produce

commodities which Canadian industry was not at that time able to provide. One reason was that certain machinery required in retooling was available only from the United States and the priority list made it difficult to obtain that machinery.

But there are two or three of these crown companies which it appears to me are busy with the production of munitions and tools and instruments which can in ordinary times be manufactured by Canadian industry. Now that the minister has explained the changes that have had to take place in production-a sufficiency of this article has been accumulated, and there will be less of that made and more of this made-it seems to me that the time is arriving when these Canadian industries which have built up their factories, and their reputations as well, in the building of certain lines of endeavour will have competition such as it is not advisable, I suggest, for them to have.

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LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

Would my hon. friend give me one or two examples? I cannot think of a crown company in that position.

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NAT

Grote Stirling

National Government

Mr. STIRLING:

I am thinking of the Citadel, and Machine Tools, and Research Enterprises Limited1. It appears to me that all these three I have mentioned-there may be others-were brought into being largely to create materials which Canadian industry was capable of creating except under that particular stress of war. It is quite true that some of these things were to be manufactured in secret. There were secret devices which had to be manufactured in secret, and the government may very likely have had excellent reasons for not assisting these Canadian industries to expand to cope with this business. But now we are changing-over production, and the time will shortly arrive when these Canadian industries will find themselves in competition with crown companies, and I ask that the minister in replying to the suggestions of the hon. member for Lake Centre, should bear that point in mind.

Another remark I wanted to make was with regard to the capital assistance given to private companies. In the auditor general's report we have a considerable list of the moneys which have been given to various private companies, and there are described to us the two methods by which this arrangement is carried out. One method is to advance amounts monthly to satisfy the company's estimated requirements. The company submits estimates, which are certified by the treasury officials, and the estimates include a fee, usually a fixed amount. The list in the auditor general's report refers to that fee, but I notice that in the list there are very few

War Appropriation-Supplies

instances in which the fee is referred to at all; and what we do not know, and what the public most certainly does not know, is how that fixed amount is arrived at. I listened with interest this afternoon to the hon. member for Stormont, and I think that he has gone farther in explaining some of these' matters than yet has been the case. I am of opinion that it is a great pity that not until this month of 1943 have these explanations been given, because it is all to the advantage of the war effort that the people of Canada should have explained to them how such matters as the fee and how it is arrived at are arranged for.

That applies also to the third matter which I wanted once more to draw attention to, namely the cost-plus contract. I shall read to-morrow the remarks of the hon. member for Stormont, who dealt to an extent with that matter. When the minister last referred to this question-it has been up at least three times in this house before-he gave an interesting illustration of what happens in the manufacture of a rifle, when he explained bow a fixed amount was arrived at, in compensation, shall I say, to the manufacturer of that rifle, and then he explained how from time to time that arrangement is reconsidered and perhaps adjustments take place in the fixed amount. But what I have never been able to understand is how the government, how the minister applies that method to some of the very difficult contracts which have had to be undertaken. I remember that on one occasion I asked him whether that method also applied to the case of a contractor who was building a building or creating some wrork such as, for instance, building a camp. In my own neighbourhood there is a training camp. It was built by contract. It was extended by contract. Some months later, just across the main road, a brigade camp was built. It was extended. It was extended a second time. And I know perfectly well that the local public have it in for the government all the time because they say that all that was done by cost plus contract. Now the minister has explained that in few oases can he remember a cost-plus contract of the type that the public usually understand by the words "cost plus". He has described how the cost plus a fixed amount is the method usually employed. But what I cannot understand is how the case of a camp covering a pretty considerable quantity of territory, with a considerable number of divergent buildings, which is begun, and then increased, can come under that fixed fee.

JMr. Stirling.]

In one part of the brigade camp work ceased altogether for a matter of weeks, or it may have been months, in the late summer and fall. It was said that material was short. Great pressure was brought to bear where it was necessary, and just before a particularly severe winter came material was forthcoming and I believe that those camp buildings were finished. But in the work which you arrange with a contractor to do there are serious expenses incurred if delay takes place whether on account of lack of material or for any other cause; and I should like the minister to explain a great deal more fully than he yet has done, in an understandable way for the public, how these fees, these fixed amounts, are arrived at. In that case a contractor is given the contract and his head office is many miles, perhaps hundreds of miles, away. He has to bring machinery; he has to bring certain of his people and a good deal of equipment. Freight is incurred to bring ail that in. Is that something which goes into the fixed amount calculation? And what else is there that goes into the fixed amount calculation? Obviously, recompense to the contractor for his overhead and his services. That must all go in. But what a carping public is always ready to seize on, I think, is the opportunity, in calculating that fee, in calculating that fixed amount, to make a good deal of profit which it probably is not the intention of the government should be made.

At the time of the last victory loan it was commonly said all around that interior of British Columbia that it was in these camps that the money on construction was wasted, and I am persuaded that it had its effect on the contributions put up by the individuals in that loan. Whether that is the situation or not, it seems to me that a synopsis, perhaps, of what the hon. member for Stormont said to-day could well be produced and then spread all across Canada for the people to get into their understanding how these calculations are made.

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LIB

Lionel Chevrier (Parliamentary Assistant to the Minister of Munitions and Supply)

Liberal

Mr. CHEVRIER:

Will the hon, gentleman tell the committee the name of the camp?

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NAT
NAT

John Ritchie MacNicol

National Government

Mr. MacNICOL:

I should like to know something about how contracts are let for the construction of buildings, and whether, after a contract is let, anyone, associated with the contractor or otherwise, can take away materials which are shipped to the contract for the job on hand. For instance last night I was called on the telphone and told by a workman who appears to be working around

Public Accounts

the John Inglis Company in Toronto that a certain building has been erected there- whether that is so or not I do not know -and that this one and that one are carting away lumber, nails and other materials. Is that possible if the whole contract belongs to the government? It is quite possible, I suppose, if the government has let the contract and the contractor has the right to move anything he likes; but if all material belongs to the government, can anyone take it away easily? Has the department any knowledge or reports of material placed on jobs for the government being stolen or taken away without the right to take it away?

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LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

I have carefully noted the various questions that have been asked, and I would be very glad to reply to them at a convenient time. Perhaps I can bring the situation up to date at three o'clock to-morrow, at the beginning of the sitting, and then make a fresh start with other inquiries. I will, of course, reply at that time to my hon. friend's question. The answer depends entirely upon whether the contract has been placed as a lump-sum contract with a responsible contractor. In that case the payment for the completed structure is a lump-sum amount and the disposal of the material is a matter for the contractor. He undertakes to supply the material and the labour and furnish the building according to specifications, and the government undertakes to pay him a certain lump-sum amount for doing so. I am under the impression, without having reviewed the situation recently, that all the buildings of John Inglis have been lump-sum contracts, in which case the contractor is responsible to his own pocket-book for the material he puts on the job. I am not sure of that, but I will get the facts to-morrow and look into it. There are two or three types of contracts, and it is hard to discuss contracts generally without knowing the particular one about which information is requested. Most of the contracts are unit price contracts which are in effect lump-sum contracts where the contractor is responsible for furnishing his own material and carrying out the work on a measurement basis, and there are other contracts, the cost plus fixed fee-

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NAT

John Ritchie MacNicol

National Government

Mr. MacNICOL:

In the case of the cost-plus contract anyone stealing material-

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LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

-is stealing government

material.

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NAT
LIB
NAT

John Ritchie MacNicol

National Government

Mr. MacNICOL:

And if particulars are

given the minister of a theft of that kind-

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LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

We will prosecute immediately. Progress reported.

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At eleven o'clock the house adjourned, without question put, pursuant to standing order. Wednesday, June 16, 1943


June 15, 1943