February 13, 1939 (18th Parliament, 4th Session)

CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

My friend says that, but
I cannot find it. I based my statement on the contract, which says that it is ten per cent. I am going to deal with the matter on the basis of ten per cent. There may have been someone willing to take it for five per cent. There are outstanding men in this country who are patriotic and loyal enough to be willing to come forward and get together an organization to make these munitions without profit at all. That is what should have been done.
In connection with the interdepartmental committee the commissioner states-I do not intend to read the whole report-that they were given much misinformation with regard to the British government's preference for Hahn. He said also that they were overruled with regard to competitive bids and that their efforts were rendered futile by the attitude taken by the Department of National Defence. I ask, why the hurry? Under this contract no guns were to be delivered until the lapse of nearly three years, at which time some 500 odd guns were to be delivered. So far as the Canadian contract was concerned, they were within its terms if within two or three days before the end of three years they were able to make this delivery of guns. That is my understanding of the contract. Since it was to take three years to make delivery, why the hurry?
I pointed out also that the placing of the defence purchasing board recommended by the commissioner under the jurisdiction of the Minister of Finance rather than under the Department of National Defence was a complete condemnation.
Now I intend to touch upon a few points in the contract itself. I did not deal with these the other day. I had read the contract at that time, but since then I have read it again two -or three times. I am going to point out a few items in the contract which seem rather extraordinary to me. So far as my experience goes, and I have had some experience as a minister in awarding large contracts, there is nearly always a clause in these contracts which forces the contractor to give something in the way of bond or marked cheque, sometimes for twenty-five per cent of the value of the contract, which is retained until the contract is practically completed. There is nothing of that sort in this contract. The financial solvency of the contractor is not assured so far as the government is concerned.
Then the licence is for ten years, and may be renewable for further periods of ten years. That makes it appear as though this is to be a continuing business which will go on for a very long time. The hon. member for Kootenay East (Mr. Stevens) referred the other day to the fact that the contract allows the costs of preliminary investigation. I venture to say that there is not a day in the year with the exception of Sunday on which there are not business men in the city of Ottawa looking for government business. Never in my life have I heard of a contractor or business man being paid his preliminary expenses for coming down here to look for a contract from the government.
The minister says the profit is not ten per cent, but 7J per cent. I do not quite follow him, but at any rate a percentage is allowed on everything conceivable. To my mind, the provisions are far too wide. For example, under the contract he gets ten per cent on the cost of tools, dies, jigs and gauges purchased by the government. Can anyone tell me what justification there is for that? One of my hon. friends has just placed in my hand a clipping from the Globe and Mail of January 27, to the effect that contracts for a little more than $64,000 had been let in connection with machinery for this work. This is not a criticism, it is merely a statement of fact. It reads:
Ottawa, Jan. 27.-Six Canadian firms have been awarded contracts to supply machinery required in connection with the manufacture of Bren machine guns, national defence department announced to-night.
Bren Gun-Mr. Manion

The total figure given is $64,776, and this amount is to be paid by the Department of National Defence. Can anyone tell me why Major Hahn should get ten per cent of the cost of machinery purchased by the department? Yet there is a clause in the contract stating that. Surely there is no justification for it, He gets his percentage, whether it is 7J per cent or 10 per cent I am not arguing at the moment, on salaries, on wages, on travelling expenses, on maintenance and repair of plant, on insurance, on depreciation, on legal fees and on the interest on bank loans in some cases, when made for additions to plant. Major Hahn is to get his percentage on all these items. That is covered by the clause to which I have just referred. The government buys the machinery for the plant and he gets his ten per cent. Then in case he is not sufficiently covered, there is a blanket clause to cover a lot of other things. Perhaps I should read this clause, which appears on page 10 of the contract.

Topic:   BREN MACHINE GUN CONTRACT
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