National Defence Committee on Feb. 15th, 2007

[LGen J. S. Lucas]

What kind of aircraft are they?

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

In Bagotville, you currently have two old aircraft parked there, but I'm just telling you that for your information.

You mentioned sharing responsibility between National Defence, that sets requirements, and Public Works, that negotiates and puts out tenders.

When you're determining equivalences, who has the last word? Does National Defence or Public Works decide what the final choice will be when two pieces of equipment are deemed to be equivalent or when two same pieces of equipment are deemed to be equivalent?

[The Chair, Conservative, Rick Casson]

Give just a short response, please, sir.

[Terry Williston]

If you're talking about, for example, the statements of capabilities that may have been received in response to an ACAN--because an ACAN does allow other suppliers to put in a statement of capabilities--the Department of Public Works and Government Services manages that challenge process and determines whether that statement of capabilities will be accepted or denied.

We certainly include our colleagues in National Defence as part of the evaluation process, but the final determination is made by Public Works and Government Services Canada.

[The Chair, Conservative, Rick Casson]

Thank you, sir, and thank you, Mr. Bouchard.

We will now go to Ms. Gallant, and then back to Mr. McGuire, who will be followed by Mr. Hiebert and then Mr. Coderre.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman.

My question is directed to Colonel Burt. Earlier you stated that the SOR is a process of refinement and mentioned that an e-mail from one juncture in time might not relate to the same issue as an e-mail from another point in time, so it would seem that the news article leading to the false allegations about political interference had incorrectly pieced together the ATIs.

Just to clarify the rationale behind the change in the SORs, I want to go into a little bit of specifics so that we can set this issue to rest once and for all. Since the range and the payload are key components of the strategic lift capabilities, how did the Canadian Forces determine the distance of 6,482 kilometres or 3,500 nautical miles and 39,000 kilograms--85,980 pounds--in order to support domestic as well as international operations?

[Col D. C. Burt]

Thank you for that question.

As the Chief of the Air Staff has already stated here this morning, we looked at a representative distance, understanding that Canada has, between it and most of our future operations, oceans. We took the representative distance from Trenton to somewhere in Europe--in this case the specific number is from Trenton to Ramstein--as being an appropriate minimum acceptable distance. To determine the 39 metric tonnes, that is the weight of two combat-ready LAV III vehicles; we considered that as a representative load, and the minimum acceptable representative load.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Therefore it was correct to say that an aircraft that's not capable of flying these distances with these payloads would be inefficient, and that it would be required to make fuel stops.

[Col D. C. Burt]

Efficiency is a key element here.

We use three basic principles. One is an overriding basic principle on each and every operational requirement we build, and that is to get the best value for Canadians and the Canadian Forces. The other two basic principles that applied in the case of the strategic airlift project were that the capability we received must significantly exceed the capability of the current tactical airlifter, the CC-130 Hercules, and it must exceed the capability of the current strategic airlifter, the CC-150 Polaris. After applying those basic principles and seeking best value, we brought in the efficiency element, which drove the reasonable determination that carrying two LAV IIIs was the appropriate number.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you.

That's all, Mr. Chairman.

[The Chair, Conservative, Rick Casson]

Thank you.

Mr. McGuire is next, and then Mr. Hiebert.

[Joe McGuire, Liberal, Egmont, PE]

Thank you, Mr. Chairman.

Good morning, everyone.

As you probably read in the transcripts from our meeting two days ago, the industry basically said that the whole system of procurement is dysfunctional, whether it's at the level of DND, the level of the bureaucracy, or at the political level. There was a pretty blanket condemnation of the whole system.

I guess they were referring to the whole process of when you get money to buy equipment--and God knows, you need new equipment--everything sort of gets derailed, we end up with contracts, the equipment doesn't work, or we give 20 years of maintenance on the C-17s to Boeing, or whatever. We are charged with making recommendations on how to improve the procurement system.

I'd like to know from both Public Works and DND whether you agree with the industry that the system is dysfunctional and taxpayers are not getting credit for their money. What do you recommend to us to improve the system--in three minutes or less?

[LGen J. S. Lucas]

I have to say I am encouraged by some of the things I've seen. Certainly we have been guilty in the past of over-specifying. Very thick documents had to be produced that essentially laid out every bolt and widget and the requirements for each. It's a very good first step to go back to high-level mandatory requirements right now, and go out to industry and offer them the opportunity to meet these, recognizing that for the most part they're going to be able to meet most of those sorts of subordinate activities as well.

There are obviously an awful lot more in areas that are really outside my area of expertise, but certainly as a first step toward creating a process that delivers what we need in a timely and efficient manner, while respecting the needs of the taxpayers of Canada, I am encouraged by what I see.

[Joe McGuire, Liberal, Egmont, PE]

Does Public Works agree with the industry that things could be vastly improved?

[Terry Williston]

I didn't understand that as the message that came from the industry associations generally, but there is always room for improvement in any process, including the procurement process. As was indicated by Mr. Ross last week and by the general here today, moving to high-level performance specifications and the acceptance of off-the-shelf commercially available types of supplies and materials is showing itself already to be a vast improvement in the way we're doing business.

We're potentially going to see the arrival of a C-17 aircraft some 12 to 14 months after it was initially announced by the government. I think delivery of a high-value piece of equipment like a C-17 is almost unprecedented in our history. So I think our procurement process is very much on the right track. We deal openly and effectively with the industry associations and companies individually. We deal with their issues as they come up.

I also understand they made specific reference to the joint support ship project and clearly indicated the excellent interaction they had with that project team through its website, sharing of documentation, and what have you.

I firmly believe we're doing the right thing and getting the best value for the taxpayers of Canada. We have a fair, open, and transparent procurement process that is quickly giving us the results we're looking for.

[Joe McGuire, Liberal, Egmont, PE]

Do you agree that a 20-year contract for maintenance is good for this country?

[Terry Williston]

I believe that a single point of accountability and a long-term maintenance arrangement generally for most fleets of equipment is a desired end state.

Specifically with respect to the C-17s, given the fact that we'll have four airplanes out of a worldwide total approaching 200, it will certainly provide good value to us. As I previously indicated, a significant amount of that work will happen within CFB Trenton, so we are going to get a large share of that maintenance activity back here in Canada.

[Joe McGuire, Liberal, Egmont, PE]

So with any future contracts that are awarded like this, what does our aerospace industry have to look forward to if they get just a minimum--

[Terry Williston]

For the other fleets of aircraft, we're certainly looking for that in-service support to be provided by Canadian suppliers for these long-term in-service support contracts. And I think that gives the supply community a long-term, sustained future without the boom and bust that can happen when having short-term contracts and without the costs associated with renewing contracts on three- or five-year cycles.

[The Chair, Conservative, Rick Casson]

Thank you, Mr. McGuire.

We'll go over to Mr. Hiebert and then back to Mr. Coderre.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Thank you, Mr. Chair.

I'm not sure which meeting Mr. McGuire was at when he heard from industry, but I certainly did not hear anybody talk about there being a dysfunction in the procurement process. Perhaps he was referring to that period of time when his government was responsible for procurement, but I think it is a mischaracterization.

We did hear comments from industry at that point suggesting that there is room for improvement. And we talked about a capabilities-based approach in seeking key investment in key technologies, which our government is doing, which I thought was quite encouraging.

I would like to give a little bit more time to Colonel Burt. I know he has been rushed in some of his previous answers, in terms of what transpired over that series of challenges that was going on within the department. I thought I'd give you a few minutes to elaborate on what happened during the period of time in question.

[Col D. C. Burt]

Thank you for that opportunity, and I do apologize for it being a long response, but there is an amount of it.

What I was getting to there is that there is a period, in defining the requirements, when the requirements are in draft mode. And until the point when I actually bring the document to the Chief of the Air Staff for his signature and advance it through the department and to the minister, we have a period of refinement.

There are a number of things that we learn through that process. In this particular case, what was interesting for me, personally, through the period of May-June of last year, was that my section head, who was developing this requirement, fortunately got a posting to a flying job and he had to go relearn how to fly.

So I was dealing with a couple of majors in his section. I became much more intimately familiar with the statement of operational requirements, and I was asking some very pointed questions and was seeking some detailed answers.

In the case of the e-mails that have been referred to in the media, there are a couple of issues that are very important, and one has to do with accuracy. Regarding the one quote, which has been in the media, it took me some time to find that e-mail, because I was looking through my text e-mails. Then I realized that this was probably not from me; it was probably from somebody who wrote to me. And indeed, that's where I found the e-mail. It was from one of my staff who was giving me some of the details. And as I was describing earlier, the discussion was about track and wheel vehicles and whether we should be including the ADATS, which is the air defence anti-tank system, in our weight consideration.

The banter that has been referred to by other members around the table had to do with whether we would include the heavier track vehicles, what that could do to change the requirements, and whether that was an appropriate thing to do in terms of what we were dealing with at that time. We came to the conclusion that because the ADATS is actually of less weight than the LAV III, we would not change the wording of the high-level mandatory capabilities to include track vehicles. They would just be wheeled.

At some point later in the process, because of my personal responsibility, now, to be reviewing the SOR, I asked some specific questions about the guiding principles, specifically the guiding principle that had to do with being better than the current Airbus A-310, our Polaris aircraft. I asked how much weight that can carry over a distance of 3,500 nautical miles, and the answer was 2,800 metric tonnes. I said, well, we now have an inconsistency between that guiding principle and the high-level mandatory capability that states 19.5 metric tonnes.

We studied for a period of time what options we had to deal with that inconsistency, and we came to the conclusion that in order to get the best value for Canadians--the efficiencies I referred to earlier--and in order to provide the best long-term capability, the best representative load would be two LAV IIIs, which would leave our guiding principle as it stood. We would get something better than the current Polaris capability and provide better efficiencies and better value for Canadians and the Canadian Forces.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

So are you saying that the quote, which was attributed to you in the paper, was actually not your words at all?

[Col D. C. Burt]

In the May 1 e-mail, that is correct.

In the May 14 e-mail, which is referred to in the newspaper, this was after the last iteration that I just described, where I had found this inconsistency. My staff and I had discussed what the options would be. We were preparing a document in Microsoft Word to illustrate the details of this, so that I could go and talk to my boss, the director general of air force development. I was asking my staff for the latest iteration of that Word document, so I could refer to it in the discussion with my boss.

[The Chair, Conservative, Rick Casson]

Thank you very much.

Moving over to Mr. Coderre, who will finish this round, and then we'll start up....