National Defence Committee on Sept. 15th, 2010

[LGen J.P.A. Deschamps]

If I understand correctly, you want to know whether there will be a distribution of the information required to work on the planes, at the industry level. The answer is that the participants will take part in negotiations to determine the level at which that can be achieved, be it in terms of software or practical work on the aircraft. That is included in the support service that has to be worked out.

Certain technological aspects are top secret, and only the U.S. government will have that information. It is important to understand that access to such one-of-a-kind technology will be limited. And that is part of the edge that the U.S. government wants to maintain. But that does not mean we will not have access to the parts available to the partners. We are not the only ones in this situation; all the other partners are also in the same boat.

The issue surrounding the level of information distribution we can expect when it comes to access to cutting-edge technology will be discussed during negotiations involving the partners and the company. As mentioned, contracts already exist for aircraft structures and components. They are already in place. However, we definitely will not have access to certain levels of the software, which is highly advanced.

[The Vice-Chair, Liberal, Bryon Wilfert]

Merci, General.

We will now go to Mr. Harris for seven minutes.

[Jack Harris, NDP, St. John's East, NL]

Thank you, Chair.

Thank you, gentlemen and madam, for joining us today.

My first question is a technical one, I suppose. We've been throwing around different kinds of language here today, and it was suggested that the current government inherited a contract for the striker project from the Liberals, with some talk about cancellation fees, etc.

Is there in existence a contract to buy 65 fighter jets, and are there cancellation fees spelled out in this contract? If there are, what are they? Or are these just political words? Do we have a contract at this point? And if we don't, when will there be a contract?

[Dan Ross]

Thank you, Mr. Chair.

There is no contract in place today. The discussion, as the minister said this morning, is under the partnership MOU for production, sustainment, and follow-on development, which includes the terms and conditions through which a partnered country could acquire aircraft.

I can ask Mr. Slack to comment on the conditions in which one would withdraw and any financial penalties that a partner nation would have to take into consideration.

[Michael Slack, F-35 Project Manager, Director of Continental Materiel Cooperation, Department of National Defence]

Thank you, Mr. Ross.

The reality is that if we do withdraw from the current MOU, we will have to negotiate a withdrawal fee with all the other partners. What that fee would be would be determined by negotiations with the other partners, but there certainly would be a cost associated with the withdrawal from the MOU.

[Jack Harris, NDP, St. John's East, NL]

Can we have that MOU tabled? Is that something that's a public document?

[Michael Slack]

The MOU is available on a website. We can provide that website to the committee. We can also, if desired, actually table the MOU if needed. But it is available. It's been publicly available since 2006.

[Jack Harris, NDP, St. John's East, NL]

No, I'm not referring to the 2006 MOU, I'm—

[The Vice-Chair, Liberal, Bryon Wilfert]

Could I ask for the committee, then, in that case, that we have it tabled?

[Michael Slack]

Mr. Harris, that's the last MOU we did sign with the other partners. It was the production, sustainment, and follow-on development MOU, and it was signed in 2006.

[Jack Harris, NDP, St. John's East, NL]

So we're not talking about a new MOU. There's no new MOU since then? Is that what you're saying?

[Michael Slack]

Yes, sir, that's correct.

[Jack Harris, NDP, St. John's East, NL]

What's happened, then, since May 27, when the minister told us that there will be a competitive bidding process for the acquisition of new aircraft, so that we're now where we are? I mean, if this decision was made in 2002, what decision was made in July that was announced to the public that all of a sudden we're talking about cancellation costs and this type of thing?

Frankly, I'm confused, and I believe Canadians looking at this or hearing about this will be very confused. We thought we had a decision made in July. I thought the minister told us there was going to be a competitive bidding process on May 27, and now you're telling us there are cancellation fees going back to an agreement signed in 2006.

I think the public deserves a better explanation than that, frankly.

[The Vice-Chair, Liberal, Bryon Wilfert]

Mr. Ross.

[Dan Ross]

Thank you, Mr. Chair.

I think the minister more specifically committed to a fair, open, and transparent process. Government officials, as I said in my opening remarks, had been watching and doing an analysis of both the statement of requirements and what was available more broadly in the marketplace.

Clearly we had participated in a fair, open, and extremely rigorous process from 1997 to 2002, when the Boeing proposal was unsuccessful over the Lockheed Martin proposal.

Officials looked at that, and with our colleagues in Public Works asked, first, was that was sufficiently transparent? Was that sufficiently rigorous, fair, and open? As well, did it deliver the solution that here, in 2010, was the most appropriate solution in terms of cost, operational performance, and so on?

Obviously we were of the view that this was a rigorous and fair and transparent process.

[The Vice-Chair, Liberal, Bryon Wilfert]

Mr. Harris, two minutes.

[Jack Harris, NDP, St. John's East, NL]

What we're looking at, I guess, is a backward bidding process, by the sounds of it, putting it back nine or ten years.

Mr. Ross, I believe it was your predecessor, Mr. Williams, who said:

The only way to know for certain which aircraft can best meet Canadian requirements and at what cost, is to put out an open, fair and transparent statement of requirements and request for proposal, and conduct a rigorous evaluation of the bidders' responses. The bid that meets the requirements of the Canadian military with the lowest life-cycle costs would be selected.

That's the formula for a standard operating procedure for government procurement, particularly when you're looking at choices and military needs.

It seems to me that somehow or other you're being asked, and your officials are being asked, to shoehorn into a government decision something that doesn't even look like this because the military needs weren't the ones that came out first, in the last six months, and said, “Hey, here's what we expect, here’s what we require, and how do we best achieve that result?”

It seems to me that somebody has made a decision that they want this particular fifth-generation aircraft and that everything else is being tailored to suit that decision.

[Dan Ross]

Mr. Chair, obviously Mr. Williams is no longer accountable for defence procurement in the Department of National Defence. As Madam Ambrose outlined, when it's crystal clear and based on substantive analysis that there is only one choice that meets the operational requirement of fifth-generation capability that will be operationally viable for 35 years, that is entirely within the contracting regulations of the Government of Canada and is the appropriate way to proceed, clearly, when a competition would have lost time and industrial opportunities for Canadian industry and not resulted in any other outcome.

[The Vice-Chair, Liberal, Bryon Wilfert]

Thank you very much, Mr. Ross.

I will now go to Mr. Hawn for seven minutes.

I would inform members of the committee that lunch is now available at the back. I know there's no correlation between lunch and Mr. Hawn, but I just thought I would let you know that.

Mr. Hawn.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

I am in for lunch, not out to lunch. Thank you, Mr. Chair.

Thank you to the witnesses for coming.

I have a couple of questions for each of the witnesses.

General Deschamps, just following on with what Mr. Harris alluded to, can you confirm that the military needs have always been at the forefront in any determination of military equipment, whether the F-35 or anything else?

[LGen J.P.A. Deschamps]

Thank you, Mr. Hawn.

Mr. Chair, it's important to point out that my role, of course, and any service chief's role, is really not to get involved in the debate that we're hearing this morning. We're certainly aware of it and it is an important one, but our job is to look ahead and decide what government expects us to do, and therefore look at the best means of delivering on those expectations. That's what we've been doing in developing the statement of requirements that we then internally get sanctioned and approved through rigorous discussion and analysis, and at some point, if the government decides it wants to move ahead, it goes into a procurement process and would then be translated into a request for proposals, and that's where that would be expressed.

Certainly we've followed our process, as you would expect. The fact that now we're into a discussion on how the procurement will occur is certainly a valid one, but I think we've followed our process, as we would for any other program.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Thank you for that.

Mr. Chair, through you to General Deschamps, is it safe to say that in a program such as this you're looking at an airplane that will be good for the next 35 years, not the past 35 years?

[LGen J.P.A. Deschamps]

That's very correct. We have to remember that this airplane doesn't come into service, doesn't start doing its job, until 2020, and it has to go for at least 30 years, which is our typical expectation. That's 2050. That's an awfully long time, and I dare anybody to try to anticipate what's going to happen in 2050.

We have to build agility and flexibility into any program that we go after; otherwise, government will be limited in its options 10 years after we procure the airplane, or perhaps even earlier.

So that is the challenge of this process. As we look at future requirements, we have to be able to anticipate, without knowing the future, what agility government would expect in its military.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Thank you, General.

Again, Mr. Chair, through you to Colonel Burt, your experience is extensive: three tours on CF-18s, a CF-18 squadron commander. How long have you been involved as the next-generation fighter program manager? How long have you been involved in your current position?

[Colonel D.C. Burt, Director, New Generation Fighter Capability, Chief of the Air Staff, Department of National Defence]

I've been in this position since 2007, but I must add that I've been in Ottawa at headquarters for 12 years now, and it has been during that entire time as project director for CF-18 modernization and then as director of requirements that I have been looking at this process.