National Defence Committee on Sept. 15th, 2010

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Thank you very much.

There was a point made about not knowing what the aircraft support is going to cost us over the lifetime of the aircraft. But we don't know what the CF-18 maintenance has cost us over the lifetime of the aircraft and we won't know that until it's finished. Could you comment? I'm talking about the life-cycle cost of the airplane. We won't know the cost until we're finished operating whatever airplane it is, and that includes the CF-18 today.

The CF-18 maintenance support contract was not signed until four years after we started flying that airplane. This is absolutely nothing new. This is a standard procedure: taking advice from the ministry based on our previous experience with other airplanes and developing it as we go along.

[Peter MacKay, Conservative, Central Nova, NS]

You're absolutely right, Mr. Hawn. It is in fact a calculation that will begin when we start to take receipt of the aircraft, so the maintenance costs will then be calculated in the future. As you know, we're still paying for the maintenance and the upkeep and the ongoing operation of the CF-18s.

So the estimated costs at this point, based on the number of planes we'll be maintaining, where they will be based, the necessary maintenance, and perhaps future investments in such things as infrastructure at Bagotville, Cold Lake, the training cycle, the number of simulators, the ongoing maintenance.... All of those costs indicate clearly, based on the department's calculations, that they will be in the order of magnitude of $250 million annually. When you calculate the costs of the CF-18 in 1980 dollars, it's remarkable how comparable these costs of maintenance and sustainability are. They're in the same order of magnitude today in our calculations as they would be for the CF-18s.

As I mentioned earlier, Mr. Hawn, that price could come down based on our access to the global supply chain and the number of future countries that may purchase the same F-35 Lightning aircraft.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Thank you for that.

Mr. Chair, through you to Minister Clement, there is a misunderstanding of the IRB process. There is a misunderstanding of the global supply chain. There is the suggestion that if some of the maintenance is being carried out by companies outside of Canada, we somehow will be at their mercy.

Is it also not true to say that when a Canadian company wins a contract to provide a component for the F-35, that will bring with it the requirement to maintain that piece of gear, which will, in fact, make the Australians and the Brits and the Americans and whoever else dependent on us for the same kind of support? To me, this makes the alliance, the consortium, a pretty common-sense way to go in terms of protecting all of us who have the common goal of protecting sovereignty, safety, and security around the world.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

That's right. People are talking about how unique the contracts are, but this airplane is unique. It's the first one designed this way. Canada helped design it. We've been part of the process from the very beginning. So yes, we'd like to help build through some of the component parts, and we will be doing that. There are 60 companies that have already signed contracts.

[The Vice-Chair, Liberal, Bryon Wilfert]

Thank you, Minister.

Ladies and gentlemen, we're going to the second round. It will be five minutes a round. We will start with Mr. LeBlanc.

Mr. LeBlanc, by the way, I've seen you play hockey, and “drag” rather than “rag” is probably appropriate.

[Voices]

Oh, oh!

[An hon. member]

That's friendly fire.

[The Vice-Chair, Liberal, Bryon Wilfert]

That's friendly fire, yes.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

That's right; it's not even stealth, is it, Peter?

[Voices]

Oh, oh!

[The Vice-Chair, Liberal, Bryon Wilfert]

Go ahead, Mr. LeBlanc. You have five minutes.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thank you, Mr. Chair.

Perhaps I could pick up on some earlier questions to Madam Ambrose around the whole notion that there was in fact a competitive process held. My understanding—and she can correct me if I'm wrong—is that the United States Air Force had a competitive process a decade ago to look at its needs as the United States Air Force--its future needs.

The minister talked about a U.S.-led process. That would imply that other countries participated in that competitive process. Perhaps you could tell us how the Canadian armed forces or the Canadian air force or your department participated in Washington, D.C., in a competitive process a decade ago to acquire these aircraft. Specifically, how would that competitive process, held in the United States, bring value to Canadian taxpayers? And what role directly did the Government of Canada have over the last decade in this allegedly competitive process?

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

Well, perhaps the honourable member could tell me that, since it was his government that was in power at the time when this MOU was signed. And I thank him for that, because I think it was the right decision at the time. Being part of this memorandum of understanding with the joint strike fighter program has offered unprecedented benefits to Canadian companies over the last decade.

You're correct; if you look at the history of the JSF program, you'll see that Canada entered in 1997. There was a lengthy and rigorous and competitive process that took place. It was U.S.-led, but all allies were partners to that. We participated in the process and all partner nations, including Canada, were a part of this, which led, as you know, to the selection of Lockheed Martin as the partner for the JSF manufacture.

The important thing to recognize is that because we are part of the memorandum of understanding for the joint strike fighter program, we have an opportunity to procure through the MOU. If perhaps your party were elected and you decided to turn your back on this MOU or pull us out of the MOU—or if you decided to hold another competition, which would signal that we would be out of the MOU—it would obviously impact Canadian industry because we would no longer have priority access to the global supply chain, which we do today thanks to our participation in the MOU. We would lose our spot in the production line, so we would incur delays in the procurement process and we would also pay more for these planes.

Again, your government was the one that signed the original MOU and participated in this program, and I thank you for that because this has been a historic opportunity for Canadian companies to date. We've seen almost $800 million in benefits up to now, and we expect billions of dollars more in benefits to Canadian industries. At the end of the day, this is about jobs.

Yesterday I was at Héroux-Devtek. They have 1,500 employees. They have two plants in Ontario and three plants in Quebec, and they make parts on the F-35. Every F-35 that's sold to partner nations around the world means more job creation just at that one company, and we know of 90 companies like it across the country.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thank you, Mr. Chair.

Minister, you've referred to different MOUs that were signed as this program evolved. I think you're correct in saying that there has been a series of different MOUs signed by previous governments and your own government.

Is it not correct, however, that in the most recent MOU, or the 2006 MOU that was signed by your government, in article 3.2 it makes it very clear that the actual procurement of a joint strike fighter will be subject to the participants' national laws and regulations and outcome with respect to the national procurement and decision-making process?

What I'm saying is that I don't think it's as simple as you say, that if we decided to have a competitive process we would somehow be breaking the MOU and getting out of the MOU, and therefore be unable to benefit from the investments that previous governments, and your own, have made, I think with considerable value. Why could we not participate through the MOU in a more open and transparent process, where we might learn, for example, the statement of requirements that you've referred to this morning?

[The Vice-Chair, Liberal, Bryon Wilfert]

Ten seconds, Minister.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

We have engaged in an open and transparent process. As you know, two years ago the Canada First defence strategy committed us to purchasing a next-generation fighter. Since then, DND and Public Works have done the research to confirm that there is only one next-generation fighter available for purchase by Canada. So to suggest that we....

I repeat, the procurement process does not drive the requirements, the requirements drive the procurement process; that's my job. At the end of the day, Public Works does not hold competitions when we know full well that there's only one product available to meet the client's needs. To run a competition for the sake of running a competition, when we have a clear statement of requirements and we know we've done the research that there is only one aircraft that fulfills those requirements, would be a waste of time and resources.

[The Vice-Chair, Liberal, Bryon Wilfert]

On a point of order, yes.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

On a point of order, Mr. Chair, the minister has referred to research and a statement of requirements. I'm wondering if you might ask her to...because surely they could redact out the copyright information that the Minister of Defence referred to. I'm surprised to find out that those wouldn't have been written by the Canadian air force officials.

Perhaps you could ask the ministers to table what they can around research and statement of requirements, without of course violating copyright.

[The Vice-Chair, Liberal, Bryon Wilfert]

Certainly we can do that. At 1:45, when we are dealing with the motion on the statement of requirements, we could request and send for documents through a motion to the various ministers. It'd be up to them to respond, and depending on what the response is, we'd report to the House. I don't want to get bogged down in that until 1:45, but we can certainly look at that, Mr. LeBlanc. Thank you.

Mr. Hawn.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

I have just a very quick point. I think we're going to hear from some witnesses later on today who will provide insight into some of that research that went on. It was incredibly extensive.

[The Vice-Chair, Liberal, Bryon Wilfert]

We may, and if it's not satisfied, we can take that course.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Absolutely.

[The Vice-Chair, Liberal, Bryon Wilfert]

We now go to the Conservatives for five minutes.

Mr. Payne, welcome.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Mr. Chair.

I'd like to thank the witnesses for appearing today. If I have any time left, I will share it with Mr. Hawn.

First of all, to Minister MacKay through the chair, could you tell us or do you have an idea of how long it takes to actually build one of these aircraft? You talked about not being able to get it off the shelf, and the need to plan ahead.

[Peter MacKay, Conservative, Central Nova, NS]

Thank you for the question. Yes, clearly this aircraft has been in the conceptual design phase since the mid to early nineties. It obviously will come online for full production sometime in the next number of years, and we're scheduled to take possession of said aircraft around 2016.

You can see, because of the extensive and high-tech nature of the aircraft, because of the on-board equipment, because of the stealth nature of the aircraft, which is unique to its abilities.... As has been mentioned now a number of times at this committee, it's the only--and I stress, the only--fifth-generation aircraft on the market. So the production has been lengthy and extensive.

Again, this has benefited Canadian aerospace to be part of that development. As my colleague Mr. Clement has said, Canada has been part of that. Canadian aerospace has been involved since 1997.

To that end, these aircraft quite simply are the best on the planet, and we want the best aircraft for our Canadian Forces. We expect a lot of them. They have many demands on them, as does their maintenance crew. We believe they deserve this level of support and they deserve that type of aircraft so they can complete their mission safely and come home safe to their families, with the job done.