Thank you, Madam Chair. It's a pleasure to be here this morning to provide information to the committee and to answer your questions.
The Canadian government's past approach to defence procurement was not always effective in either providing the Canadian Forces with the right equipment or ensuring the best economic benefits for the country. The policy and planning environment was uncertain, with sporadic injections of funding for major acquisitions. We had a procurement process in which industry was often told what to do, when to do it, and how to do it, with little warning or consultation.
We produced extremely detailed specifications leading to unique Canadian solutions that often became unaffordable to maintain and had little potential for export sales. Multiple contracts were the norm, with no single entity accountable for overall system performance. That often left the Canadian Forces to struggle with making the end product work.
Industry was frustrated, but they had little opportunity to innovate and the continuous competition/re-tendering cycle made effective investment planning difficult. Similarly, the Industrial and Regional Benefits requirements were often transactional, based on individual contracts, and left little scope for long-term strategic investments that could generate self-sustaining industrial capabilities. In fact, certain project-generated industrial capabilities became drains on scarce financial resources rather than strengthening our industrial infrastructure. In other words, we often created welfare industries.
As a consequence, the government was not effectively leveraging defence investments to achieve long-term economic benefit for Canada. DND often had critical equipment delivered late, and industry worked in a feast-or-famine environment that did little to encourage long-term investment or innovation.
Over the past three years, DND have been working both internally and with our partner departments to reshape the way we do defence procurement, and rebuild our capacity to deliver a growing program of investment in defence capabilities.
We are creating a new procurement environment that emphasizes best value solutions. Wherever possible, we are procuring to high-level performance standards, not detailed technical specifications, in order to encourage more innovative solutions. Off-the-shelf systems are now carefully considered wherever possible.
We are working to ensure that we can pull through government-sponsored research and development successes to acquisition of capability. DND is also moving towards long-term, domestic-based, in-service support contracts in conjunction with system acquisitions, with a single entity being accountable for system performance and availability. These approaches are showing results by more consistently delivering the right capabilities for the Canadian Forces, as well as providing Canadian industry increased opportunity to make and recoup long-term investments and engage in continuous development.
National Defence is also improving its internal processes for determining priorities for investments, including the introduction of more holistic capability-based planning models. As well, after many years of restraint we are rebuilding a strong, professional defence acquisitions team and making significant new investments in the professional development and training of our project management people.
Recent policy announcements by the government have given a significant boost to these efforts. Advantage Canada expresses the goal of linking defence spending to economic sustainability and growth. The “Canada First” defence strategy brings stability to our defence investment plans, and recent budgets have provided the predictable funding required to implement them. Also, the government's adoption of accrual accounting provides investment cash at the right time and gives a clear indication of equipment life cycles and replacement schedules.
While getting the right capabilities for the CF continues to be our primary goal, the conditions are being set to create a new relationship with our defence industry, which will also stimulate investment in research and development, and improve international competitiveness. We are redefining and strengthening our relationship with industry, emphasizing relations that are fair, open and transparent. We will leverage fora such as DND's Defence Industry Advisory Committee to improve mutual understanding and awareness of our goals.
We're also investing in the people dimension through such initiatives as Advantage Canada's promotion of higher-level skill sets in industry and a focused national defence program to enhance project management and procurement skills. In addition, we are exploring increased use of government-industry exchanges.
We believe the payoffs from these initiatives are significant. Having a coherent framework for government science and technology investments will lower the risks and costs in meeting our military requirements and give us a better military capability. At the same time, the economic development goals of the government will be furthered by better positioning industry for success in the international marketplace. By strengthening industry's technology and competitiveness, it will give greater opportunity for long-term involvement in the supply chains of the large global original equipment manufacturers.
The end result will be a much better alignment between our defence requirements, our industrial capabilities and the socio-economic goals of the Government of Canada.
It's within this wider context of fundamental defence procurement reform that the government received and has largely embraced the recent report of the Standing Committee on National Defence. The committee recommendations in many cases reinforce and validate the direction in which we are headed, and the report as a whole has provided us with useful insights as we continue our reforms. We look forward to further engagement with Parliament on this important issue.
I would be happy to respond to your questions after my colleagues have given their remarks.
Thank you.
