Government Operations Committee on June 3rd, 2022

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Mueller.

Mr. Chair, so as not to take up other members' time, I would like to take this opportunity to table my motion regarding the Kingfisher aircraft issue. This motion already has the unanimous consent of all parties. This is a procurement issue that we are having problems with.

I will quickly read the motion. If we have the consent of the committee, we can then proceed. The motion reads as follows:

That, in the context of its study of air defence procurement projects, the committee compel Public Services and Procurement Canada to provide the following information related to modification approvals and modifications, as well as design and specification changes and modifications that have been initiated to address technical and mechanical problems that have plagued the CC‑295 Kingfisher aircraft since their purchase: additional Costs, briefing notes, procurement schedules and deadlines for completing the work to make them operational; and that these documents be submitted to the committee no later than noon (Eastern Time) on Friday, July 22, 2022.

As I said, Mr. Chair, we've already talked about this motion. I think we can have unanimous consent.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Paul-Hus.

I understand the motion has just been distributed to all members, so they have it, and there has been agreement. That's what I'm hearing. As I look around the room, I'm seeing the nodding of heads, as well. I'll ask for a show of hands to see whether we're in agreement on this.

(Motion agreed to)

We will now go to Mr. Bains for four minutes.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. Chair.

Thank you to our witnesses for joining us today.

When there is a request for new military equipment, how can the RFP process help ensure the requirements are met while also ensuring a competitive price and economic benefits?

[Mike Mueller]

More engagement with industry, above and beyond, would be helpful for industry to respond appropriately to the request for proposals or the request for information. That goes back to what we've been calling for quite a while now, which is that long-term national strategy with respect to aerospace, specifically with respect to procurement. Part of the issue is that if the industry doesn't know where the government is going....

As I said before in my opening remarks, we have “Strong, Secure, Engaged”, which outlines some of the pieces there, but that overarching strategy looks at all the different components. In research and innovation, what are the new industrial capabilities and commercial mechanisms that we're trying to drive? How do we leverage the defence procurement with respect to innovation here in Canada?

There are a lot of opportunities to come together through some of those models to have more collaboration with industry, so that industry knows exactly what's coming up. Knowing what some of the priorities are and where that strategy is going would be very helpful.

Right now, if we look at what's happening, we had some great announcements earlier this week. I know CANSEC was on, which is a great show. At the high level, the situation we're now in is that money goes to the department, the department doesn't spend all of that money and it lapses. Our armed forces don't have the capacity to meet some of their demands. Industry can't respond and deliver on that. It's just a vicious cycle.

More collaboration and coordination with industry and working together with us on a high-level strategy would be very helpful. It would solve a lot of the problems you are uncovering as a committee.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Would you agree that a competitive process for defence procurement is more beneficial for the Canadian taxpayer?

[Mike Mueller]

I would agree.

Yes, competition is always good. More information is also good. Less complexity and more timeliness, predictability and certainty are absolutely needed. That's why we've been advocating for an aerospace strategy to really knit all of those things together.

To your point, absolutely, competition is good. Our industry in particular thrives on competition. We're a global industry and 80% of what we produce is export-related. We do need the support of the government through a strategy to really leverage these procurement pieces here.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

What challenges do your industry members face in Canadian military procurement bids?

[Mike Mueller]

I would say the timeliness is absolutely a challenge there. There's also a challenge with respect to the need for a strategy.

I keep coming back to that. How are we going to co-develop technologies to meet defence needs? How are we going to promote exports? How are we going to build the economy and the industry here in Canada with respect to aerospace?

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Do you have solutions or suggestions on how those things can be done?

[Mike Mueller]

Absolutely.

In the aerospace strategy we're calling for—the defence industrial strategy—we're looking at how to leverage advanced air mobility. That's one of the future pieces out there, so we need to have discussions on that. Another one is space policy and planning.

We also have workforce skills development pieces out there. One of the challenges right now that you're probably seeing across the board is on the labour market side of things.

Also, how do we encourage our small businesses to make sure that they're part of this process? Some of the recommendations we have with respect to small businesses is how to ensure small businesses can compete for procurement and then how to unbundle some of those procurements for them.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Mueller.

We will now go Ms. Vignola for four minutes..

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

Mr. Mueller, in my opinion, it would be important for there to be real teamwork between the government and the aerospace industry in Quebec and in Canada. I think you were going in the same direction in your speech and in your answers.

In your opinion, is the government consulting sufficiently with the Canadian and Quebec aerospace and defence industries on NORAD, on the choice of future fighters and on other aerospace needs that we have or will have?

[Mike Mueller]

Thank you for your question.

It's an absolutely great one.

There are some formal mechanisms where we do engage with government, but I think we need more. We definitely need more engagement on the upcoming defence policy review that the Minister of Defence has promised and that the recent budget has promised.

We are encouraged by the $8 billion of new funding in the budget, but we need more discussion. Where is that going? There is not a lot of clarity on that.

On NORAD modernization also, there are huge opportunities for our industry, but we need to have more collaboration, more discussion. Again, that goes back to the need for an overarching aerospace strategy.

We can take some lessons from Quebec. The provincial government has put forward an aerospace strategy, and they are very strategic in how they are approaching the industry. That's something we need to emulate at the national level also.

As I said before, all of our competitor nations have strategies, and they're executing against those strategies. We need to do the same here. That builds the capacity and the capability of industry, and allows industry to respond to the government's needs. I think, with the Ukraine situation right now, we see those requirements changing at a very rapid pace, and we need to make sure that industry has a clear understanding of how to contribute and respond to some of these pretty significant challenges that are coming up.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much.

Mr. Mueller, you mentioned strategy.

There is a significant labour shortage at the moment.

In the aerospace sector, are there particular areas where there is a labour shortage? If so, does the industry have a strategy to meet its needs? How can the Government of Canada assist the industry in this regard?

[Mike Mueller]

Thank you for your question.

Again, it is another great one.

The number one challenge I keep hearing from industry right across the country is labour market concerns. I'm sure you're hearing that from a lot of other different industries also, but it's something we're seized with. We're taking a look at how we define the situation. How can we work together with government with respect to the pipeline of skills that are out there?

Aerospace has very attractive working conditions. I think it has 30% higher wages within the industry, so there's a lot of opportunity there.

We also need to do a better job as an industry in promoting the opportunities in our industry, and we are working together with ESDC on a couple of initiatives that we think would be very helpful for the industry. Absolutely, it is a huge challenge across the board to find skilled workers, train skilled workers, and bring skilled workers in internationally also to help contribute.

There is a huge opportunity there with the Ukrainian population coming into Canada. There is a large industry in Ukraine, so we're also looking to work with the government on those things.

Again, more collaboration with the government, more discussions are absolutely critical so that we can respond to some of these things.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

We'll now go to Mr. Johns for four minutes.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you so much for being here and for representing so many great businesses in Canada.

We've obviously been hearing a lot about the opportunities for the civilian sector to work with the military. In this connection, nothing is more apparent to me than tackling climate change. We saw how Defence was called upon to help in response to last year's raging forest fires, flooding and other types of natural disasters. In fact, in my home province of B.C., over 350 military personnel were sent to the interior to fight forest fires and to support private sector contractors.

Do you believe that it's really important that the military work with the private sector, outside of typical defence needs that you would imagine, on the climate emergencies?

I have a great company that you're probably very well informed about, Coulson Aviation. They're working in Argentina, Chile, Bolivia and the United States of America. They're working with their C-130s and CH-47s and Black Hawks to support aerial firefighting capacities, but they're not doing anything here in Canada, and Canada hasn't taken a lead in forest firefighting.

Do you see opportunities that could be there to help deal with natural disasters and the warming climate that we're facing?

[Mike Mueller]

I'm originally from British Columbia too, so a lot of my family was caught in some of those floods, and it was the air access that actually got some of them out of the situations they were in, so it's absolutely critical. As we see with severe weather events, it's pretty important to have the capability here in Canada on these items.

With respect to climate change and wildfires, there is a whole host of opportunities out there. We were also encouraged by the budget. There's some funding for wildfire mitigation and also detection, so we're working with the government on some of those pieces.

One of the things that we're really excited about is—I think it was in budget 2021—the notion of a Canadian DARPA model. It's something that we are talking to the government about. We really need an agency like this because you're talking about the.... You have the civil side and also the defence side, and we need an agency like this to focus on sectors like aerospace in which Canada has a competitive advantage. You mentioned wildfire mitigation, and Coulson is an example. Conair is another. There are a whole host of companies that have a real skill set here in Canada.

[Gord Johns, NDP, Courtenay—Alberni, BC]

I was going to ask you about the made-in-Canada story. The time is running out here, and I only have a minute left, which I want to give to you.

Coulson is not doing business here in Canada, primarily. They're doing it all over the world, where they're working with private sector companies. You see this all the time: Canadian companies working abroad, but they're not getting procured here in Canada to solve some of our problems. We know that putting out a fire is really important to climate mitigation.

Can you talk about that and how important that budget money is—and I'm very excited about it as well—to get out to those companies, and the barriers that private sector companies face when they try to do business with Canada?

[Mike Mueller]

We looked at some of the barriers a few years ago in our “Vision 2025” document. We really talked about how to buy for the benefit of Canadians. That was really the focus that we took a look at and is what we really advocate for with the government. We also took a look at procurement and how you can support Canadian workers, Canadian capability and a whole host of pieces like this.

Again, I would say that collaboration and having more discussions with industry is always helpful. I've had some companies talk to me about how they have more engagement with foreign governments than they do with our own government on some of these things.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Mueller.

Now, we will go into our second round, and each party will get two minutes. That will allow us to finish at three o'clock, which Mr. Mueller has to leave. That my understanding, so hopefully we'll do that.

We'll start with Mr. McCauley for two minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks, Mr. Chair.

I apologize, Mr. Mueller. I'm going to table my motion immediately so that we don't take up the committee's time. It's one we presented on Wednesday:

That the committee requests that the Office of the Parliamentary Budget Officer undertake a costing analysis of the active life cycle costs for the Canadian Surface Combatants, including decommissioning and disposal, and that the report containing this analysis be presented to the Chair of the committee by Thursday, October 27, 2022.

I've spoken to the PBO, and they're fine with that date. It works with their planning. If we can just get it approved and move forward, I'll pass over my time.

[The Chair, Conservative, Robert Gordon Kitchen]

I'm looking around the room. Is there any debate? I'm not seeing any, so I will call for a vote.

(Motion agreed to)

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks.

I'll yield any of my time left to the others.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. McCauley.

We'll now go to Mr. Housefather for two minutes.