Government Operations Committee on Oct. 17th, 2023

[The Chair, Conservative, Kelly McCauley]

I call this meeting to order.

Welcome to meeting number 78 of the House of Commons Standing Committee on Government Operations and Estimates, also known as “the mighty OGGO, the only committee that matters”.

Pursuant to the motion adopted by the committee on Thursday, September 28, 2023, the committee is meeting on the study of the replacement of the CP-140 Aurora by the Boeing P-8 Poseidon.

Just a reminder, as always, colleagues, please do not to put earpieces next to the microphone, as it causes feedback and potential injury.

I understand we have opening statements today.

We have Mr. Bill Matthews back with us again, and Mr. Page, and then Ms. Gregory. We'll go in that order.

Mr. Matthews, welcome back. The floor is yours for five minutes.

[Bill Matthews, Deputy Minister, Department of National Defence]

Thank you, Mr. Chair. I will try to be much quicker than five minutes.

Thank you for the invitation. I'm here with my colleague Nancy Tremblay from our ADM materiel group, as well as with colleagues from PSPC and ISED, whom you'll hear from momentarily, to discuss the Canadian multi-mission aircraft project, which will replace the CP-140 and will equip the Canadian Armed Forces with a long-range crewed maritime patrol aircraft that will specialize in anti-submarine and anti-surface warfare. This procurement will further help ensure the Canadian Armed Forces are world class in intelligence, surveillance and reconnaissance capabilities, or ISR capabilities.

Given that we're a little late in starting, Mr. Chair, may I just wrap it up there and say I look forward to your questions?

I will pass it over to Mr. Page.

[The Chair, Conservative, Kelly McCauley]

Thank you, sir.

Go ahead, Mr. Page.

[Simon Page, Assistant Deputy Minister, Defence and Marine Procurement, Department of Public Works and Government Services]

Good afternoon.

I'm afraid I'm going to be a little longer than Mr. Matthews. I'll go through my remarks as presented.

Good afternoon. My name is Simon Page. I am the assistant deputy minister of the defence and marine procurement branch at Public Services and Procurement Canada. Thank you for inviting me to the committee meeting today.

Public Services and Procurement Canada supports federal departments and agencies in their daily operations by serving as their central purchasing agent, common service provider, linguistic authority, and a variety of other roles. My organization is responsible for the acquisition of defence and marine goods and services on behalf of the Canadian Armed Forces and the Department of National Defence, the Canadian Coast Guard, and other federal clients. We work with client departments and industry partners to ensure that our members have the equipment they need to carry out their important work. We also work closely with our colleagues at Innovation, Science and Economic Development Canada to leverage these procurements to deliver economic benefits for Canada and for Canadians.

Defence procurement is shaped by the cornerstone policies of “Strong, Secure, Engaged”, Canada's defence policy, which came out in 2017, and the national shipbuilding strategy. Our work is further guided by the defence investment plan, which was approved in 2018. These policies and plans help PSPC ensure that the Canadian Armed Forces and the Canadian Coast Guard are well equipped and supported.

Today I want to briefly highlight the work that we at PSPC are doing to support the Canadian multi-mission aircraft procurement, or CMMA, after which I am happy to take questions from members of the committee.

For any defence procurement, PSPC first receives information on the requirement from the Department of National Defence. Early in the procurement process, as part of pre-procurement activities, PSPC engages with industry and undertakes market analysis. This allows us to know what industry, in Canada and globally, is capable of producing in response to the requirement and to know the timeline they can produce it in.

With this information, we are better able to work with our federal clients and with our partners to identify the most appropriate procurement strategy. For example, our requests for proposals are more likely to result in a successful procurement if market analysis demonstrates a healthy marketplace for the requirement.

For the Canadian multi-mission aircraft procurement, PSPC began engaging an independent third party to conduct a market assessment of potential solutions for this capability. This analysis also looked at Canadian aerospace capabilities to analyze the different options and to assess the feasibility of the development of a CMMA solution in Canada. Based on the findings of that third party, the project team concluded that it would be very challenging for Canadian industry to develop a CMMA solution with the required capabilities within the time frame needed to meet the estimated life expectancy of the CP-140 Aurora aircraft.

To validate the findings of this report, a request for information was published in February 2022, not only to seek input from industry on the identified capability requirements for the new fleet, but also to assess the industry's interest, capability and experience to provide a solution meeting these requirements.

Out of the 23 responses received from that consultation, only Boeing provided a non-developmental military-off-the-shelf aircraft, with its P‑8A Poseidon already in use by all other Five Eyes and other key allies. The other responses were either only partial or sub-system-level solutions, or based on an aircraft not yet developed or requiring extensive modification.

Consultation with Canada's Five Eyes partners, the United States, the United Kingdom, Australia, and New Zealand, has also confirmed that no other allied country currently has plans to develop a multi-mission platform, except for France that has requested Airbus and Dassault to produce studies for a future maritime patrol aircraft as the potential basis of a replacement project to be launched in 2026, with a new aircraft potentially entering service late in the 2030s.

The P‑8A Poseidon capability is export-controlled under the United States' Arms Export Control Act and its regulatory instrument, the International Traffic in Arms Regulations, and can only be procured via the U.S. foreign military sales program. That program allows eligible foreign governments and international agencies to purchase defence articles and services from the U.S. government, and has been accessed by Canada since 1951.

With a view to exploring this option in more detail, the CMMA project team then obtained the necessary governance approval to submit a letter of request to the U.S. government in December 2022, outlining Canada's requirements and requesting an offer for up to 16 P‑8A Poseidon aircraft and associated equipment and initial servicing. It is important to note that the issuance of that letter did not commit Canada to purchase the aircraft. It merely allowed Canada to understand the capability, cost, availability and benefits to Canadian industry in more detail.

In keeping with ... practice—

[The Chair, Conservative, Kelly McCauley]

I'm afraid that's our time, Mr. Page. Could you just wrap up briefly?

[Simon Page]

Thank you for the opportunity to present to you today. I welcome any follow‑up questions.

[The Chair, Conservative, Kelly McCauley]

Thanks.

We have Ms. Gregory for five minutes, please.

[Mary Gregory, Associate Assistant Deputy Minister, Industry Sector, Department of Industry]

Good afternoon. Thank you for the invitation. My name is Mary Gregory, and I am the associate assistant deputy minister in the industry sector at Innovation, Science and Economic Development Canada.

Under Canada’s defence procurement strategy, our department is responsible for leveraging certain defence procurements to promote economic activity and growth across Canada. The purpose is to ensure that certain large-scale military purchases contribute more broadly to the Canadian economy.

We achieve this mainly through the application of the industrial and technological benefits policy, or ITB policy, since 2014; and where applicable its predecessor, the industrial and regional benefits policy, since the mid‑1980s.

The industrial and technological benefits policy applies on certain defence and Coast Guard projects over $100 million in purchase value that are not subject to trade agreements, or when a national security exemption is applied. The policy requires companies awarded contracts to undertake business activities in Canada equal to the value of the contracts they win.

Business activities can be directly related to the procurement or can include other high-value activities in areas that strengthen Canada's industrial base in defence or other sectors and advance key priorities. A value proposition is generally developed for competitive procurement through market analysis and informed by industry engagement that is conducted in parallel with the work of other departments to support procurement timelines. It can also be developed and applied to directed procurement.

The economic benefit requirements also target business activities in Canada’s key industrial capabilities, which include areas of established strength, such as training and simulation and emerging technologies such as artificial intelligence.

As a core department under Canada's defence procurement strategy, ISED participates in interdepartmental governance, and works closely with our partner departments in the procurement process. This enables our officials to develop economic benefit approaches early on in the procurement process and work in parallel with the work of our partner departments to support timely decision-making and meet procurement deadlines.

With respect to the industrial and technological benefits policy, Canada has developed a robust and flexible tool that achieves positive economic outcomes in an open and transparent manner consistent with the overall procurement process. Canada's regional development agencies can also play an important role in the process and work closely with businesses to streamline the identification of potential suppliers. Contractors are also given a proportionate amount of time in which to complete their obligations, usually tied to the duration of the contract.

Since Canada has leveraged defence procurements for economic benefits for over three decades, most large contractors are well aware of the ITB policy and its associated obligations.

This policy remains an important tool to foster economic growth, support innovation, contribute to exports and help maintain and build Canada's industrial base.

Thank you very much.

[The Chair, Conservative, Kelly McCauley]

That's great. Thank you very much.

We'll start our six-minute round with Ms. Block.

Go ahead, please.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Mr. Chair.

I'd like to thank our witnesses for joining us today. I know it's only a one-meeting study, but I think it's important for us to get an update on what is happening with this procurement project.

Again, we are meeting today to discuss the procurement process for the P-8 Poseidon aircraft. Really, I think that as parliamentarians we're here to ensure that proper procurement processes are being followed and that taxpayers are getting good value for their money. I believe it's important that we have this opportunity.

I know each of you has provided us with an overview of your department's role in procurement, but I have a question with regard to the Canadian Armed Forces. What role does the Canadian Armed Forces play in the procurement of military equipment?

[Bill Matthews]

The main role for the Canadian Armed Forces starts with requirements definition. A capability is required, and then we drift into what the actual detailed requirements are for that capability. In this case, we're talking about the replacement for the CP-140, so that's everything from the range of the aircraft to what it needs to be able to do from an anti-submarine warfare and anti-surface warfare perspective, which means the defensive mechanisms it needs, the missiles it needs to carry and the threats it needs to mitigate.

The armed forces start there, and as the requirements get further defined and we transition into a procurement process and procurement planning, my colleagues at PSPC get more heavily involved, but even throughout that process, the armed forces would play a role in clarifying requirements, maybe validating the information that comes back against their requirements to make sure it does indeed meet them.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

How is that balanced with the role the Department of National Defence plays?

[Bill Matthews]

That is the role of the Department of National Defence integrated with the Canadian Armed Forces. We would work together with colleagues at PSPC to do that, but the requirements would start with the armed forces, and they would get some help from the procurement team within the Department of National Defence. However, the actual procurement process for something this large is run by PSPC.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

With regard to industry and PSPC, I was listening to you, Ms. Gregory, when you were describing industry. Regarding this procurement in particular, what sort of advice had you provided with regard to the economics and the benefits to the Canadian economy of procuring either with companies here in Canada or looking abroad?

[Mary Gregory]

We provide a policy frame that permits the benefits from the procurement whether the provider is Canadian or external to Canada. As the deputy minister of DND outlined, the requirements come from the DND side, and we work with them to ensure that people understand the types of capabilities available in Canada. We publish a “state of aerospace” report once a year, and we study the state of the defence industry with the industry partners once every two years, so we try to provide some open, transparent information about the state of Canada's industry.

When it comes to the procurement process, we try to ensure that we can help them understand what capabilities exist and how they can be leveraged.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

I know that in the timeline between the launch of the request for information in February 2022 by PSPC and the letter of request sent to the U.S. government in March 2023 for up to 16 Boeing P-8A Poseidons, somewhere in there were rumours of sole-sourcing that started in December.

I'm wondering whether you could answer the question—and you might have, Mr. Page. Did I hear you say that the RFI was sent to multiple companies?

[Simon Page]

Indeed, the request for information was sent to multiple companies. Actually, it was an open request for information for the industry at large. We got a fair number of answers—up to 23. After we received the information, we proceeded with a fairly detailed analysis of all the information received.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Okay.

What happened between February and December 2022 that led to the letter being sent to the U.S. government? I know you were cut off when you were explaining that the issuance of the letter did not mean— as you were about to tell us, I'm sure—that it was a letter signalling a request to purchase, although I note that in June 2023, the U.S. government pre-approved the sale.

What happened between February and December that led the department to write a letter to the U.S. government asking for up to 16 Boeings?

[The Chair, Conservative, Kelly McCauley]

I'm afraid I have to cut you off again, because we're at six minutes. Perhaps you can provide that in writing, or we can get to it in our next round.

Next is Mr. Kusmierczyk for six minutes.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you, Mr. Chair.

I want to begin by saying thank you to my colleague Madame Vignola for bringing this motion and study forward. This is an incredibly important conversation we're having here today.

The men and women of our Royal Canadian Air Force have a hard job. They do that job very well, and oftentimes they face peril to their safety and livelihood. We saw that this summer with the loss of two servicemen in the crash of the Chinook helicopter. My number one objective here is to make sure we get the best plane for our servicemen for the purpose of their mission and make sure they come back every single night from their work.

I want to talk a little about capabilities.

Mr. Matthews, I want to ask you how the capabilities of the CMMA requirements differ from the existing capabilities of the Aurora. What has changed and what are some of the emerging threats that the CMMA will be facing?

[Bill Matthews]

There are a few points here.

Number one, the CP-140 is an old plane. It was put into service in 1980. It's been upgraded several times since it first came into service, but from a capability perspective, it is losing relevance rather quickly, first because it's old and then because our adversaries are getting more complicated much more quickly than we had hoped. There is only so much you can do to upgrade a plane that old to keep it relevant. Our current plan is 2030.

Where the CMMA will differ is more in self-defence. You want to put an asset into theatre that is not only capable of self-defence but that also has more modern offensive capability in terms of the missiles it can carry, both for anti-submarine and anti-surface warfare.

The other piece.... I think there's a risk we will oversimplify this conversation. We talked about a plane. This is a plane with very complicated systems on board that make it a relevant asset, including radar, sensors, underwater capabilities, and all the integrated communications—intelligence and surveillance–type capabilities—that go with it. This is not just a flying piece of metal; it's the systems that come with it that make it relevant.

The capability required for the CMMA integration is absolutely critical. This is integration with the other assets the Canadian Armed Forces employs, but it's also integration and interoperability with our NATO allies. That is becoming increasingly important in the world we have right now.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Can you speak to that interoperability a little bit? Why is that important, and why is that gaining more importance right now?

[Bill Matthews]

Certainly. You can pick a dangerous spot in the world that you like, but we are rarely there alone. We are there with Five Eyes partners. We are there with NATO allies, or other allies. The ability to exchange information in real time and the ability to have complete or all-domain awareness about subsurface and surface threats and all the various threats is critical to inform the men and women operating the plane of their best course of action.

As I said, we are very rarely doing that alone, so the ability to exchange information with our NATO partners and with other allies is absolutely critical.

When you look at the current asset, you see that it's dated—let's just say that—and it's becoming increasingly difficult to sustain it. If we look at what our allies have done, we see that all our Five Eyes partners and many of our NATO allies have gone to the P-8, so interoperability is absolutely critical.

That's not to say that the P-8 is the only thing that can do it, but lots of our allies have already gone there.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

You mentioned “multi-mission” a little bit. Can you describe for the folks watching at home what you mean by “multi-mission”? What types of missions would a plane like this conduct?

[Bill Matthews]

It will certainly conduct the same types of missions that the CP-140 conducts right now. Think about, in the news recently, the flights in terms of enforcing and monitoring sanctions against North Korea. That type of surveillance task is absolutely still on, underwater surveillance and above-water surveillance both being key. If you think about the threats to the Arctic, you see that monitoring those threats is absolutely critical.

The mission set is becoming more broad and more complicated because of the evolving threat environment, but surveillance is job one here.

Ms. Tremblay, do you have something to add?