Government Operations Committee on Oct. 17th, 2023

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

What I want to know is how long a procurement process takes, from the call for tenders to making a decision.

[Simon Page]

A fast-track process, from the time the needs of the customer, the Department of National Defence, would be known in detail to the time the contract would be awarded—not the time the aircraft would be obtained—could take between 30 and 32 months.

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

All right.

Mr. Matthews, the P‑8A Poseidon is a Boeing 737 modified and adapted to the customer's needs. Is that correct?

[Bill Matthews]

This is an aircraft that has been modified to meet the requirements of U.S. military forces. Military forces in other countries have adopted the same requirements.

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

All right.

The fact remains that although the two aircraft have similar characteristics, the P‑8A Poseidon is a Boeing 737 modified to meet the countries' needs. Is it true that there is currently no other aircraft on the planet that is modifiable, compatible, interoperable, or possibly even interchangeable, and that no one has purchased an aircraft that is modifiable like this?

[Bill Matthews]

The real question would be how long it would take to build one, and at what cost. In the case of the P‑8A Poseidon, it took the U.S. 30 years to create it by modifying an existing aircraft to meet the requirements of military forces.

I believe it cost in excess of $8 billion to actually make those modifications. The point I would like to emphasize here is that the modifications we're talking about to take a civilian aircraft and modify it into something military are very complicated and very expensive. These are not easy modifications.

It's not that they cannot be done—

[The Chair, Conservative, Kelly McCauley]

Thanks, Mr. Mathews. We're half a minute past our time.

Mr. Johns, you have the floor for two and a half minutes, please.

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

Mr. Page, you mentioned that PSPC did a third party market assessment. With the will of the committee, Mr. Chair, I'd like to ask Mr. Page to table that document to the committee.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Colleagues, are we comfortable with that?

Please do, Mr. Page.

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

Obviously the environmental concerns are significant to us. We understand that the P-8 costs approximately $29,900 USD per flight hour, which is 30% more than the CP-140. It uses significantly more fuel than the CP-140. Based on a fleet's yearly flying rate of 8,000 hours, this equates to an annual operating cost of approximately $239 million USD.

Have these costs been provisioned in annual estimates? What provisions for carbon offsets and green procurement considerations have been made for this procurement?

Mr. Page, given Canadian industry's proven track record of delivering specialized military aircraft that are less expensive to operate and more fuel efficient than the P-8, why won't you give Canadian industry the opportunity to do that again with the CMMA program?

[Simon Page]

Thank you for the question.

Those questions are very focused on the plane itself, the cost of sustainment. I think they're better for DND to answer. We can move in with a process discussion if you wish, Mr. Johns, afterwards.

[Bill Matthews]

In terms of the carbon offsets around military activity, the department is still developing an overall approach for that regardless of the option picked here.

The current serviceability of the CP-140 is around 45%. It's down where it should be. It's an old plane; that's not surprising.

The other point I'd make on the P-8—again, it's a certainty versus some speculation on the other options—is that it can get to theatre much faster than the CP-140.

I'll take your word for your observations on the fuel cost, but because something like the P-8 can get to theatre more quickly, it spends more time doing its actual job as opposed to getting there. It can fly at higher altitudes as well.

Those are the other requirements factored in, in addition to sustainment.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We'll go to Ms. Kusie for five minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much, Mr. Chair.

Thank you very much to all the witnesses for being here today. I very much appreciate the topic of procurement. I served with Global Affairs Canada as a management consular officer for several years, so I date myself back to the time of MERX. It's always a pleasure to be in the room with other procurement officers. Certainly, I did not do procurement at a level like this, but rather some medium-sized projects within missions around the world.

Thank you very much for being here today.

I have a few questions about the initial RFI of February 2022.

How many responses did you get to the initial RFI?

[Simon Page]

Thank you for the question.

We received 23 responses.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

It was 23 responses.

Regarding the RFI, my understanding is that it was a document of only 14 pages. Once you take away the cover page and table of contents, it becomes a significantly smaller, less detailed document.

Would you say it was a typical RFI that laid out all the requirements necessary to fill the procurement?

[Simon Page]

I would say that yes, at this stage of the procurement, it was a typical RFI. I mentioned earlier that the RFI included all the high-level mandatory requirements we had from the Department of National Defence.

It's important to understand the difference between generic high-level requirements, such as interoperability—that would be one of them—and a specific set of requirements that would be a lot more detailed, which we would use in a request for proposal process. I want to make sure you understand that a 14-page RFI is fairly standard at the stage we were with the project.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you for that response.

After you received the 23 responses to the RFI, how many times would you say you consulted with industry? How much industry consultation did you do, would you say?

[Simon Page]

For me, formal engagement or re-engaging with industry...we did not.

I mentioned earlier that we re-engaged with all those who came back and wanted to talk to us, wanted more information and wanted to share additional information about their respective solutions.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Why did you not engage with industry?

[Simon Page]

The key piece of the RFI was that it be unanimous. It was a conclusion of the RFI that the only aircraft currently available that offered a solution to all Department of National Defence HLMRs, their high-level mandatory requirements, was the Boeing P-8 Poseidon. From a process point of view, we went from capturing this information to doing the analysis to trying to dig more into this potential solution—the Boeing P-8 Poseidon.

The interesting part about this procurement is that the only way we could get additional information from Boeing regarding the RFI was through a government-to-government military sale engagement. Therefore, in late 2022, we kick-started that engagement through a letter of request to the U.S. government to make sure we were going to have specific information about the Boeing P-8 Poseidon as we went forward. That was to ensure we had all the pieces of information necessary to make our call about next steps and further analysis.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

That's a bit concerning to me, given that it was a 10-page document and, as you mentioned, the high-level information, which is usually normal for the RFI stage of the process, but not the RFP.... You indicated you only communicated with industry that had responded to you with further questions or information. You indicated you didn't communicate with all of the respondents to the RFI, only with a select few.

How did you determine who you communicated with after receiving the responses from the RFI?

[Simon Page]

It was simply based on a request point of view. We didn't say no to anyone. We engaged with everyone who wanted to talk to us about this procurement.

With respect to the concerning part, we had a third-party assessment, as I mentioned earlier. It was fairly standard. The analysis was fairly conclusive with respect to the only military off-the-shelf aircraft. I think there was enough information in the RFI responses to come up with that conclusion.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mrs. Kusie. Thank you, Mr. Page.

Mrs. Atwin, please go ahead for five minutes.