Government Operations Committee on March 22nd, 2022

[The Chair (Mr. Robert Kitchen (Souris—Moose Mountain, CPC)), Conservative, Robert Gordon Kitchen]

Welcome to meeting number nine of the House of Commons Standing Committee on Government Operations and Estimates.

Today, the committee will continue its study on air defence procurement projects. We will hear from representatives of Public Services and Procurement Canada and the Department of National Defence.

Today’s meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. Regarding the speaking list, the committee clerk and I will do our best to maintain a consolidated order of speaking for all members, whether you're participating virtually or in person. I would like to take this opportunity to remind all participants in this meeting that screenshots or taking photos of your screen is not permitted.

Given the ongoing pandemic situation and in light of the recommendations from public health authorities, as well as the directive of the Board of Internal Economy on October 19, 2021, to remain healthy and safe, the following is recommended for all those attending the meeting in person.

Anyone with symptoms should participate by Zoom and not attend the meeting in person. Everyone must maintain a two-metre physical distancing, whether seated or standing. Everyone must wear a non-medical mask when circulating in the room. It is recommended in the strongest possible terms that members wear their masks at all times, including when seated. Non-medical masks, which provide better clarity over cloth masks, are available in the room. Everyone present must maintain proper hand hygiene by using the hand sanitizer at the room entrance.

Committee rooms are cleaned before and after each meeting. To maintain this, everyone is encouraged to clean surfaces such as the desk, chair and microphone with the provided disinfectant wipes when vacating or taking a seat.

As the chair, I will be enforcing these measures for the duration of the meeting. I thank members in advance for their co-operation.

I would like to welcome the witnesses and invite the representative of PSPC to make his opening statement.

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

Thank you very much, Mr. Chair.

Good afternoon. My name is Simon Page and I am pleased to be with you today in my role as assistant deputy minister of the defence and marine procurement branch at Public Services and Procurement Canada.

The Minister of PSPC's 2021 mandate letter includes a commitment to “Ensure the ongoing delivery of defence procurements in support of Canada's Defence Policy, 'Strong, Secure, Engaged'.”

We work very closely with DND and our other federal partners to ensure that we provide the acquisitions support needed to deliver the right equipment and services to the Canadian Armed Forces in a timely manner. PSPC chairs the interdepartmental governance committees established under the defence procurement strategy to bring together all the key federal players to transparently consider trade-offs related to capabilities, cost, the timely delivery of equipment and services, and economic benefits to Canada.

Defence procurement is very complex and multi-faceted, and the defence procurement apparatus is making sound progress at addressing this complexity and delivering on multiple air defence procurements. Despite the challenges, we are making progress on key air defence procurements and solicitation processes. For example, we have recently achieved important milestones with respect to the future fighter capability project procurement process. We continue to work towards contract award for the future fighter capability project this year.

In February 2022, the final requests for proposals were released for the future aircrew training program and the remotely piloted aircraft system, RPAS, projects. Canada has also released a request for information for the Canadian multi-mission aircraft this past February. Canada is also advancing work to replace its CC-150 Polaris fleet with a strategic tanker transport capability. The contract award for full implementation is anticipated to take place in 2022-23.

In 2021, PSPC, on behalf of the Department of National Defence, awarded two contracts, valued at $186 million, tax included, for the purchase of three new tactical control radars and their in-service support for an initial period of five years.

Finally, in 2022, PSPC, on behalf of DND again, awarded a contract to an Inuit-owned company for the operation and maintenance of the North Warning System. The contract is for an initial period of seven years and is valued at $592 million. The contract also includes four two-year option periods for a total estimated value of $1.3 billion.

As we make progress on major projects, defence procurement continues to innovate to meet the needs of the Canadian military.

Until such time as new fighters are delivered and fully operational, there is a need to extend the life of the CF-18 aircraft. The Hornet extension project, HEP, will provide upgrades to avionics and mission support systems for up to 94 aircraft in order to meet new regulatory requirements and keep pace with allied military interoperability, and will provide combat capability upgrades for 36 aircraft.

To ensure there is no capacity gap until the new fighters are delivered and are fully operational, the interim fighter capability project acquired 18 Australian F/A-18 aircraft, associated spares and equipment to supplement the CF-18 fleet in Canada. All aircraft deliveries were completed in 2021. To date, six aircraft have been introduced into service after some minor modifications and it is expected that all aircraft will be in service by the end of 2022.

Of note, we are making increased use of the phased bid compliance process in projects like the future fighter capability project and the future aircrew training program to foster competition and best value to Canada by increasing the potential number of compliant bids, as PSPC continues to support the streamlining of defence procurement processes and DND in the execution of “Strong, Secure, Engaged”.

That concludes my opening remarks. Thank you all, once again, for providing me with this opportunity to speak with you this afternoon.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Page.

We will now go into our first round of questions.

No, I apologize. I don't know who is speaking for National Defence. Is it both of you? Okay.

Go ahead, General Ménard.

[Major-General Sylvain Ménard, Chief Fighter Capability, Royal Canadian Air Force, Department of National Defence]

Good afternoon, Mr. Chair. Thank you very much for the opportunity to speak with you this afternoon on air defence.

My name is Major-General Sylvain Ménard. I am the chief of fighter capability, responsible for managing the development of fighter, jet trainer and air demonstration aircraft. In addition to my current role, my experience extends across the defence portfolio, including experience with the North American Aerospace Defense Command, NORAD, as chief of programs and chief of military personnel, where I have participated in managing Canada's air defence team as well as being a leader within Canada's fighter force.

As the chief of fighter capability, I have two main responsibilities.

First, I oversee the continued development of existing aircraft to ensure current missions can continue to safely and effectively carry out their roles. This includes investments in regulatory upgrades for air navigation and communications, enhancements to ensure continued interoperability with allies and introducing limited combat capability upgrades such as improved radar and weapons.

This work includes introducing 18 former Australian CF-18s into Canada's CF-18 fleet. Additionally, the entire CF-18 fleet will receive regulatory and interoperability upgrades, while 36 CF-18s will also receive combat capability upgrades to include new radars and modern weapons. These upgrades, under the current Hornet extension project, will ensure a continued ability to support our commitments to NORAD and NATO while bridging to the future fighter capability.

Secondly, I lead a team that is progressing the introduction of the future aircraft systems and capabilities as outlined in “Strong, Secure, Engaged”. The introduction of the future fighter lead-in trainer and its associated capabilities will allow the RCAF to train future fighter pilots to the level necessary to move on the new advanced fighter aircraft. The new fighter aircraft itself will be a sophisticated platform that will require complex lead-in training to streamline pilot progression and preparation for the new fighter roles.

The RCAF is preparing to bring the new fighter capability to our squadrons and our members. This effort has benefited from many areas of expertise, including successful interdepartmental support, and in advance of a contract award announcement, we are preparing for the transition to a modern jet fighter that will be at the forefront of operations for decades to come.

Finally, I must recognize that, in all the work we do for the air defence of Canada, it is the people who are the strength of the organization, both programmatically and organizationally. The RCAF has focused the priority on our people over recent years, emphasizing comprehensive retention strategies, families and quality of life for our members as we focus on culture and change. The RCAF exists because of its people, and they are our most important asset.

Thank you again, Mr. Chair, for giving me the opportunity to address your committee.

I look forward to addressing any questions you might have.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

Mr. Crosby, did you have a few words you'd like to say?

[Troy Crosby, Assistant Deputy Minister, Materiel Group, Department of National Defence]

I do, Mr. Chair. Thank you for the opportunity.

Good afternoon, everyone. My name is Troy Crosby, and I'm pleased to be speaking to you today in my role as assistant deputy minister, materiel, at the Department of National Defence. As ADM, materiel, I'm responsible for the management of the full life cycle of defence equipment required by the Canadian Armed Forces. This means from acquisition, through maintenance and support, to disposal.

I'm here today to discuss how the department is moving forward with the renewal and replacement of core equipment fleets, particularly in the context of air defence.

We are renewing and replacing basic equipment fleets to support Canada's multi–purpose, combat–capable defence force.

We are committed to providing the Canadian Armed Forces with the modern equipment they need, but we are also ensuring the best value for Canadian taxpayers, creating jobs, supporting Canadian technological innovation, and contributing to long–term economic growth across the country.

To begin, I will acknowledge that there have been significant impacts over the past two years due to COVID on both our procurement processes and the Canadian defence industry. These impacts have resulted from the sudden transition to remote or hybrid work, reduced or interrupted production capacity, restricted travel and border closures, workforce turnover and impacts to supply chains. These have all resulted in inefficiencies, scarcity of resources, delays and increased costs.

Despite these challenges, our team has continued to make important progress both on our “Strong, Secure, Engaged” projects and with the sustainment of in-service fleets.

The commitments made in Strong, Secure, Engaged continue to be our focus.

To put our work in perspective, the materiel group is currently leading 74 major procurement projects, 13 of which are valued at over $1 billion. Only these 13 projects together have a total procurement budget of over $100 billion.

National Defence works in close collaboration with our colleagues at Public Services and Procurement Canada and Innovation, Science and Economic Development Canada, as well as with the central agencies, to oversee these projects and the major in-service support contracts for the sustainment of in-service capabilities such as the North Warning System. Our capital acquisition work includes the procurement of a number of air defence capabilities for the Canadian Armed Forces, including the future fighter capability project, the interim fighter capability project, the Hornet extension project and the strategic tanker transport capability project.

Given the horrific world events that we have been bearing witness to recently, our job of sustaining and procuring equipment for our military is more important than ever. That includes, notably, our future fighter fleet.

In parallel with the significant progress we continue to make on the future fighter procurement, infrastructure design and site preparation work has begun in Bagotville and Cold Lake to prepare for the arrival of the future fighter aircraft.

These new fighter squadron facilities will house the tactical combat squadrons and the training squadron and will include spaces for day–to–day operations.

These facilities are being designed to leadership in energy and environmental design silver and net-zero carbon standards and have taken gender-based analysis considerations into account. There is already good progress in Cold Lake. It is expected that site services will be completed by spring 2022.

While work is progressing on the future fighter capability project and its supporting infrastructure, we're also investing in our current fleet.

To bridge any capability gap until the new fighter aircraft are fully operational, the department acquired 18 F/A‑18 Hornets from the Australian government.

All 18 aircraft have been received by the department and six have now been released to the Royal Canadian Air Force. Work on the remaining aircraft is progressing, with the eighteenth aircraft scheduled to return to service by June 2023.

Our fighter fleet is also undergoing various upgrades under the Hornet extension project, as you heard, including upgrades to avionics and weapons in order to meet operational requirements until 2032 and to maintain interoperability with our allies as we transition to the new fighter fleet.

These are just a few brief examples of all the ongoing work that demonstrates our progress in these uncertain times. As we continue to navigate through the global context, we're committed to moving forward on the defence investments outlined in “Strong, Secure, Engaged”.

It's important for us to keep these investments on track. This equipment will help to ensure that the Canadian Armed Forces are able to defend Canadians at home and work with our allies and partners abroad.

Thank you, Mr. Chair. I'll be happy to take the committee's questions.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you very much, gentlemen. I appreciate that.

We will now start our questioning. We will start our first round with six minutes from Mr. Paul-Hus.

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

Thank you, Mr. Chair.

I want to greet the witnesses and thank them for joining us today.

My question is for Major General Ménard.

Major General Ménard, you talk about pilot training in your presentation.

How are you currently preparing pilot and technician training without knowing what types of aircraft we will have in the future?

[MGen Sylvain Ménard]

Thank you for the question.

We are currently continuing with our joint training activities focused on the CF‑18 fleet. As we have mentioned, owing to the ongoing modernization of our F‑18 fleet, and to be able to maintain a reliable operational capability until our future fighters arrive, we are continuing to modernize and to increase our advanced operational capabilities.

Our pilots continue to fine-tune their capabilities and to align them with the new operational capabilities that will apply to the new fighters.

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

Okay.

Regardless of whether it is the F‑35 or the Gripen E, we are waiting to find out which aircraft will be selected before providing the training.

Is that right?

[MGen Sylvain Ménard]

Yes, that's right.

We are still continuing to increase our operational capability through our investments. We are continuing to increase our capabilities, which will be compatible with the selected platform, regardless of which it is.

What we are investing in training for our aircrews will be applicable to the next fighter.

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

Thank you, Major General Ménard.

In 2017 or 2018, I went to the headquarters of the North American Aerospace Defense Command, or NORAD, to attend a presentation on the systems. They talked about the future aircraft we will need, which will have to be an integral part of what is referred to as the ultimate system owing to connections to satellites, ships, and so on.

We currently know that the government has made no decision on the next aircraft model.

What will be the impact of purchasing aircraft that would be integrated into this famous ultimate systems, considering the threat in the Arctic and the potential modernization of NORAD and of radar systems? Is it paramount for the new aircraft to be integrated into those systems?

[MGen Sylvain Ménard]

Thank you for the question.

Regardless of which aircraft will be selected, it will have to meet the standards of the ultimate system, as you called it, to enable us to provide modern joint interagency air and space powers.

So the Royal Canadian Air Force will ensure that we can support NORAD, the North Atlantic Treaty Organization, NATO, or the Five Eyes appropriately.

For other more specific questions related to NORAD, I would invite you to consult NORAD authorities.

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

Okay.

Mr. Page, you told us that nine of the 16 CC‑295 Kingfisher aircraft have been delivered. I have been told that they are not operational. The aircraft have been delivered, but they do not fly and have been stored in hangars, as they are defective.

Is that correct?

[Simon Page]

Mr. Chair, thank you for the question.

Yes, we have received nine aircraft purchased under a contract with Airbus, in Spain. We are currently in discussions with the company to resolve technical difficulties we are having with the aircraft.

We are doing that to ensure to be able to get the certification and the necessary qualifications for the next steps and effectively integrate the CC‑295 Kingfisher aircraft into the Royal Canadian Air Force's fleet.

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

So we have brand-new aircraft that are not operational.

The CH‑149 Cormorant helicopters were also discussed. We have an issue with the company, Leonardo, over the cost of those helicopters. As they need an update, there is a difference in price, which the government is refusing to accept.

Is there any progress in that area? Those aircraft really have to be updated, as they are 20 years old.

[Simon Page]

Thank you very much for the question.

The file is moving forward. We are engaged in active discussions with Leonardo's representatives. The discussion process is fairly elaborate. We are currently considering a number of options to ensure a viable solution is found, which would be logical for aviation and would have economic benefits and a solid return on investment for Canadians.

I must say that those discussions have not been easy, but they are ongoing. We hope to move the project forward as soon as possible.

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

Thank you, Mr. Page.

Mr. Crosby, on March 21, 2022, president and CEO of the Aerospace Industries Association of Canada, Mike Mueller, wrote an article in The Hill Times, where he said that industry was prepared to work with the government.

However, as we too often see, coordination and efficiency are problematic in Canada.

Can things be changed or will we always be stuck in a vicious cycle of administrative problems, on the industry side or on the government side?

At the end of the day, even if we are investing more in defence, we are losing our money to needless fees or to a lack of effective processes.

Internally, are you telling yourselves that you should be better?

[Troy Crosby]

It's an opportunity to highlight some of the ongoing work we have through various industry association engagements and directly with industry through our procurement processes.

We work closely with the Canadian Association of Defence and Security Industries and the Aerospace Industries Association of Canada. They're members of what we refer to as DIAG, the defence industries advisory group, that Mr. Page and I are both part of, alongside Innovation, Science and Economic Development Canada, as well as individual representatives from various defence industry companies across the country. Those venues give us the opportunity to exchange information on our practices with respect to ongoing procurements and future potential improvements, taking into account industries' involvement in our Canadian work as well as our international experience.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Crosby. I apologize for cutting you off, but we are limited on time.

If you have anything further to add to that answer, if you would provide that to the clerk, we'd greatly appreciate it. Thank you.

We'll now go to Mr. Bains for six minutes.

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

Thank you, Mr. Chair.

My questions are maybe best suited for our representatives from National Defence. I know the major-general mentioned the capacity of the jets and modernizing them. Can you speak to the capacity of both jets, the F-35 and the Gripen, to harmonize with the weapon systems of our NATO allies? Is one more compatible than the other?

[MGen Sylvain Ménard]

Since we are in an open and transparent competition, I would rather not comment on any of the platforms. That is an ongoing competition at this stage.

What I can say, however, is that one of our high-level mandatory requirements is interoperability. Any platform that is still in the race at this time has to demonstrate that it will be fully interoperable with NORAD and NATO for what Canada needs. I will leave it at that.

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

Okay, I'll move on to the delivery.

What steps have been taken to help ensure the RCAF is ready to take delivery of the new fighter jets and reach operational capability?

[MGen Sylvain Ménard]

As mentioned by Mr. Crosby earlier, there is some preparatory work that is being done both at 3 Wing and 4 Wing for the future fighter squadron facilities. This work right now is platform agnostic, so the preparatory work that we're doing will be able, in due time, to be tailored once we have a decision from the Canadian government. We're doing everything that we can do at this stage to prepare both on the training and on the infrastructure fronts so that the air force is ready to transition to the future fighter once it is selected. I would say that we are being as proactive as we can be, and we are eager to continue to deliver air power and joint space effects for Canada.

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

Okay.

I'm just going to go into the projects a little bit.

According to DND's 2019 defence investment plan, the department plans to invest $164 billion in capital projects on a cash accounting basis between fiscal years 2017-18 and 2036-37. Of this estimate, roughly $35 billion is intended for capital projects requiring authorities from Parliament between 2017-18 and 2021-22. How have DND's investment plans evolved since its 2019 defence investment plan?