Industry Committee on Oct. 26th, 2016

[Dr. Marc Fortin]

Our first choice is to work with Canadian partners. We spend in Canada approximately $3 billion on research and development in our universities. This is a huge investment made by the Government of Canada.

If we can leverage the knowledge that exists in our universities and our companies, then that is to our benefit. We cannot ignore the fact...and I apologize for leaving at 4:30, but the invitation I had received was until 4:30. I'm leaving tonight to go to Washington to leverage the $60-billion investment in research and development that the U.S. is making in defence. It's an enormous investment, and our participation in projects with the United States, the U.K., Australia, and other allies brings back to Canada military capabilities and technologies that we would not have access to because our investment is relatively modest.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you.

Mr. Garrison, you have seven minutes.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Thank you very much, Mr. Chair.

Thank you, Mr. Fortin, for clarifying that your invitation was for one hour. I appreciate that.

As a member who represents a riding that's the home of the Canadian Pacific fleet and also the Victoria Shipyards, I was keen to be here today in this committee, although I have to say I've not felt keen to be in the industry committee before.

Since you do have to leave, I want to start my first round of my questions with you, Mr. Fortin.

When the national shipbuilding strategy came out, the discussion was that for the ships to be designed, the preference would be for an off-the-shelf design. We all know there's really no such thing as an off-the-shelf design, but I wonder with the technology whether there aren't some good reasons why we might want to look at a Canadian design, apart from timing, rather than an off-the-shelf design. For the benefits of developing technology in Canada, it would seem to me there aren't off-the-shelf designs in Canada for the ships we're talking about, and those elsewhere would be unlikely to include Canadian-developed technology in their designs.

[Dr. Marc Fortin]

Thank you for the question. It is a good question.

There are two elements. There are the platforms themselves—the ship, the steel, if you wish. There are also all the technology components that go on the ship: sensor systems, radar systems, fire control systems, so on and so forth. We have Canadian companies that are internationally well renowned in the quality of their technology and what they can bring. Part of my role is to de-risk the development of those new technologies such that they can be offered for insertion on those platforms when those platforms are built.

New radar technologies are needed to defeat new threats that our adversaries are deploying. We have Canadian companies that are well positioned and that we are helping through contracting with them or our interactions with them—technologies we transferred to them—to be competitive in the procurement process that our colleagues at PSPC are running. Our objective is to help those companies develop the technologies such that they can be successful for insertion.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

People think of the shipbuilding strategy as Halifax and Vancouver, but I'm in Victoria, and we actually have the good jobs, because Seaspan does the hulls in Vancouver and it does the filling of the hulls with the technology in Esquimalt. I'm quite happy to hear that there is attention to that, given the off-the-shelf design.

I know this gets between you and procurement, but does that also include provisions to ensure that if we do select an off-the-shelf design, that technology is transferred to Canada so that when it comes to maintenance of those systems we won't be beholden to a foreign company that might have other priorities or be under some restrictions by a foreign government?

I know Britain ran into this in some of its technology. When it wanted to go to Afghanistan, other countries suggested that the end use wasn't acceptable to them and therefore certain kinds of maintenance and parts couldn't be supplied to Britain.

I wonder if we have that same concern here and whether we're working to develop our own capacities.

[Dr. Marc Fortin]

We're developing our capacities to be able to equip and, from my perspective and my mandate, we're developing those capacities to provide the Canadian Armed Forces, including the navy, with cutting-edge technologies. In terms of bringing foreign technologies to Canada, I'll have to defer that question to my colleagues.

[Sylvain Cyr, Director General, Land and Aerospace Equipment Procurement and Support Sector , Department of Public Works and Government Services]

Maybe I can try to answer. Typically what happens is we would work with our colleagues in ISED, and through the value proposition or ITB requirements we would try to leverage as much as is doable, taking into account the capabilities, obviously, of Canadian companies. What can be maintained in Canada would be embedded and be part of the selection criteria.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

I understand, and I'm concerned about economic benefits, but I'm raising a national security concern about technology here, so maybe....

[Paul Halucha]

I think the answer is that you're absolutely right. That's the first principle in terms of these procurements: ensuring that we obtain the necessary intellectual properties so that we can maintain the ships ourselves. In a worst-case scenario or a theoretical scenario when we were in a state of war, the last thing we want is the company that is responsible for maintaining part x of the ship to be on the other side of the battle.

Maintaining that capability in Canada and having that access through getting intellectual property rules right in the procurement process is a first principle. It's linked to sovereignty and, as you point out, our national security.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Given the new government's emphasis on peacekeeping, we might, on the other side in battle, be more likely to end up in the situation Britain was in, which was not that the other company was on the other side in battle but....

[Paul Halucha]

No, I was depicting an extreme, hypothetical—

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

I think a more realistic one is that other countries that have end-use requirements on their transfer of military technology might try to exercise those in ways that would restrict our sovereignty and—

[Paul Halucha]

They could even simply just raise the cost, because they are the only supplier in the market.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Right.

[Paul Halucha]

You need the flexibility and the ability to go elsewhere to shop.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Southern Vancouver Island has become one of the centres of high technology. I know everybody claims to be “the” centre of high technology. I won't make that claim today, but I've heard locally from people that despite the efforts of all the groups to include them, they find it hard to get the information they need to be ready to step into a lot of these programs. In terms of companies that aren't located here in Ottawa or aren't part of the big networks, what specific things are being done to help those that are located in my riding to participate in technology development?

[Dr. Marc Fortin]

I can take a first shot at the answer on this one.

I would agree that we need to be better at reaching out to small technology companies, and I'd say academia as well. In the last two rounds of calls for proposals, we have done business differently. We've changed our business model.

You may be familiar with DARPA in the U.S., the Defense Advanced Research Projects Agency. They put out those calls for proposals. Essentially, they put the problem out there, and they ask for any company, innovator, or academic—anyone who has something to contribute to solve that problem—to come forward.

We recently held workshop days at which we invited anyone to address a set of topics we had on surveillance in the north. It is a priority for the Minister of National Defence. It is in his mandate letter that we support Canadian sovereignty in the north. We've asked for anyone with any piece of technology or solution on that to come forward, and we've had a very successful engagement with, I'd say, a more diversified set of innovators.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

It is 4:30, so I guess you can leave, Mr. Fortin.

We are going to jump to Mr. Baylis.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I have just a quick question before you leave. I understand your role in looking at science and technology. Is there anything formalized that pushes you to specifically target Canadian technologies and Canadian companies?

[Dr. Marc Fortin]

There is the question of national security, to begin with. As I said earlier, most of the research that is done by the 1,300 people in my organization is focused more on classified and sensitive research areas, where it's not easy to share with other countries, so there is a national security imperative to begin with.

Otherwise, I am not aware of a regulatory requirement to force us to do that.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Could there be such a requirement that we could mandate? Could we, effectively, structurally formalize that you must drive that towards Canadian companies?

[Dr. Marc Fortin]

The danger in setting up that policy would be that, Canada being a reasonably small player on the international scene, it would restrict access to technologies that are game-changers for the Canadian Forces, so we would need to balance—

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Presently, we have nothing. We could theoretically structure something. Can you think of something we could do to mandate you to drive that way?

[Paul Halucha]

I think the risk of this is that you can design anything hypothetically. The challenge, though.... The Canadian companies that grow to scale, and beyond scale, and create the best jobs in Canada, are those that reach export opportunities. We'd have to be careful and look at how other countries would respond to that. We are a massive export nation, as you well know, so we need to think about what types of rules we want to face in foreign markets.