National Defence Committee on Feb. 6th, 2007

[The Chair, Conservative, Rick Casson]

Mr. Minister, you have four minutes.

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

We live with eternal hope.

First of all, let me be clear what the responsibility of the defence department is. I know you're going to study procurement, and there are a lot of departments involved.

Essentially our part of procurement is to set the requirements and provide the funds. The contracting—all the rules of contracting, and ACAN, and all those things—is with Public Works. Industrial benefits are with the industry department, and ITAR is under the external affairs department. Our part of procurement is that the military determine what they require, essentially, and we obtain the funds from the Prime Minister and the cabinet to acquire it. That's our part.

Theoretically, I can answer all these questions about ACANs and deadlines and ITARs, but you should be getting representatives of other departments to do it.

With respect to the requirements....

If you want, General Hillier, you can talk about the requirements.

[Gen R.J. Hillier]

Yes, sir. I'd be delighted to talk about military requirements, which are our job to define.

We start with a strategic assessment of the operational environment we work in now and believe we will work in for the immediate future—what kind of missions we will have in the Canadian Forces, what we expect the Government of Canada to ask us to do, where they will expect us to do it, and under what kind of environmental conditions—and therefore, what kind of capabilities we would need to be successful in it.

That's top-down, at the strategic level. We also then work bottom-up—from the people who do the missions in the field right now, based on lessons learned in places such as Afghanistan, in Alert in Canada, on the east coast, of course, with the air, land, and sea forces—and incorporate the lessons learned on a daily basis about what best provides them the capability to do their job.

We combine those things and bring the result through a rigid process in the Canadian Forces, with the Department of National Defence as a full piece of it, obviously. We walk it through bear-pit sessions, analysis of the requirement—a stringent requirement to follow the line of logic: this kind of mission would demand this kind of capability, and therefore, here is what we would need to ask for in high-level specifications.

That process takes a long time. It changes en route. I would love to direct everything myself, but I have an entire structure that holds me accountable, and I hold them accountable for walking through this in a thorough way, from all 360 degrees, in providing the best military advice I can give to the Government of Canada on what we would need. We do that constantly.

[The Chair, Conservative, Rick Casson]

You have one minute left.

[Claude Bachand, Bloc, Saint-Jean, QC]

I would like to get an answer regarding the Defence Capabilities Plan. We have been hearing promises for months, and things were done backwards and defence contracts to the tune of $20 billion were signed even before having a plan.

Can we expect a plan within the coming weeks, and if so, of what use would it be now? Would it justify the 20-billion-dollar purchase, or will we be looking at other requirements pursuant to Canada's defence policy?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

We have already announced what our defence policies are; you know what our defence policy is. The capability plan is still working its way through the cabinet process.

With respect to the first five projects, which were announced last June, all are transportation projects—air transportation, land transportation, sea transportation—and they are required in any possible scenario.

[The Chair, Conservative, Rick Casson]

Thank you very much.

Ms. Black, you have ten minutes.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Thank you, Mr. Chair.

Thank you very much for appearing before the committee today.

You mentioned just a moment ago, Minister, the different government departments that are involved in the procurement process. I have a really basic question that I want to ask you.

With DND, with Public Works, with Industry Canada all being involved, who is the lead minister? Who has the final responsibility on defence procurement?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

There is no final responsibility on defence procurement. Each of us has our own area of responsibility. The cabinet is the final say on defence procurement. Everything ultimately gets approved at the cabinet level.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

I also have some questions on the C-17 purchases or the contract that's been let out. It seems to me that we're paying $3.4 billion for this contract, and Canadian industry is not getting the full benefit for the maintenance of that contract. So Canadian industry is losing out on what has traditionally happened in these kinds of procurements.

I don't believe that the military is being assured of receiving the very best product available, when there's been no competitive process. In a competitive process, each of the suppliers would tell you, tell us, and tell the Canadian government about the capabilities of meeting the requirements, which you spoke about earlier, General Hillier, that the military sets. During the competitive process, the bidding companies would have the responsibility of proving that their product met those capabilities. So there's no competitive process going on here.

I have to wonder if part of the reason for going this route is an attempt to improve relationships with the U.S. Is that part of the thinking that went into the process? If so, aren't we putting the issue of Canadian sovereignty before the requirements and needs of the men and women in the Canadian Forces?

Also, look at how the contract for maintenance apparently will be carried out. It's my understanding that the maintenance will be carried out by the U.S. Air Force. I wonder then, if we were in a situation where American and Canadian planes needed maintenance and servicing at the same time, whose planes would get priority?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

With respect to the contracting side and the benefits, you'll have to talk to those ministers. They'll give you the details.

First, from my point of view, the Department of Defence doesn't declare whether or not it's a competitive process. That's done through Public Works. But from our point of view, an ACAN or an SIQ is a competitive process. Once the requirements are out there, anybody in the world can come forward with the product, and if they can prove that the product does it, there's a competition.

So it's just the sorting out; it depends upon the requirement. You send the requirement out. If a number of companies can answer that requirement, then basically you run a competition. If it happens that no other companies but one can meet the requirement, then that's the way it is.

I don't set the requirements; the military sets the requirements, and I literally don't interfere with the requirements. I do not change one number, one dot. These are requirements that go through a rigorous process in this and other departments, where military officers have to justify why the requirements are the way they are.

Once that requirement's accepted, basically it goes out to Public Works, which decides the process. Whenever a company is chosen, then Industry Canada gets involved with the industrial benefits.

The other point you made was whether there was there any thought of sort of catering to the United States. There wasn't. Our military and I don't care where the product comes from, as long as it meets the requirements and is the best choice at the cheapest price. It happens at the moment that the aircraft we're selecting for strategic lift is American. The tactical is American, and the helicopters are American. But who knows what truck—in fact, trucks, because there are two truck projects in there—we're going to end up with. And who's building the ship? We don't know yet. There are still two teams. They started running it down with four teams. We have no idea who's going to win it.

So from our point of view, it is a competitive process.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

The requirements appear to have been set so that only one company was able to match those requirements exactly.

But the other question, I think—

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

Madam, theoretically two to three companies could have met those requirements. They just had to show up with an airplane.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

By using the national security exemption, your government has upset many of the provinces, because that means this agreement is not subject to the agreement on internal trade.

I think the agreement on internal trade was brought into being after the CF-18s went to Quebec and not Winnipeg.

So I want to ask, why was the decision made to have the national security exemption? What was the process that was used to arrive at that decision?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

It's Public Works. You have to ask the Minister of Public Works and Government Services Canada.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

And you have no understanding of it?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

I have an understanding, but it's his responsibility, and he should answer the question.

I think you'll find in the procurement process, as you get into it, that the Department of Defence has very little to do with the procurement process other than setting the requirements and providing the funds.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

With regard to the C-17 contract, the Liberal Party has said they would like to immediately cancel that contract. I would like to ask you what the contract says about cancellation. What are the contractual terms and obligations in the contract? What would the result of that cancellation be?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

I don't know. I haven't read the contract, and I don't know. Again, that's Public Works. If you call the Minister of Public Works and Government Services Canada here, he would say.

To me, this is bravado. I don't imagine that, were a government to change, they would actually cancel a contract, because there would be aircraft on the ground, and the costs would be horrific. I don't anticipate that ever happening.

Also, I don't anticipate any government doing it once they take power and talk to the military and find out why they require them.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

I'm going to move on to the issue of the search and rescue contract that's been in the works now since 2004. Is that right—since 2004? It's been underway for several years, at any rate. I'm wondering how long it's going to be until we have those new aircraft.

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

It's at an earlier stage. We are still internally discussing the need for new search and rescue aircraft and, if we need new search and rescue aircraft, what the basic requirements are. That is still an ongoing process inside the defence department.

It hasn't gone anywhere; it's basically still inside the military staffs.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

There's no contract out? There's nothing in the plans?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

No, there isn't. I'm saying it may appear in the final version of the plan and it may not. Right now the military staffs are looking at whether they need new search and rescue aircraft and, if they do, what the basic requirements are. Nothing is set in stone.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Thank you.

[The Chair, Conservative, Rick Casson]

You have one minute left, Ms. Black.