National Defence Committee on Feb. 8th, 2007

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

You talked a lot about the procurement process, and I want to ask you a quick question.

[Dan Ross]

Good. I'd like a question about that, actually.

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

What holds it up? You talked about 15 years, but what really holds it up? Is it the bureaucracy, or is it that governments sometimes can't make up their minds? Is it that there are so many players involved, so many different departments? When I asked the minister who had the final accountability, he couldn't answer that question.

I'd like your quick opinion on that.

[Dan Ross]

I've been involved in this business since 1982. When I first came to National Defence Headquarters as a major, I was the manager of the army's equipment program.

My view would be that over the past 25 years we have had some internal self-inflicted wounds, as I mentioned, but there has often been uncertainty by governments about how much they wanted to fund in national defence, and uncertainty in the department about whether it was affordable or whether we would get policy approval. That uncertainty itself has consumed a lot of time.

When we say 15 years and it takes 9 years to get to the policy approval stage, that wasn't all in DND. Let's be honest, it wasn't all in DND, but the part that was in DND.... When we embark on a three-year process to write a technical specification, that doesn't help. Frankly, I can't tell Sikorsky how to design a better helicopter.

[The Chair, Conservative, Rick Casson]

Thank you, Ms. Black.

Ms. Gallant.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman.

Through you to the witnesses, the committee is doing a study on procurement for the second time in as many years, because this time people are unhappy with the companies that won the contracts or with the companies that didn't win the contracts. Allegations of political interference make for great media coverage, and in this case the charges have been unfounded.

Thirteen years ago, political interference did result in the cancellation of the EH 101 military helicopter contract, costing $500 million of scarce taxpayer dollars, only to have the same government purchase a commercial, off-the-shelf version of the same helicopter with none of the industrial spinoff benefits to the Canadian economy that the EH 101 would have provided.

The Cormorant has been experiencing some cracked rotor problems, I understand, because the commercial version is not the militarized, heavy-duty version built to withstand the demands put on aircraft in an operational military role.

How will the process we've implemented of non-interference in military procurement enhance the safety of the women and men who use this equipment?

[Dan Ross]

I need to correct you, because the MHP project was the one cancelled by the government. The aircraft you're referring to is the rotary ring search and rescue, which is a completely different project.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

I'm talking about two different ones.

[Dan Ross]

Yes, exactly.

The S-92, which is being built by Sikorsky for our maritime patrol aircraft, was a commercial aircraft, and we've only modified the tail, and so on. So we have a fairly high degree of confidence that it was a proven aircraft.

I think it's difficult to say that the government had any real significant role in the difficulty we've had with the Cormorant. It was early in the production of that aircraft, the EH 101. The Royal Navy had bought some. But again, that's fairly typical of developmental aircraft programs, where it takes, in many cases, about a decade to work out the bugs.

We're working hard with AgustaWestland, and in fact we—our engineers—have found the solution, we believe, to the half-hub rotor issue and have solved that for AgustaWestland.

I think it highlights the issue of risk when you get into a very complex piece of military equipment very early in its developmental process and its initial production. There's a lot of risk there, and the Cormorant is a prime example.

We also don't have a single point of accountability with the Cormorant, and we didn't purchase the right type of intellectual property with the Cormorant. As Mr. Rowe, the president of I.M.P. in Halifax, will tell you, as I say, it takes about 10 years to work out those bugs.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Okay. Let's go to the fixed-wing search and rescue procurement that I understand is currently in the works. It hasn't been finalized.

What has been brought to our attention is that there was an SOR version two in April 2005 and then an SOR version four in July 2006. Because we're trying to understand the procurement process, how is it that one jumps from one set of requirements to the next? I think in this case one of the examples was the 6-foot 11-inch cockpit height. So what is it that takes place in between one version and the next version?

[Dan Ross]

It's the challenge function, led by General Ward and his people.

[MGen M.J. Ward]

We submit each of these statements of requirements to numerous levels of scrutiny, and at each progressive level the people who initially draw that statement of requirement up have to be able to reinforce or to at least withstand that challenge. At a number of these stages we've actually asked them to go back to study some things again in order to provide better analysis or better science and technology support to those specific requirements that they specify.

So in one particular instance—and I'm not sure which of the SORs it was—they went back and undertook some significant operations research analysis to understand what all the height, weight, and width requirements would be in the aircraft so that they could perform roles for which we had confidence search and rescue would require.

Until it gets to the very last stage where they ask for effective project approval, any of these things could change to make sure we're getting exactly the right specification in there.

[MGen J.D.A. Hincke]

For example, in the challenge function, there are a set of assumptions at the front of any SOR, saying that these are the assumptions we use: we're going to have this many crew in an aircraft, we're going to have it based here, these are the response times, and so on. These can also be posed as questions, because they all have value and cost impacts.

So the response time may be made shorter by a basing option that has more distribution across Canada. But that might cost more. So you have to do those kinds of trade-off analyses to find out which set of solutions and which capabilities give you the best value. You have to make sure you're asking for the right things in the high-level SOR, which we're talking about now. This will be scrutinized by my people and, from a capability perspective, by General Ward's folks. Those go into the SOR evolution as these things go forward.

So I think we could probably go back and see that any of the approved SORs were not the first or second versions. There are numerous iterations as the challenge function takes place in the department, from the perspective of cost, affordability, of how many people are involved and how much money it will cost, and of what will be the life-cycle ownership costs of that capability over its 20 years.

There are also various permutations and combinations of all of those things that then get assessed by the military sponsors of that capability. We look at it as well, and a decision is taken departmentally that we're good to go.

We also work with various other folks—I work with a Treasury Board analyst as well—and they have challenge functions and questions, since they're looking at and questioning us regarding whether this is the best value for the government.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

So then there's documentation to back up why the SORs were changed, and it's not a matter of engineering a contract, so that just one company qualifies.

[Dan Ross]

[Inaudible--Editor]...and it was extremely...I wouldn't say acrimonious, but they were tough discussions and contentious issues. The key issue has always been, what is the minimum level of service to Canadians in search and rescue?

The air force's push-back was, you have to identify what that minimal level of service is. Where we are now in our draft documents is the same level of search and rescue service to Canadians, or better—but no worse. We cannot require a capability to do that immediate assistance role to Canadians and give them worse service that affects speed, range, endurance, the sensors on the aircraft, and so on.

[The Chair, Conservative, Rick Casson]

Thank you, Mr. Ross.

That concludes the opening round. Now we go into the five-minute round.

We go to Mr. Martin and then to Mr. Blaney.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Thank you very much.

Mr. Ross, General Ward, and, General Hincke, thank you very much for being here, and thank you for your work in the service of the members of the Canadian Forces and our country.

You have a very difficult job to do, and having just touched its surface, we certainly had an appreciation of how complex it is. I don't envy you because you probably have a lot of sleepless nights.

First, on procurement, I'm going to ask four questions, and you may not be able to answer them all today, but if you could provide us with the answers, that would be appreciated.

Sitting with your colleagues in Public Works, the Treasury Board, and industry, you must say to yourself, there's a better way of doing this. So looking at the big picture and how we can streamline the whole procurement process--and saying, in an ideal world, we could have this changed from here to here—if you've thought of some kind of a model like that, particularly looking at the Swiss and Australian models, and learning from best practices around the world in your experience, could you please provide us with this kind of model, which we could add to our final report? That would be very helpful for us in trying to look at ways where we could really cut to the chase to make sure you're able to do the job in as quick and effective a fashion as I know you're trying to. So I'll leave that.

My three real questions are as follows. First, regarding the replacement for the fixed-wing SAR, it's come to my attention that the statement of operational requirement for the minimum flight speed has been raised to 140 knots.

In my province of B.C., where contour search and rescue is very important, I understand that the best way to do visual SAR is between 70 and 120 knots. So could you please tell us why that minimum SOR has been raised to 140 knots, which I think really compromises the security of our SAR techs and the functioning ability of the plane to do the job, particularly for contour searches?

The second question is, when we were looking at tactical versus strategic airlift, we came to the conclusion that purchasing tactical airlift, while renting the Globemasters from the United States, would save the taxpayer $400 million. Why didn't we buy the replacement for the Hercs and lease the Globemasters from the U.S., which would have enabled us to have those C-17s here? The Americans liked it, and it was responsible for the taxpayer. Why did we not take that course of action?

Lastly, do the ITAR restrictions apply to both DND employees and industry?

Thank you.

[Dan Ross]

I'll take a cut at that list first, Dr. Martin, and perhaps my colleagues will add a couple of comments.

Number one is what could we do to improve the overall process jointly with our colleagues across government. I talked about some things that we think are on our watch and we're going to do. I know this is perhaps a politically linked response, but consistent defence policy and long-term consistent funding, not guarantees but assurances from government, would be one. Secondly, clarity on what is the primary objective here. Is the primary objective the right equipment at the right time for our troops, or is it other objectives? Is it IRBs? Is it jobs? Is it development of certain industries in this country? I'm not sure those things are clear, and that would be a question I would leave with you people, who are closer to those issues than I am.

I don't know the answer on SAR fixed-wing minimum speed. Do you know, John?

[MGen J.D.A. Hincke]

I do not know the answer on the fixed-wing minimum speed. It would really be an issue the chief of the air staff or the air force would be able to answer in terms of safety issues with regard to exiting the aircraft, I'm assuming. There are probably issues related to best speed for visual search and best speeds for SAR techs jumping out of aircraft. I'm not an expert. The air force would probably have to take that one on.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Maybe you could get back to us on that, General Hincke, because it's a matter of safety, and it's really relating to the fact that visual search and rescue, from what I understand, is between 70 and 120 knots over contour, over mountains, in my province, which is really important.

[MGen J.D.A. Hincke]

That's really an operational kind of technique. I think the air force would be best positioned, and we'll see what we can do.

[Dan Ross]

We can provide a written response.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

If you could, that would be really appreciated. Thank you.

[Dan Ross]

The third one is leasing Globemasters and then waiting for our Hercules, if I understand the question.

I wasn't actually aware that we could lease Globemasters, and the United States didn't offer that when we put out our proposal. Waiting for Hercules is very challenging because of the rate at which they are dying. We really do need to be at contract as soon as possible for a replacement to our Hercules.

The leasing option is challenging as well because it truly isn't a permanent solution to long-haul strategic airlift, which effectively in that business is jet aircraft that can carry at least two armoured vehicles trans-Atlantic or several hops over the Pacific, or something. I think the minister and the chief articulated on Tuesday some great advantages to owning a small and highly valuable component that is strategic.

I know our air staff has done a lot of analysis, and they feel the optimal balance is that small piece of about four, with about 17 tactical air lifters. It actually does give you the capability, if you have a surge, to use our strategic lines of communications agreement with the United States Air Force to access their capacity or to actually have to go out to the market and lease a little bit more. I'm hoping that NATO will buy a small number of C-17s, and we'll have a relationship with them, so that I actually never have to pay for the lease of any contracted strategic airlift. I can provide them a little bit of capacity when they need it and they can provide a little bit of capacity to us.

[The Chair, Conservative, Rick Casson]

There was one question that was asked about ITAR, if it applied to DND personnel and industry.