National Defence Committee on Feb. 8th, 2007

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

Anything can happen?

[Dan Ross]

Yes.

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

Including that?

[Dan Ross]

In my experience, I don't see ministers intervening in that way. They normally rely on the CDS's advice and advice from their senior officials. So it clearly wasn't the case here with the C-17s. The government indicated that they were prepared to provide the resources. We were trying to meet strategic airlift demands, and the process evolved as a best-value, performance-driven process.

[The Chair, Conservative, Rick Casson]

Thank you, Mr. Ross. Thank you, Mr. Bachand.

Ms. Black.

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

Thank you for coming today and making your presentations. The minister was here on Tuesday and I asked questions then about the national security exemption. The government invoked it, and because of that exemption the agreement is exempt from the agreement on internal trade.

When the minister was here on Tuesday, he told me that DND was not involved in that process, and I found this kind of puzzling. He also told me he wasn't the minister responsible.

[Dan Ross]

The Minister of Public Works is the minister responsible.

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

Okay, but it seems to me it just makes common sense that the Department of National Defence would put forward the request that there be a national security exemption, not the Department of Public Works.

So my question is the same question I asked on Tuesday really. What was the process in determining that this contract should be let under a national security exemption? What was the rationale for that? And is the minister correct in saying that DND was not really the initiator of that process? What is the qualification? What are the standards? What is the qualification for determining a national security exemption?

[Dan Ross]

First of all, the process is one where the assistant deputy minister of materiel at National Defence has to request it. I would send a formal letter to my counterparts in Public Works, who, as I mentioned to Monsieur Bachand, do a legal review of that. There is an evaluation of that, and they have the authority to approve or not approve it. So they will write me back.

The criterion is normally the ability to ensure that the in-service support of a key piece of equipment is done in Canada with sufficient guarantees that a Canadian firm with access to a reserve of spare parts can ensure the operation of that equipment in a time of emergency when perhaps another country would have different priorities. This is so we'd have assured support and availability of that key equipment. And that's the main criterion that we use. That's the main time we'd consider a national security exception to the agreement on internal trade.

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

I'm more puzzled. Part of the maintenance is going to go to the U.S. Air Force. Is that right?

[Dan Ross]

Yes, but it is only the part that is in the Boeing global support system. The vast majority of the maintenance on the C-17s will be done in Trenton by military personnel in the squadron and at the wing. For the spare parts we will require Boeing to have skilled technicians, spare parts, and a reserve of spare parts available to us in Canada to ensure that if the United States Air Force had a priority, it would not impact our ability to keep our aircraft serviceable.

The service support part for C-17s is only what we call third-line depot-level inspection and repair, through which we will access their global support chain for C-17s. It was absolutely unaffordable to bring that piece to Canada for four aircraft.

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

If the U.S. Air Force is looking for service on their C-17s and we're looking for that particular kind of servicing at the same time in the U.S., who do you think is going to get priority?

[Dan Ross]

We will work that out with the United States Air Force.

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

Good luck.

[Dan Ross]

That type of servicing is the periodic inspection type of service that would go on, say, once every six months, and so on. You can schedule that with the Boeing global support system, and it can be done in Australia, Germany, the United States--anywhere they have one of those facilities.

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

Having this national security exemption is what nullifies the whole agreement on internal trade, and it seems to me that decision was made after the CF-18—

[Dan Ross]

We didn't actually have the agreement until after the project.

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

I realize that, but that was the political genesis of the agreement on internal trade, certainly.

The response to another question I asked the minister also puzzled me. It was on the whole issue of the contract on the C-17s. I asked about the contractual terms of the contract and the obligations under the contract. As you've heard or are no doubt aware, the Liberals have said they would cancel this contract if they became government. What would the result be if we were to cancel this contract? What are our contractual obligations under the contracts right now?

[Dan Ross]

Public Works is the contracting authority. My understanding is that all our contracts have termination terms and conditions in them--the language is “termination for convenience”--so you can always terminate a contract. There are costs for terminating a contract; they are largely for compensating the company for any expenses or work we have asked them to do.

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

That's what I'm asking you. What would those costs be?

[Dan Ross]

At this point, they wouldn't be major; if you go another year from now, they would be fairly significant.

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

What does “fairly significant” mean?

[Dan Ross]

It would probably be hundreds of millions of dollars.

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

When will the C-17s be operationally ready? The announcement talked about delivery in the summer, and I'm wondering about the training for the pilots and the crews. If we get them this summer, will they be ready right away? Will the crews be ready right away?

[Dan Ross]

The crews are being trained now. The crew is very small. It's a crew of only four people. I had a conversation with the commander of 1 Canadian Air Division fairly recently, and they will be ready to fly their plane in the summer. That will effectively be the initial operating capability.