National Defence Committee on Feb. 13th, 2007

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

You are saying that politicians can decide what type of aircraft they want, even if that is not fully consistent with the army's requirements and the importance the army places on that type of contract. You are saying, somewhat like Mr. Ross, that anything is possible, that there can be political interference. They can say they want a certain type of aircraft and that they want you to determine your requirements to make it possible to purchase that type of aircraft or to sign that type of military contract. It is possible.

[LGen George Macdonald]

It's a question of nuance and interpretation of the word “possible”, I suppose. But the reality is that I think most of us would agree that the process would be totally compromised if something like that happened.

The fundamental requirement here is that government decides what the national interests are, decides what the policy is, defines what mission the Canadian Forces perform, but then I think it's important that they respect and accept the military's advice with regard to what the requirements are to fulfil that.

How that's funded, again, is another decision for the government to make.

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

We always go back to the example of the maritime helicopters. Political interference certainly occurred in the case of the maritime helicopters. You acknowledge that, don't you?

[LGen George Macdonald]

Obviously, the government of the day decided to cancel the project completely. Whether that was because of cost or a disagreement with the requirements is something I suppose you could argue.

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

Yes, but you acknowledge that a subsequent decision was made to adopt two approaches, one for the platform and another for the computer platform. It was like deciding to put a Ford dashboard in a Chrysler car. That would not work well. Why was that decision made? It was because they did not want to buy the same helicopter as in the contract they had cancelled, which had cost $700 million. You are saying, in veiled terms—I understand that—that you think there was political interference.

I don't have much time left. Isn't it important for Canadian industry to benefit from economic spinoffs? Moreover, we must also look at whether we are in a position to build this type of equipment. I find that lacking. I don't think that the Department of Industry can represent everyone. If representatives of Canadian industry were present, they could indicate what they are in a position to offer in terms of future contracts.

I think you are right in saying that we cannot build all parts of the C-17 in Canada. However, if certain companies were around the table and the decisions were made, they could provide important insight. Are you in favour of industry representatives being involved in the procurement approach?

[LGen George Macdonald]

I'd like to restate what I said before and not have any misinterpretation about my response to you, Monsieur Bachand. I think the requirements are fundamentally in the military domain. The military provide the requirements. If the government decides to accept or reject those requirements, that's a decision for the government.

Industry certainly has a role in this in providing information on capabilities and potential solutions to those requirements, but industry, of course, is biased towards industrial concerns. They should not be involved in the requirements. The requirements should be set to perform the mission to the best capability of the military, and it's up to the government, then, to take these into consideration.

[The Chair, Conservative, Rick Casson]

Thank you very much, and thank you, Mr. Bachand.

Ms. Black.

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

Thank you very much, and thank you both for your presentations this morning and for appearing at the committee.

In terms of responsibility, when the minister was here at the committee last week he said that cabinet as a whole was responsible for defence procurement, and when Mr. Ross was here he said there was a joint responsibility between DND and Public Works, with some others involved.

You mentioned, General Manson, that the system was—“dysfunctional” was the word you used. So if the procurement system is not working—that seems to be the tenor of your submission, you talked about 27 years for the replacement of the Sea Kings—who has the final responsibility in the process? Who is the final level of responsibility in the procurement process?

[Gen Paul Manson]

Obviously, it is the Prime Minister and ministers at the cabinet table in our democratic system of government. It is the tradition that they have final responsibility for making decisions, especially decisions that involve the expenditure of billions of dollars of taxpayers' money. So there can be no question about that.

The term “political interference” is one I think we must be very careful about.

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

I didn't use that term.

[Gen Paul Manson]

I know you didn't. But we must be very careful. You hear it often these days. But is it really interference when the cabinet and the Prime Minister exercise their constitutional responsibilities? Certainly there is a risk that they can jump in at the very early stages of the major capital procurement and try to influence it.

In my 40 or 50 years of experience I've only really seen one instance, and that goes back many decades. But in recent years I've not seen that. In the case of the maritime helicopter project, the EH 101 cancellation, the cancellation was done after the contract had been in place for one full year. They didn't try to influence the requirements and the specifications at all. They decided for other reasons to cancel the program back in 1993.

So, yes, the government is ultimately responsible, and rightfully so in my estimation.

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

General Macdonald, you talked about the statement of requirements and how the military and DND puts that together. In your experience, were those statements of requirements ever modified by government?

[LGen George Macdonald]

I cannot think of a specific case, no. They have been modified from time to time since their original version, due to changing needs, or the emission requirements have changed somehow, or some new technical information has been available—not significantly, but I can't think of a case where government forced a change in requirements.

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

So when the statement of requirements is finally endorsed by DND or the military, that's what goes out to the theoretically competitive process?

[LGen George Macdonald]

That contributes to the competitive process, yes.

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

But the requirements as deemed necessary by DND, is that what is finally sent out to the bidding process?

[LGen George Macdonald]

It's interpreted into a statement of work, and the statement of requirements go together. But as long as the government approves the project and for work to continue, yes.

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

So government, in your experience, has never modified or changed any of the requirements DND put forward?

[LGen George Macdonald]

I suppose there have been cases where you could say they rejected a particular approval and therefore did not accept the requirements, but, no, I can't think of any forced changes.

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

I wanted to ask each of you what you think is an acceptable timeframe for procurement. Shouldn't the process be able to wrap up relatively quickly? I guess it depends upon what exactly is being asked for. But is there any relationship between the length of the procurement process and the final outcome in terms of when something is purchased?

[Gen Paul Manson]

It's a very interesting question. There is no simple answer. We can't say, of course, that every procurement should take place in three or five years. It depends very much on the particular program. For obvious reasons, the megaprojects, the huge ones, will take longer than the acquisition of a relatively small piece of equipment. In fact, our association, our institute, did a study last year of procurement times and we found there is an enormous range. Yes, of course, the maritime helicopter project is some 30 years. But there have been some very good instances in recent years of quick acquisition in under three or even two years. An example is the Nyala vehicle for the army in Afghanistan. The new artillery piece for the army, which is being used very effectively in Afghanistan, had come through very quickly.

An important factor is whether you can buy something that exists on the shelf that meets Canadian needs precisely, and if the will is there and the operational need is critical, then the government can buy this equipment very quickly. But in other cases...for example, the Canadian patrol frigate, which had to be designed, wasn't available on the shelf to meet Canadian needs. That's one that took many years. It depends very much on the circumstance of the day.

[LGen George Macdonald]

I would add to General Manson's response by referring to a few points I made in my presentation. If the commitment is there to purchase a capability, then it can proceed quickly. If the funding is available, of course, it can proceed. Perhaps the variable in this is how much risk you're willing to accept. Obviously, buying something quickly may induce a risk that this piece of equipment isn't quite as suitable for future missions as you would have wanted it to be had you taken the time to flesh out the total applicability of that particular piece of equipment. Or you may not have the personnel trained in time. So there are things. Doing things more quickly may incur risk. Doing things over a longer period of time, of course, incurs more risk with funding or whatever.

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

My last question relates to the fifth point in your presentation, when you talked about the balance between domestic and international needs. Do you foresee a domestic purpose for the procurement that's going on now for large aircraft?

[LGen George Macdonald]

Absolutely.

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

Could you expand upon that?