National Defence Committee on March 29th, 2007

[Peter Simmons]

As I said, we are in the process of negotiation, but no contract has been signed.

As Mr. Coyle pointed out this morning, he has not been involved for approximately a decade in the environment of the aircraft, so he could not offer personal history but was obliged to read from the same January report.

[Denis Coderre, Liberal, Bourassa, QC]

But, Mr. Simmons, let's be fair to Mr. Coyle. He said himself that the report he was quoting was from January 2007.

[Peter Simmons]

And that is the one I am now going to address. But the report he was given to read from this morning was dated this January. That is the 2006 DOT and E annual review report, which they are obliged to produce every year.

There are three issues raised in that report. What I would like to clarify is that the OT and E environment that has been referred to only relates to the United States Air Force C-130J aircraft and its testing environment and does in no way reflect the operational condition of the aircraft as it relates to all other operators, which are many years ahead in terms of testing and operation than the United States is. They had far more aggressive test and deployment schedules than the U.S. Air Force. The testing schedule under OT and E is actually lagging the rest of the world in terms of operational capability.

On the three issues, I'll be happy to address them specifically. If it becomes a little tedious technically, I apologize, but I feel justified in giving you the reality of what's going on.

[The Chair, Conservative, Rick Casson]

You have only one minute.

[Denis Coderre, Liberal, Bourassa, QC]

So you think it is inaccurate.

I would also ask a question specifically on the price of the plane, because it seems that, rightly or wrongly, we're going to spend billions of dollars. If you calculate, maybe it's too simplistic, but if you put what it's worth, it would cost about $188 million per plane.

It seems that in the United States they have a better deal, because it's U.S. $66.5 million. So for the sake of taxpayers' money—and if I'm wrong, I will be more than pleased to have the better answer—how much will it cost Canadian taxpayers for one plane?

I think Jack wants to answer.

[Jack Crisler, International Vice-President, Business Development, Air Mobility, Lockheed Martin Aeronautics Company]

Sir, that's yet to be negotiated. The number you're dividing by 17 is the total program cost, funding all of the Canadian program office activities and a lot of the Canadian expenditures that it will take to prosecute the program.

We'll have fair and transparent insight into the cost of the program, and that's per your Public Works terms and conditions. They will have insight into the cost.

[Denis Coderre, Liberal, Bourassa, QC]

How much will it cost?

[Jack Crisler]

That's yet to be negotiated.

[Denis Coderre, Liberal, Bourassa, QC]

Oh, you're still negotiating.

[Jack Crisler]

We will respond to the requirements of the Crown. Once we know all of those requirements, we'll price it....

Thank you.

[The Chair, Conservative, Rick Casson]

Thank you very much. The time has expired. I apologize that you didn't have time to answer that, but we have to move on.

Mr. Bachand.

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

Thank you, Mr. Chairman. Let me also welcome all of the witnesses.

I have a question for Mr. Bain, which I will preface with a remark. The motion that the Bloc Québécois introduced in the House of Commons stated that 60%, or certainly 55%—we can quibble about the exact percentage—of Canada's aerospace industry is in Quebec. When the industry minister appeared before the committee, he had already signed the C-17 contract with Boeing. I asked him if his hands, and those of his colleague Michael Fortier, the Minister of Public Works and Government Services Canada, had trembled before they signed the contract, because they knew full well that in signing the contract, 60% or 55% of the economic spinoffs would not be going to Quebec. Unlike my Liberal colleague, I feel that the AQA did make some headway on this file.

But I would like you to tell me about another group in Quebec, and whether or not you have any type of relationship with it. I am referring to the aerospace cluster, which brings together all of the big players. I believe that Pratt & Whitney is one of them, but they don't seem to have very much to say about it. I understand that you don't want to bite the hand that feeds you, but the problem is that the hand is not feeding the industry. It might be time to bite it.

Can you tell us if there are any ties between the AQA and the aerospace cluster? I know that you represent the small- and medium-sized businesses, whereas the aerospace cluster represents the larger corporations. Is there not some way that you could form a coalition to express your dissatisfaction? That seems to come through in your brief, but I think you could put more teeth into it. Is it possible for you to do that?

[Stewart Bain]

Merci, Monsieur Bachand.

I cannot speak on behalf of Aero-Montreal, only on behalf of the Quebec Aerospace Association. Primarily our mandate is to respond to the needs of small to medium-sized enterprises. Certainly the aerospace industry in Quebec is built on a strong collaboration between the OEMs and the SMEs. We rely very much on their vision and leadership in our industry in order for us to get the benefits as well.

In the Aero-Montreal--as you referred to it, the grappe--inherently we do participate. The AQA participates on certain committees. As an active member of Aero-Montreal, we support that initiative wholeheartedly. But I cannot speak on behalf of Aero-Montreal; I can only speak on behalf of the AQA. Our agenda is to improve the situation and essentially, as you put it, respect a situation that is well established. The industry in the area of Quebec has been a leader and continues to be a leader in the world with its aerospace capabilities.

We will continue to dialogue with Aero-Montreal. We will do our part to share information, to be as transparent as possible. In the same spirit, our proposal suggests that when Canada considers a major military procurement, all of the stakeholders be considered, all of the interests be considered--including, most importantly, the needs and the technical requirements of our military, and also how we can leverage that into our Canadian industry, an established Canadian industry that is a world leader.

That's as much detail as I can give you on that point, Mr. Bachand.

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

Thank you.

Now, I have a question for Mr. Simmons. I know that in its negotiations with Boeing for the strategic aircraft and the helicopter, Public Works and Government Services Canada used what is known as an ACAN. That is an advanced contract award notice. I won't refer to the Camaro example: we have all heard enough about that.

In your case, at the time I had seen a letter of intent on the MERX site, the official electronic tendering service. You have now confirmed that negotiations are underway.

We heard from Mr. Bain, as well as the excellent presentation made by CASA. Alenia did not present a brief, but we are told that there will be major Quebec and Canadian content. If the government were to agree to work with you, I would like to know if you can commit, on behalf of Lockheed Martin, to having 60% of the Canadian contract awarded to Quebec, where the major part of the aerospace industry is located.

Should I be asking you that question, Mr. Simmons, or should I call the Lockheed Martin CEO? Perhaps you could pass the message along for me.

[Peter Simmons]

I'll actually defer to Mr. Crisler.

[Jack Crisler]

The MERX address that you referred to was a solicitation of interest and qualification that had some very specific requirements--nine to be exact.

One of those that we had to certify was an industrial and regional benefits requirement. That requirement was very specific about the business areas, the technologies in the regions that we would have to put business in, to the percentage. So we will meet those requirements in our proposal, and we will execute to those proposals.

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

Are the requirements still confidential?

[Jack Crisler]

They were listed on MERX as well, sir.

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

By your answer, do you mean that 60% of the economic spinoffs in Canada would go to Quebec?

[Jack Crisler]

It was a very overlapping equation. The percentages per region were very specific, but in the discipline areas, which Quebec has a lot of, the disciplines resident in the Montreal region could also absorb additional percentages. It's not until we make our proposal for industrial and regional benefits and that proposal is accepted that we'll know what percentage resides in Quebec.

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

Okay. That means that you can't confirm at this time that 60% of the benefits would be granted to Quebec?

[Jack Crisler]

I cannot, sir.

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

You can't say that?

[Jack Crisler]

It's not a requirement.

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

It is not a requirement. Did you not say that there would be a specific distribution of regional industrial benefits throughout Canada?