Thank you, Mr. Chair.
Committee members, ladies and gentlemen, thank you for the invitation to come and speak to you about procurement in the Department of National Defence today.
As the chair said, I'm the assistant deputy minister, matériel. The materiel group is a central service provider and functional authority for all materiel for the Canadian Forces and the Department of National Defence. Essentially, that means that the materiel group is accountable for acquiring and managing the equipment through its entire life cycle, from the identification of a requirement right through to disposal.
We are the overall design authority for Canadian Forces equipment and systems. We also oversee the defence materiel relationship with other Canadian government departments, agencies, the Canadian defence industry, foreign governments, and international organizations.
We employ approximately 4,400 civilian and military personnel. It takes experienced and professional staff to execute on the various procurement activities we face, and in this regard we are fortunate in that we have innovative, capable and dedicated professionals. We continue to make strenuous efforts to further professionalize our skills in complex project management.
I manage an annual budget of over $3.5 billion for capital expenditures annually and another $2.6 billion for maintenance and upgrades. We oversee approximately $22 billion in existing inventory of major systems and assets and I co-manage an active inventory of $5.2 billion with the Canadian Operational Support Command.
On average, annually we spend on materiel approximately $6 billion. There is a very predictable funding framework provided by the Canada First defence strategy, and that is reinforced by the departmental strategic investment plan. And I would comment, as well, that accrual budgeting has also been a key improvement in accelerating defence procurement in the past three or four years.
What keeps me awake at night, as you're no doubt aware, is the operational tempo of the Canadian Forces around the world, particularly over the last decade. Currently, we have 18 international missions under way, involving 5,200 members of the Canadian Forces. Vital as that is to meeting our obligations, it does consume resources, it increases equipment maintenance and repair, and it hastens deadlines for replacement.
Our military's equipment is often unique, is generally highly complex or sophisticated and frequently requires a measure of adaptation for use by our forces
The number of suppliers of major platforms is small and it is becoming smaller with the merger of various defence corporations worldwide. And these same corporations supply various countries, not just Canada.
Finally, in addition to meeting the urgent short-term requirements of our troops engaged in conflict and the longer-term requirements to make the future defence vision a reality, we also need to be accountable to Canadian taxpayers, to get best value for money, while taking into consideration industrial regional benefits, environmental health and safety, legislation of regulatory requirements, and international treaties and trade agreements.
I would comment that we have had some successes for our troops in recent years. For example, in terms of process we have shortened considerably the process in the past five years. We were averaging, in the previous ten years, 107 months to get to contract award, and we're averaging less than 48 months. This has largely been achieved by going to performance-based procurement, by going from the very detailed requirements to much higher-level performance-based requirements by minimizing customization and focusing on proven off-the-shelf solutions.
By applying these concepts, we have seen many examples of procurement successes such as the CF-18 modernization, with the last fighter delivered last week, ahead of schedule and well under budget.
There is also the Halifax class modernization program to extend the operational life of our frigates. It's a more than $2 billion program and is well under way, with our first frigate coming out of the water this fall in Halifax.
We've delivered the four C-17 strategic airlift aircraft early and well under budget again.
We are planning to accept the first of 17 new Hercules tactical airlifters shortly, six months ahead of schedule.
We signed a contract last August for 15 new Chinook 47F helicopters that will be based in Petawawa, a huge increase in the army's ability to conduct all sorts of operations, from combat to disaster relief.
We purchased 100 surplus Leopard 2 tanks, which have been enormously effective in Afghanistan and provided vital protection to our troops in dangerous missions.
The last project I'd comment on is with our armoured logistics trucks, which have been enormously effective in Afghanistan. Our crews have not suffered a single casualty to date in using those new heavy armoured trucks.
There are many other projects that have been brought under contract or delivered in the past four or five years.
As a result of the Canada First defence strategy, in the future the department will replace more of the force's core equipment platforms to preserve the maximum operational flexibility for the Canadian Forces. This will include replacing our existing destroyers and frigates and replacing the fixed-wing search and rescue aircraft, a capability currently provided by the Buffalo and Hercules.
We are also procuring the next generation of fighter aircraft to replace the existing fleet of CF-18s. We will replace the Aurora maritime aircraft, joint support ships, and Arctic offshore patrol ships.
Lastly, I would comment that we will progress to acquire a new family of land combat vehicles and systems to protect our land force soldiers in high-risk missions abroad. This will include the close combat vehicle, a light armoured vehicle upgrade--to be done by GDLS in London, Ontario--a tactical armoured patrol vehicle, and new armoured engineer vehicles based on Leopard 2 tanks.
Of particular note is the replacement of our ships. As stated in the Speech from the Throne, the government will continue to support the shipbuilding industry's sustainable development through a long-term approach to federal procurement for ships. In order to capitalize on a number of shipbuilding projects that we and other departments like the Canadian Coast Guard will undertake, we are working towards a national shipbuilding procurement strategy. This will reinvigorate Canadian shipbuilding and will provide work for our shipyards for the foreseeable future. It will also ensure the best value for Canada, the defence dollar, and the economy.
There is no other public sector organization of a comparable size or function in Canada to DND's materiel group. I'm proud of the progress we've made in the last few years.
Mr. Chair, I'd be delighted to take any questions from the members.
