Mr. Chair, distinguished members of the committee, I would like to thank you for the invitation to appear before you to answer questions relating to your study of the Royal Canadian Navy.
As Assistant Deputy Minister, Material, for the Department of National Defence, I am responsible for the acquisition and life cycle support of all military equipment. This includes all ships, submarines, minor war vessels, auxiliaries, weapon systems and platform systems that are operated by the Royal Canadian Navy. I ensure that all naval assets are properly procured, supported through life, materially certified and technically ready for the various operations they may be assigned in support of government priorities.
Acquiring the new naval fleet and sustaining the existing one are very complex activities. At DND this involves an annual budget of approximately $1.5 billion, almost 1,000 people, and over 4,000 separate contracts under management with my colleagues at Public Services and Procurement Canada. By far, the majority of these contracts deliver as expected on an ongoing basis. A few of these contracts are, however, particularly notable for their importance in defining our future naval capabilities and materiel readiness for years to come and, of course, for their complexity.
Currently, the Royal Canadian Navy is in the midst of its most intensive and comprehensive period of recapitalization in its peacetime history, touching upon all elements of the fleet. The largest components of this recapitalization effort include:
First, the Halifax-class modernization, which delivers modernized and sophisticated systems, will ensure that the Halifax-class frigates continue to meet all operational requirements of the Royal Canadian Navy until they are replaced by the Canadian surface combatants. The modernized Halifax-class frigates have achieved noteworthy operating results, and the 12th and final mid-life refit is nearing completion. The program remains on schedule and on budget.
Second, the Arctic offshore patrol ships will conduct armed seaborne surveillance in Canada's waters, including in the Arctic. They will enhance the government's ability to assert Canadian sovereignty and provide surveillance and support to other government departments. The construction of the first two ships is well under way, and delivery of the first ship is scheduled for 2018.
Third, the joint support ships will increase the range and endurance of naval task groups, permitting them to remain at sea for significant periods of time without returning to port for replenishment. The construction contract is on track to be awarded in 2018.
Fourth, the interim auxiliary oil replenishment capability will provide at-sea replenishment services to the Royal Canadian Navy in non-threat environments by fall 2017. The initial period of service delivery will be for five years, with options to extend that period by up to five additional one-year terms until the second joint support ship joins the Royal Canadian Navy.
Finally, the Canadian surface combatant will be capable of meeting multiple threats in both open oceans and complex coastal environments, ensuring that Canada continues to monitor and defend its waters, contributes to the collective defence of the nation, and promotes international peace and stability abroad. Twelve companies have been pre-qualified to submit bids under the current procurement process. The build contract is anticipated to be awarded in 2019.
Numerous in-service support contracts further ensure that the Royal Canadian Navy remains relevant and delivers operational excellence. These include a new sonar system for our Victoria-class submarines, naval remote weapon stations for our Halifax-class frigates and joint support ships, and high-speed data connectivity for the Kingston-class vessels.
Considerable efforts are also under way to ensure that we are appropriately prepared to support the new fleets through their entire service life. These new ships will arrive with new technologies and global supply chains involving companies from around the world. We are looking closely at our support methodologies and consulting our allies and industry partners to consider new types of arrangements that provide capable, flexible, and cost-effective services to maintain our fleets.
Examples of some of the larger in-service support procurements that will utilize or already use these approaches include the Arctic offshore patrol ship and joint support ship in-service support contract, the Victoria-class in-service support contract, and the Halifax-class combat systems in-service support contract.
Knowledge management and best practices are also at the heart of our improvement effort within the procurement domain. As an example, when the Halifax-class modernization program entered implementation in 2009, it was considered one of the most complex naval procurements undertaken by the materiel group since the original Canadian patrol frigate program in the early 1990s. Innovation and governance, contracting, and management approaches were used not only to achieve success with the Halifax-class modernization program, but also to prepare the entire materiel management enterprise to meet the challenges that new build, modernization, and in-service support will bring across the entire Canadian Armed Forces.
Finally, we are also evolving the competencies and the organization to ensure that we are ready to maintain these new fleets to recognized standards. We are in contract with a classification society to provide greater insight into the materiel condition of our fleets. Significant efforts have also been dedicated to the development of business intelligence solutions to monitor and report the effectiveness of our maintenance programs. We are instilling the business acumen to work effectively with our industry partners to establish and maintain the types of support contracts that we need to keep our fleets capable, available, and cost-effective.
In closing, we are in an exciting time of navel fleet recapitalization. At the same time, the evolution and innovation of our procurement and support approaches have continued soundly and will ensure we are well positioned to provide the necessary support for all assets for years to come.
We are very proud to be able to work closely with the Royal Canadian Navy in the defence of Canada and the projection of Canadian values abroad.
Thank you for allowing me to provide some opening comments. I'll turn it over to my colleague.