Evidence of meeting #78 for National Defence in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was things.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Patrick Finn  Assistant Deputy Minister, Materiel, Department of National Defence
Jennifer Hubbard  Director General, International and Industry Programs, Department of National Defence

10 a.m.

Conservative

James Bezan Conservative Selkirk—Interlake—Eastman, MB

I appreciate that. I had the pleasure of meeting with 409 Squadron and 19 Wing last week. It is an amazing capability. I just want to be sure we're looking ahead for how it works in the NATO context.

We do ongoing air policing, taking our turn through doing the air policing for Iceland as part of our NATO commitment. We've done air policing in Romania. We've done air policing in the Baltics as part of Operation Reassurance. The comment is that we need 88 fighter jets to continue to potentially meet our NATO and NORAD commitments.

Where are we at with this acquisition of used RAAF Hornets? Now we're talking about extending our CF-18s to 2032, seven years past their best-before date.

10 a.m.

Assistant Deputy Minister, Materiel, Department of National Defence

Patrick Finn

There were a few things there.

Yes, as you indicate, to be able to simultaneously meet NORAD and NATO commitments, it is 88 aircraft. It's obviously not all 88 by virtue of maintenance and training and other things that happen, as occurs today.

With the Australian legacy Hornets, of which right now we intend to acquire 18, we've gone through various steps of their disposal process. I've got a very clear indication of interest in providing 18 to us. We have received what's called a letter of cost proposal that gives us some of the details. That is going through final cost validation by our CFO and others. We've signalled that we want to receive them.

10 a.m.

Conservative

James Bezan Conservative Selkirk—Interlake—Eastman, MB

How much does that cost?

10 a.m.

Assistant Deputy Minister, Materiel, Department of National Defence

Patrick Finn

Because it's not just the airplanes, we've set aside, if memory serves me, about half a billion, but that includes infrastructure and a whole bunch of things we need to do. I don't have the numbers per aircraft. They are much below that. Again, we could provide a bit more information.

10 a.m.

Conservative

James Bezan Conservative Selkirk—Interlake—Eastman, MB

Yes, please.

10 a.m.

Assistant Deputy Minister, Materiel, Department of National Defence

Patrick Finn

We still need to get authorities to proceed, as has always been the case in the Canadian context, from Treasury Board and other authorities. We're pulling that together. The Australians have now gone to the U.S. State Department for the transfer under ITAR. That is under way.

The idea of firming this up in the fall of 2018 was for the start of delivery of the two first aircraft to be next summer, and then quickly beyond it. We're looking at 2032. That is the last aircraft, sir, in the order of battle. That's just the reality, whether it's.... Mr. O'Toole talked about Sea Kings. The last Sea King flight was on the east coast last week. There's a reality of having to maintain a degree of capability while we ramp up.

Our intention is that the first of the new aircraft would be about 2025, and then beyond that.

10 a.m.

Liberal

The Chair Liberal Stephen Fuhr

Go ahead, Mr. Garrison.

10 a.m.

NDP

Randall Garrison NDP Esquimalt—Saanich—Sooke, BC

Thanks very much, Mr. Chair.

I'm going to resist the temptation to ask these witnesses about the Conservatives wanting to skip any procurement process on jets and the Liberals' inability to start any procurement process on jets. I'll come back to something I think is more related to the expertise of the witnesses we have in front of us.

I want to ask about intellectual property under NATO procurement rules. I've asked similar questions to you before on our own procurement.

As military technology and military equipment becomes more and more complex, especially in terms of electronics, I've become more and more concerned about companies attempting to retain the ownership of the intellectual property and the restrictions that places on the ability of militaries to do their own maintenance and repair and the restrictions that not owning the intellectual property places on future procurement.

In terms of the NATO operations, how much attention is being paid to ownership of intellectual property in those procurement processes?

10 a.m.

Assistant Deputy Minister, Materiel, Department of National Defence

Patrick Finn

In the context of NATO procurement, which leads to their operations, the approach is similar to that of Canada's. In my career in procurement, 20 years ago, although IP was something that was there, we talked about it quickly because, quite frankly, we could give you the whole intellectual property for an aircraft or a ship, but unless you had the entire industrial complex to build it, it wasn't worth that much. Today we're in a very different situation because of software technology and those sorts of things.

At the same time, we're more interested, but for a lot of companies, it is the crown jewels. It is something they guard very closely. For us, almost on a procurement-by-procurement basis, we look at how we will do it, how we will approach it. The view is not amorphous in industry, so if you're a provider of equipment, you want to guard it; if you're a supporter of equipment, you want us to acquire it.

We spend a lot of time looking at the right amount. There's ownership of it. There's licence to use it and to have it used. That's an area for us. Generally, as the Government of Canada, we tend not to seek ownership, because having that might preclude Canadian companies from having opportunities elsewhere, and that is not something we want to stand in the way of. We've seen that with Lockheed Martin Canada and their success around the world in updating New Zealand frigates. We've licensed them in the foreground IP that we own, and we do that in a number of cases. We have a similar agreement with MDA, now Maxar. The Triton system was enabled by some of the IP we have that we paid to develop.

The issue, sir, becomes one of, as you negotiate and do it, what you can afford, what you can do, how much access you need, and how much access you can get. I understand exactly what you're saying in the context of in-service support, whether it's by industry or it's by our own fleet maintenance facilities and service battalions and air maintenance squadrons. We try to be very judicious at this and strike a balance, and it's very similar in NATO. They have a practice such that if it's the foreground—what's done and what has occurred—it's theirs, but it's almost on a procurement-by-procurement basis.

In the case of the Canadian surface combatants, we probably spent the better part of a year on, among other things, negotiating intellectual property. We took a position and closed a lot of it, but there were certain things on which the bidders had such different views that we literally set them aside and said that for whoever is selected, we'll establish a short window in which we will complete the negotiations on intellectual property with them, and if we're not successful, we'll go to the second-scoring bidder.

It's exactly as you indicate. There could be a policy to say we'll own it all. We'll break the bank.

The other issue with intellectual property, from my experience, is that owning all that capacity brings with it a duty to maintain it, which is not trivial. I've literally seen at times that we've bought it, locked it up somewhere and not touched it for years, and have then come back to it and found that its utility was limited and that it would have been better to have been retained in the hands of industry.

The issue often is access for a right to use and to have it used. Even for NATO, you can take that position, but where do you find yourself in the discussions with industry?

10:05 a.m.

NDP

Randall Garrison NDP Esquimalt—Saanich—Sooke, BC

I understand it's hard to draw a hard and fast rule, but I think what I hear you saying is that sometimes licensing provides both more flexibility and a kind of guarantee that the owners, the companies, will spend the money on maintenance of the actual equipment and further development, especially in the areas of software.

10:05 a.m.

Assistant Deputy Minister, Materiel, Department of National Defence

Patrick Finn

It may not be the maintenance. At some point that can become an issue, because they can often move away from it, but what it does to us generally in the life cycle is that rather than our taking it away so they can't reuse it or there being the threat that somebody in Canadian industry will be able to compete against them, we're licensing it for the purposes of maintaining it and having our systems maintained. There still can be an issue when we put an in-service support contract up for competition, because their competitor can get access to their IP.

Intellectual property has become much more complicated and sophisticated, frankly. We used to have big debates about requirements. It's not that they're not there, but intellectual property can become overwhelming. We have a defence industry advisory group that has worked in this area, and with Canadian industry we've put together a series of principles to look at to try to improve this.

10:05 a.m.

Liberal

The Chair Liberal Stephen Fuhr

That's the time.

10:05 a.m.

Conservative

James Bezan Conservative Selkirk—Interlake—Eastman, MB

If I could have just one word, Mr. Finn committed to supplying us with information on costing regarding the Australian F-18s. If we could also get information on any analysis they did on the physical condition of those airframes as well, I think that would be worthwhile for the committee.

10:10 a.m.

Liberal

The Chair Liberal Stephen Fuhr

We still have a reasonable amount of time left. Mr. Bezan has some motions that I've undertaken to make sure he has an opportunity to present. I have a couple of people who still want to ask questions. I can either go around formally and do it or I can just take some questions.

Are there any more questions from your side, other than your motions?

10:10 a.m.

Conservative

James Bezan Conservative Selkirk—Interlake—Eastman, MB

No, I think we're good.

10:10 a.m.

Liberal

The Chair Liberal Stephen Fuhr

Okay, there are a couple of folks, Ms. Alleslev and then Mr. Robillard. Then I'll suspend to let the witnesses leave, and then we can go back into a public meeting and deal with our motions.

Go ahead, Ms. Alleslev.

10:10 a.m.

Liberal

Leona Alleslev Liberal Aurora—Oak Ridges—Richmond Hill, ON

I'll let Mr. Robillard go first.

10:10 a.m.

Liberal

The Chair Liberal Stephen Fuhr

Sure. Take no more than five minutes, please.

10:10 a.m.

Liberal

Yves Robillard Liberal Marc-Aurèle-Fortin, QC

Thank you.

With regard to NATO, what does the term “smart defence” mean and how does the NSPA help NATO achieve its objectives in that regard?

10:10 a.m.

Assistant Deputy Minister, Materiel, Department of National Defence

Patrick Finn

You said “smart defence”. You are perhaps referring to a series of projects to analyze capabilities that NATO and its members are working on. The members meet to work together on various matters, including innovation, advanced military capabilities, and so forth. I can give you a few examples.

One is biometrics in military operations. Another is multinational cyber-defence capability development, which Len Bastien talked about. Others are mission modularity and responsiveness to biological outbreaks.

NATO members can choose to take part in these projects, but not all 29 countries participate in all the projects. Canada is interested in many of these projects. This does not provide us with equipment strictly speaking, but it enables us to share our standards and approaches with other NATO countries.

10:10 a.m.

Liberal

Yves Robillard Liberal Marc-Aurèle-Fortin, QC

Thank you.

10:10 a.m.

Liberal

Leona Alleslev Liberal Aurora—Oak Ridges—Richmond Hill, ON

Thank you very much.

I just wanted to make sure I was clear on something you said. Can you confirm that our government has responded to the NATO letter on being involved in the future generation surveillance, the AWACS replacement program?

10:10 a.m.

Assistant Deputy Minister, Materiel, Department of National Defence

Patrick Finn

I don't know for sure. It's a process by which we seek participation. I do know that internally, that part has occurred. We can find out for you whether the last steps have occurred for us to formally sign on at NATO. It's something that—

10:10 a.m.

Liberal

Leona Alleslev Liberal Aurora—Oak Ridges—Richmond Hill, ON

I know the request came, so if you could confirm whether we have responded back to NATO on that request, that would be fantastic. Also, a list of the projects that we actually have currently signed on to in NATO, including ones for which we actually have people, physical human beings, in the project office in NATO, would be great too.

In addition to the financial information I asked for at the beginning, I want to confirm that I would like a copy of the report, if we could, from the NATEX in NCIA upon his leaving. I know that Colonel Bates did write a report, and I would be very interested for the committee to see that.

10:10 a.m.

Assistant Deputy Minister, Materiel, Department of National Defence

Patrick Finn

Thank you.