National Defence Committee on March 22nd, 2018

[Daniel Verreault]

Yes. These bids often involve a multitude of companies. Just think of the future of surveillance, as an example, where we are very good globally. We have terrific technology. One is at IMP, as an example, with the Aurora. Definitely we should be playing a significant role in these procurements, perhaps not as the prime contractor, but as first-tier suppliers.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Yes, I get you.

I know I'm asking a question that might be beyond the realm of your expertise, but how might PESCO impact positively or negatively in terms of our success and/or our lack of success in what we just talked about?

[Daniel Verreault]

I cannot answer that in terms of black and white.

[Martin Hill]

Can I make a comment on this issue of prime and sub?

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Yes, by all means, Mr. Hill.

[Martin Hill]

Everything in NATO is awarded to the prime. There is nothing given to the subcontractor. The records that NCIA and NSPA hold actually need to be dug into much more deeply. I have asked for years that the major subcontractors also get listed along with the primes, because the statistics are grossly distorted by that fact.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Okay.

Mr. Chair, how much time do I have left?

[The Chair, Liberal, Stephen Fuhr]

You have a minute and 20 seconds.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

I was going to save this question for another round, but with respect to the NATO national technical experts, the NATEX, I'll ask a couple of quick ones, and maybe we can see if we can get answers. What is the role of a NATEX? What is the advantage of a NATEX? Do we have one? If we don't, did we? Do you think we should?

I'll go to Janet first and then see if there's any time for anybody else to comment.

[Janet Thorsteinson]

The NATEX provides information on what's being done within a specific agency. Canada has one and a half NATEX—one in Capellen at the NATO supply and procurement agency, and the half in Brussels headquarters supporting the NCIA.

Tell me again the rest of the pop quiz.

[Voices]

Oh, oh!

[Martin Hill]

Can I answer some of that?

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Yes, by all means. You can take the last 30 seconds, Mr. Hill.

[Martin Hill]

The NATEX is fifty-fifty funded by NCIA, or the agency, and by the nation. His role is fifty per cent to support the national industry in finding out what the agency is doing, and fifty per cent to support the agency itself. His really important role for the nation is that he sits on the national technical experts group and validates the agency's technical proposal. If that technical proposal by the agency excludes a solution provided by a Canadian company, that is bad for Canada, it's the NATEX who sits there and says, “I don't like that solution. Change it.” He's a really, really important person at that level.

[The Chair, Liberal, Stephen Fuhr]

Thank you very much.

We'll go to five-minute questions with MP Gerretsen.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Thank you, Mr. Chair.

Janet, in your opening comments you talked about how NATO used to move with a lack of speed but it's better now as it relates to its procurement. Can you explain why it's better now?

[Janet Thorsteinson]

If we go back 10 years, the systems were not so automated and were not so open. Both NCIA and NSPA publish their requirements. Both use automated systems. If you're a registered supplier, you have the opportunity to bid on requirements in a much more timely manner.

But please do not interpret my remarks as implying that NATO moves with rapidity now. They are just less slow than they used to be.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

This is what I was getting at. We have this world that revolves around procurement, and quite often technology moves so quickly that we seem to run into the problem where, by the time we've gotten the product we've sought to get, it's out of date in terms of its technological lifespan.

[Janet Thorsteinson]

Absolutely. Martin Hill just a few moments ago made reference to the issue of how to keep it up to date. Even if what you got was what you wanted at that time, how do you deal with the issue of technical insertion?

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

I guess my bigger question as it relates to NATO is how does a NATO structure, which involves so many different parts that feed into it, stay at a pace that stays in line with how things in the world are changing so rapidly with regard to procurement? How do you do that when you have so many different parts?

What we're really trying to do here is come up with advice to the government on what Canada should be doing differently, or on how it should be participating in NATO. That's the exercise we're undertaking on NATO. Stemming from that question, do you have any recommendations on what the government can specifically look at doing that would help in this area?

[Janet Thorsteinson]

I think the issue is exactly the same within the Canadian environment itself, and I don't think the Canadian environment has identified a real solution to this problem either. If we manage to find a solution within the Canadian environment, my best advice would be to share that with NATO—or, if they find it, let's take theirs. At the moment, I have no specific recommendations.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

In 2014 you wrote an article in which you said that Canada has needed a defence industrial and exports strategy for years in order to

bolster Canada's sovereignty and national security interests, and to maximize high value economic activity in Canada from defence spending at home and abroad. Doing so would bring Canada in line with the practices of its NATO allies and most other...industrial countries.

I'm curious to know what your position is on that today, whether you think there is still a need for that strategy, and how this might bring us in line with the practices of NATO.

[Janet Thorsteinson]

I think the recent changes in policy with regard to defence procurement and the procurement strategies have moved us closer to what I was seeking in that article. Could we get closer to it? Absolutely we could. But just like everything else I've talked about, it is getting better. I think if you look at some of the European allies, they have a much more integrated industry-government relationship. I don't think we will get there, in my lifetime, in Canada.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

You're segueing perfectly between my questions, because my next question was going to be about the comment in your opening remarks that we don't have as integrated a relationship as other NATO countries do with NATO. Why is that? Is that because of the geography?

[Janet Thorsteinson]

No, I think it's a cultural issue. I think the Canadian procurement system—I'm digressing for a moment, I'm sorry—with things like the agreement on internal trade, which highly regulates what we can do within Canada, presents a certain challenge in this regard. There is no doubt that—