National Defence Committee on Sept. 24th, 2024

[Christyn Cianfarani]

The DPU strangely addresses it, but only in reference to a defence industrial strategy. By nature, what you would do is have this defence industrial strategy or defence industrial policy. You would identify key capability areas where you want sovereign capability within the country, and then you would align all your programming, processes and procurements around ensuring that the sovereign capability remained within Canada.

You would also decide what you are going to purchase from your allies at the same time. For example, if we feel that airframe platforms are largely going to come from our allies and that we will be more interested in parts, components, sensors and things like that, we would articulate that in a defence industrial strategy, and then we would let that guide us when it comes to making decisions about what we're procuring and the speed at which we procure those things, in other words, sole-sourcing from Canadian firms, for example.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

I've heard from a lot of companies within Canada that they don't bid on Canadian contracts, either because the process is too complicated or because of Canada's over-reliance on what they call urgent operating requirement procurement, filling in short-term very quickly. They can't meet that need. I certainly heard that today.

Could all of you comment on that as well?

[Mike Mueller]

Sure. I'll take a crack at that.

The complexity of the procurement process is incredible. I'll give you just one anecdote from a company. In bidding on a same-sized contract in the U.S. and in Canada, in the U.S. it is a binder full of information that they're asking for, and in Canada they weighed theirs, and I think it was 45 pounds of paper. Just the amount of material that's being generated on this oftentimes is incredible.

There are definitely ways to streamline the procurement, to make it risk-based approaches: Do you need the amount of information for something very simple? However, there's definitely.... We put in some recommendations on that. It is a huge issue. It's one of the concerns I have with the DPU. There's lots of money there. How do we get the money out quickly and effectively to actually make a difference on some of these things?

[The Chair, Liberal, John McKay]

Okay. We're going to have to leave it there, colleagues. We have the room until a quarter to six. We have a 25-minute round coming up. The math doesn't work, so three minutes...and I'm just going to have to be brutal: three minutes, done. Let's just do it: three minutes, done.

[Don Stewart, Conservative, Toronto—St. Paul's, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being here today.

I want to draw attention to a section in the DPU: “Building an Innovative and Effective Defence Industrial Base”. That leads me to the fact that we've had underinvestment in our military over the last number of years, and, in that, we've seen a stagnating growth potential in the defence industry.

Where would you suggest the government direct its investments in defence to create homegrown manufacturing, both in hard-core manufacturing and also in creating IP that can then be exported to our allies, thereby creating a greater GDP for Canada and for the defence industry?

[Christyn Cianfarani]

Can I make a small correction in your statement? The defence industry has actually grown 10% over the last few years because of the injection of the world market demand, basically, for defence-related goods. I think that's important to contextualize. There is demand.

To your point on Canadian competency, we have incredible Canadian competency in space, as my colleagues alluded to. In fact, we're world leaders in space and space exploration. We have incredible Canadian competency in things like—you were talking about it earlier—artificial intelligence and quantum computing. We have incredible Canadian capability on the conventional defence side in sensor and sensing capabilities and in underwater capabilities. We run our shipbuilding programs and, in land vehicles in particular, light armoured vehicles and other light APVs.

Those are just some areas. I could continue listing them. Maybe my colleague can give you some examples in the aerospace domain.

[Mike Mueller]

Well, I think you actually have to step back. We need to do this together. We talked about the foreign policy. We talked about the industrial policy. You need to make sure that everything is aligning and that you identify the capabilities that are required. Industry and government need to come together to do that, to define out what is required from our defence capabilities and what's required from an economic perspective.

That hard work has to come. I think the DPU sets the stage for that, but we haven't seen the follow-up to any of those pieces yet. I think you have identified very correctly what the issue is.

[Don Stewart, Conservative, Toronto—St. Paul's, ON]

Are there adequate amounts of Canadian IP being incorporated into the products that are being manufactured in Canada? Intellectual properties....

[Mike Mueller]

In Canada, yes. I think the bigger question is on some of the other procurements. How do you make sure that you have the intellectual property, again, defined out on what core capabilities we need incorporated into some of those?

[The Chair, Liberal, John McKay]

Thank you, Mr. Stewart.

Madame Lalonde, you have three minutes.

[Marie-France Lalonde, Liberal, Orléans, ON]

Thank you very much.

I'm going to be brief. You've all mentioned industrial policy, strategy and their importance. You just referred to all of your members and the enormous capabilities that Canadian companies can offer.

We talk all the time about innovation, creativity and being ready to help our defence team here. As we are writing a report, could you be more specific in terms of industrial policy or strategy? I know there was some reference to it, but you know the industries. You know who are the actors. If you were to suggest it to us as parliamentarians, what would you like to see more specifically in the industrial strategy? I know policy was mentioned.

[Mike Mueller]

I can take a crack, from an aerospace perspective again.

Again, there are very positive signals from the government and Minister Champagne with respect to that. Defence has to be a part of it. We talked about operationalizing and institutionalizing the DPU—that is absolutely critical—and about reforms to procurement to give that certainty and that predictability that's there.

Innovation is a huge piece. How are we supporting innovation, both on the defence side and on the civil side? What's the crossover to that? We have certification issues. There's a whole host of pieces that I think need to be addressed through a strategy. It has to tie into foreign policy. It has to tie into defence industrial policy. You need to take the signals from everywhere.

Again, my message to all parties is that this has to be above politics. This has to be an all-of-nation effort. You have a willing partner in industry to do this, but we need to come together. Those discussions are starting to happen, but we need to have the action flowing from that.

[Christyn Cianfarani]

I certainly think one of the key pieces of a defence industrial policy would be that you need CAF-DND to articulate the capabilities it needs for its force projection. It comes from CFD, basically, to force development, and from the CDS to articulate that the CAF needs certain capabilities for it to force project in line with Canada's aspirations under its foreign policy. That's a starting point.

From there, you would ask, “How will we look at our current defence industrial base and identify capabilities that will enable that, and what capabilities are we are missing that we will obtain perhaps from our allies and/or that we want to build in this country for the future?” That is the foundation of the questions you would ask, starting a defence industrial policy, in my opinion.

[Marie-France Lalonde, Liberal, Orléans, ON]

Mr. Chair, since they didn't all have time to reply, if it is possible, can you send us some remarks about some suggestions? It would be greatly appreciated.

[The Chair, Liberal, John McKay]

Ms. Michaud, you have the floor for a minute and a half.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

The defence policy seems to focus a great deal on digital technology, artificial intelligence and new technology that could, in a way, save the Canadian Armed Forces. We're told that the endless wait for recruitment is over and that the somewhat archaic supply system has run its course. There seems to be a number of promises. One promise is an armed forces cyber‑command.

Ms. Cianfarani, do you think that the funding earmarked for the development of cyber capabilities will help us make up for lost time or for our lag behind countries, such as China, which use cutting‑edge technology, for example?

[Christyn Cianfarani]

It's hard for me to answer, because I believe that, simultaneous with the investments we are making to try to right ourselves, the needle keeps moving forward faster than we can get in front of it. I think we have tremendous capability within the country, from an industrial perspective on the cyber side, and that we have incredible competency within our agencies—CSIS and the CSE—as well as the building of cyber-command under the Department of National Defence. I see those as all positive steps forward.

The question is really how a democratic country with a talent shortage and a funding shortage would match with a country that is a dictatorship and that has innumerable and exponential amounts of money to pour into this particular area. We will always, I think, be chasing our tail in some way, unless we come together more as allies with our allied partners, like we do under Five Eyes, to try to get ahead of it.

They're all good steps; it's just that by nature, I think, we will always be playing catch-up.

[The Chair, Liberal, John McKay]

You have a minute and a half, Ms. Mathyssen.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

It has been repeated. We've done studies on it. We've talked about procurement. We've talked about depoliticizing it. You've talked today about how you need that consistency beyond one government to another government, and so on.

One would argue that you're trying to create those sorts of policies or long-term strategies almost in consensus. Would you argue, then, that it's preferable that parties depoliticize and look, on these very important issues, to creating things like agreements or to going into partnerships—one may even say coalitions—in order to ensure that we're serving and doing what's necessary to support the industries—doing what we need to do on the world stage and putting ourselves at the back of that in favour of working together?

[Brian Gallant]

Look, I think that on any subject, if you can have multi-party support it's amazing. In the panel before us, I didn't catch the name of the academic, but I really liked it when he said that studies would show that when two or three parties have a consensus, you're going to see the public follow and agree to make that a priority, whatever the topic is, so certainly I think you're right to say everything you've just said.

In terms of the mechanisms, some of that would probably work. My gut would say that even just having the public dialogue would do the trick, frankly, and it's as simple as the discourse being, “No, we're supportive of this. We recognize”—whether it's party X, Y or Z—“that this is something we have to invest in. We're all working on this together.”

[The Chair, Liberal, John McKay]

Thank you, Ms. Mathyssen.

Ms. Gallant, you have three minutes.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chair.

Madam Christyn Cianfarani, the government has estimated that it will award a submarine contract four years from now, with the first new submarine in the water a decade later. What can be done to expedite the process so that our navy can receive these new submarines in the water more quickly?

[Christyn Cianfarani]

Well, I think that some of the things it's doing right now will help to expedite the process. Going around the world and understanding what our allies already have in an off-the-shelf procurement in this particular case, I think, will expedite the capability in the hands of the Royal Canadian Navy, so I would say less bespoke and probably more off the shelf. Also, understanding where Canadian industry will play to probably maintain and operate such an asset will be incredibly important. The release of the RFI most recently to gather that information and move forward on it, then, I think, is incredibly important.

The other thing that will need to be done in short order, probably in the next budget, is to have that money profiled actually within the budget. Right now, you can't buy those submarines because you don't have any money earmarked for them.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

You say “off the shelf”, but there's no submarine sitting on a shelf somewhere. We don't even have the schematics done. All told, what is the minimum, then? If there were a production line already in play that we could place an order in, is there a possibility that we could get them sooner that way?

[Christyn Cianfarani]

I have not looked into this as to what country is most advanced in line with what our requirements say. You'd have to ask the navy that question.