National Defence Committee on Nov. 28th, 2024

[The Chair, Liberal, John McKay]

Colleagues, let's begin. It's 8:15. We have quorum.

It's my privilege to welcome our minister, Jean-Yves Duclos, Minister of Public Services and Procurement, to complete our study on the defence policy update.

I'll leave it to you, Minister, to introduce the colleagues with you. I look forward to what you have to say for the next five minutes. Then, at five minutes and one second, I think a door will open and something will happen.

Thank you, Minister, for your appearance here.

[Jean-Yves Duclos, Liberal, Minister of Public Services and Procurement]

Thank you, Mr. Chair.

I'm delighted to be invited to your final meeting on this important subject. I imagine that the last meeting can either be a less important or much more important meeting, depending on what preceded it.

I'm going to do my best to be of service to your important committee. To that end, with me today are two colleagues from my department: Simon Page, assistant deputy minister for the defence and marine procurement branch; and Siobhan Harty, assistant deputy minister for the defence procurement review branch.

We thank the committee for its invitation. We recognize the important work you are doing.

First, last week, we marked the 1,000 days of the barbaric and unjustified invasion of Russia in Ukraine. The Canadian government reiterates its unshakeable support for Ukraine and the Ukrainian people.

Since the start of the conflict, the Canadian government has supported Ukraine by providing $4.5 billion in military support. We also renegotiated the Canada-Ukraine free trade agreement to better support the people of Ukraine in their fight for independence.

Two weeks ago, I was in Saint‑Jean-sur‑Richelieu, where we announced a $374 million procurement contract with Rheinmetall Canada to better support our armed forces. Our colleague, the member for Saint-Jean and member of the committee was there for this important announcement. I want to highlight her partnership and leadership for her community.

I was able to speak with members of the Canadian Armed Forces who took part in training Ukrainian soldiers during Operation REASSURANCE in Lithuania. Those soldiers told me just how and the extent to which Operation REASSURANCE and Canada's contribution to training Ukrainians, who are currently fighting for their freedom and democracy, made a considerable change.

To better support our armed forces, we need to invest in them. “Our North, Strong and Free” highlighted a new overall investment of $8.1 billion over five years and $73 billion over 20 years in defence spending, which is included in our budget 2024. With those investments, Canada's defence spending to GDP ratio, currently at about 1.4%, is expected to rise above 1.7% in 2029-30 and reach 2% of NATO spending by 2032.

“Our North, Strong and Free: A Renewed Vision for Canada's Defence” reaffirms our commitment to reviewing Canada's defence procurement system. We have to think differently about defence procurement, and in the review, we are asking questions at every stage of the process, from how the Department of National Defence sets requirements right up to how quickly we can deliver new equipment while running open, fair, rigorous, comparative, competitive processes wherever and whenever possible and preferable.

We are reviewing the rules and regulations that govern military procurement, as well as the internal processes used to define requirements in approved projects. We're looking for ways to compress timelines for major government acquisitions without sacrificing due diligence, and we're working with our industry partners to change the way we consult with the defence industry to adopt a more strategic approach.

We also want to get smarter about how we invest in innovation and how we acquire and integrate Canada's innovations into CAF capabilities. Of course, we'll always support Canadian industry to be more globally competitive as new opportunities emerge in a rapidly changing defence market.

And we’re going to collaborate more closely with our allies on how we define requirements, how we develop new equipment and systems that support interoperability and strengthen our shared defence.

We are currently working with other departments and agencies to review and reform our defence procurement processes so that we can better achieve these goals. These changes should be announced in the months to come.

In the meantime, we continue to advance key defence procurements on a number of fronts and as efficiently as possible.

For example, on Monday, at the Canadian Global Affairs Institute's defence procurement conference in Ottawa,Minister Blair and I, along with others, entered into negotiations for a strategic partnership with L3Harris for the F-35 airframe maintenance depot. That strategic partnership will allow us to be ready to do the maintenance on our new fleet of F-35 fighter jets once they start being delivered in 2026.

In conclusion, investments in our Canadian Armed Forces, like the ones highlighted in our new defence strategy, are about making sure Canada can work with like-minded nations to uphold international rules and defend peace, justice and freedom while creating good middle-class jobs.

I'm now prepared to respond to questions from members of the committee.

[The Chair, Liberal, John McKay]

Thank you for that, Minister.

Mr. Bezan, you have six minutes.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Thank you, Mr. Chair.

Minister and officials, I welcome you to the committee today, and to our study.

Minister, in your procurement program, we know that a National Defence employee called David Yeo was running a company called Dalian. Under the ArriveCAN scam, this company got $7.9 million. National Defence fired David Yeo.

What are you doing to recoup the money Dalian received—the $7.9 million—as part of the ArriveCAN scam?

[Jean-Yves Duclos, Liberal, Québec, QC]

Thank you, Mr. Bezan.

Let me point to another number. You pointed to defence procurement. It was less than 1%. That's what the former government invested in defence spending.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

If you compare apples to apples, Minister, the parliamentary library just found out that actual spending on national defence is at 0.95% this year. You guys are below 1%. It's only with creative accounting that you get over that. You have to add in veterans pensions, the Coast Guard and Global Affairs.

Let's move on from that, because I don't think you guys have a leg to stand on there.

If you're not going to answer the question on recouping taxpayers' money from a scam like the ArriveCAN app and Dalian, let's go to a question I asked last year.

We were talking about getting shoulder-launch missiles for our troops in Latvia. I asked if there were any live-fire exercises and shoot-off tests among the different systems out there. DND confirmed there weren't. Now we're hearing that the Spike LR2 system is having problems. It's not as accurate as expected.

Why weren't options tested before we procured a system that doesn't work to the expectations of our armed forces?

[Jean-Yves Duclos, Liberal, Québec, QC]

There are two things.

Again, less than 1%.... I know you don't like to hear that, but—

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

You're at less than 1%. Come on. Let's just move on.

[Jean-Yves Duclos, Liberal, Québec, QC]

The second thing is, if you want to hear more details on operational matters for DND, I'm sure Minister Blair would be very pleased to come.

I expected this meeting to centre on the procurement activities we need for supporting the armed forces. Obviously, these procurement activities are supportive of the needs of the armed forces, but they are also supportive of a more resilient and competitive defence industry in Canada. We believe that when we invest in our industry, we also invest in our armed forces and support other allied countries at the same time.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

You have to fix it because, as we know, the Spike LR2 system hasn't met expectations. Our troops are wondering why we didn't do proper testing and procurement in that process.

To move on, we have the defence industry employing all different types of people. You signed a number of certificates of exemption from registration under the controlled goods regulations, which were granted to citizens of Russia, the People's Republic of China and Iran. This is with industries that are developing sensitive military technologies.

Do you believe it's a national security risk to allow foreign nationals to access those sensitive military technologies?

[Jean-Yves Duclos, Liberal, Québec, QC]

Well, first, you spoke about Russia. I think it's important to point to things that, unfortunately.... You may not have agreed with it, James, but there are things that your party did in the House of Commons, like oppose every measure we put in place to support Ukraine in its war against the unjustified battle—

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

He's going to sit there and play politics, Mr. Chair. Let's have him answer the questions I'm asking.

[The Chair, Liberal, John McKay]

It works better when you don't talk over each other. Whether it's the questions you are asking or the answers he is giving, you're not able to direct each other. He's not able to direct your questions, and you're not able to direct his answers.

I'm going to turn to the minister and ask him, in as short a time as possible, to respond to Mr. Bezan's questions in the two minutes he has left.

[Jean-Yves Duclos, Liberal, Québec, QC]

You did correctly speak to how we defend Ukraine against Russia. That's exactly what we have done until now. This is teamwork. Every party in the House needs to be aligned in supporting Ukraine against Russia. Unfortunately, this is not what we have seen recently, including on the free trade accord.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Minister, if we're talking about supporting Ukraine, let's make sure Russia doesn't get access to our military secrets.

Since 2016, the PSPC minister has signed off on 199 citizens of China, 22 Russian citizens and four citizens of the Iranian regime, who were international students, temporary foreign workers or visitors to Canada. That gave them access to military technology like jet engines, diagrams, blueprints, electronic countermeasures equipment and missile technology. Section [Inaudible—Editor] goods includes but is not limited to global navigation systems.

Why would we allow our adversaries to enter any defence industry? You allowed that by giving those industries permission to have 199 citizens of the People's Republic of China, 22 Russians and four Iranians access our military defence industry.

[Jean-Yves Duclos, Liberal, Québec, QC]

I'm sorry, MP Bezan. I don't accept the premises of your various questions. You're stating a number of facts that are inaccurate. It may be because you have been mis-briefed, or you didn't have the opportunity to get the proper security clearance you would need in order to know and understand the information.

I would point to—

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

I've actually asked for security clearance. Of course, the government is saying, “You don't need to know, Bezan”, so I'm not going to get a security clearance.

[The Chair, Liberal, John McKay]

Mr. Bezan, you're not giving the minister a chance to respond to your question.

[Jean-Yves Duclos, Liberal, Québec, QC]

Talking about the equipment that matters so much, which I think you're correct to point to, with the announcement we made in budget 2024, we are going ahead with the 2% NATO target that is so important to Canada.

That being said—we know you don't like to hear this—we were investing less than 1% of our GDP in defence spending prior to our coming into power. We've increased that to 1.4% now. It will go to 1.8% in 2028, and then ahead to 2% by 2030. These are tangible things we need to do to support our military.

[The Chair, Liberal, John McKay]

We'll have to leave the enthusiastic question and answer session there.

Madame Lambropoulos, you have six minutes.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you, Chair.

Thank you, Minister, for being here to answer some of our questions today. We appreciate your presence.

In the defence policy update and in budget 2024, we have committed to undertaking a review of Canada's procurement system. I'm wondering if you could tell us what that work has revealed and how we can improve our procurement system.

[Jean-Yves Duclos, Liberal, Québec, QC]

That is a great question, Emmanuella. Thank you for asking it.

There are a number of objectives. Let me go through them quickly. The first one, the most important objective, is to meet the needs of our armed forces. They require support to be there for Canada and Canadians across the world. We need to do that in a more timely and more strategic manner while we protect the rigour of our system. In the end, what matters is the right equipment at the right time in the right way for our military.

As we do that, procurement reform will also make sure we develop the resilience and capability of our defence industry sector in Canada. We need that because other countries are facing similar challenges when it comes to delivering the right equipment at the right time. One example of that, a brief one that I would point to, is a recent accord with Finland and the United States. It's called the ICE pact. The ICE pact is a tremendous example of what Canadian industry can support and how Canadian industry can support the needs, in this case, of the armed forces and the Coast Guard while supporting the needs of Finland, the United States and many other allied countries in the world on icebreaking capability. This is an incredibly important example of how we can do things more quickly and more collaboratively with our industries and with allied countries.

A recent example that I mentioned briefly in my opening remarks is the announcement about L3Harris. L3Harris is a very important industry player in the defence sector in Canada. The fact that they'll be able to work strategically with us in the weeks and months to come will not only enable them to develop a national depot for the soon-to-come F-35s. It will also open up the opportunity for the United States to partner with us to have a regional North American depot for airframe maintenance in Canada for the F-35s.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you so much for that.

You actually went into my next question, but I'll pick your brain a bit more.

You spoke to promoting our defence ministry to our partners as well, and you just mentioned a very specific example of where that was done and how our industry will be helping with the icebreakers. I'm wondering what your thoughts are on our own relationship with the defence industry. I know that you recently spoke to the importance of this relationship and to improving it and changing it in ways to allow the kind of co-operation we haven't necessarily seen in the past. What are your views on what needs to be done in order for us to work in partnership with industry to make sure we meet the needs of our Canadian Armed Forces in defending our country?

[Jean-Yves Duclos, Liberal, Québec, QC]

That's an excellent question. Some of the answers appear in the report this committee tabled in June 2024.

I'll just point to two of a number of important recommendations, 15 and 17, which are on the importance of developing sovereign industrial capabilities here in Canada. That must be done in a manner that is, obviously, connected to issues like interoperability and working with allies. It's not only about investing in the Canadian industry in a sovereign context. It's also, again, about connecting in terms of the exchange of information and securing contract exchanges, both within Canada and with our allies. You point to these in the report.

Other things you point to in the report are recommendations 12 and 13, where you indicate a more modern procurement system using electronic means, such as the electronic procurement system we've put in place in recent years, the CanadaBuys platform, which is an open, transparent and easily accessible platform.

These are the sorts of things we believe will support the procurement reform that we need to put in place.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

I've spoken quite a bit to the industry because a lot of companies are in my riding. I'm also one of the co-chairs of the aerospace industry group. They have spoken about an aerospace strategy. I'm wondering if you have any thoughts on what that could look like, on whether you support that type of strategy and on whether you think we should be working in partnership early on to determine what the needs will be in the next 10 years, for example, or longer.