Thank you, Mr. Chair.
Ladies and gentleman, I have been engaged in industry for seven years. While I'm a firm believer in competition, I'm also very much a proponent for getting the right equipment for our Canadian Armed Forces in terms of delivery schedule, period of performance, capability tied to interoperability, cost and of course long-term and sovereign sustainability. We are not different from government in this respect. Our company's success is very much dependent on the same desired outcomes.
My CEO detests “red” programs probably more than government does. Canada has one of the most complex procurement processes, which is costly in terms of time and money. The geopolitical situation will require faster and more effective procurement to ensure that the Canadian Armed Forces remains operationally relevant.
Faced with a personnel deficit, the armed forces should work more closely with industry and adjust some of the default constructs with the procurement and in-service support processes.
We have the following recommendations.
Avoid high-risk firm fixed-price developmental programs. By their very nature, developmental programs will face some unknowns in terms of the full cost required to develop a capability. There are many deliberate developmental U.S. programs that take years and significant costs to develop. Non-recurring engineering paid by a launch customer OEM is not always cheap and does not always bode well for schedule, cost or risk. Canada needs to understand better what level of developmental program risk they are entering into and plan accordingly in terms of both cost and schedule.
Programs should be competed when they need to be competed and not for the sake of competition. Competition is healthy and should be a matter of course when two products or capabilities have comparative offers. If there is only one product or capability that meets the CAF's requirements and Canada is not prepared to appropriately fund a developmental program for another offering to create competition, then it should not be competed. Similarly, Canada's true requirement should not be watered down to force a competition. This ultimately undermines the CAF's capability. These principles should apply to both product acquisitions and in-service support.
For proven off-the-shelf solutions, the launch customer has invested, developed and, in many cases, competed the solution. Canada should take advantage of this to avoid delays in schedule and cost.
Canadian industries should be even more integrated than ever in the U.S.-led North American supply chain. For example, the over-the-horizon radar project should be an aligned U.S. and Canadian solution for NORAD with a cross-border and integrated industry. The U.S. is developing spiral programs to invest and develop future capabilities in radio software, night vision equipment and command and control systems. An example is Project Convergence, which is focused on regular software and command and control. Canada should deliberately partner and invest in these concepts and better integrate our supply chain into the developed solution. Canada should incentivize companies to invest in Canada to better integrate the supply chain.
R and D investment within Canada should be more focused and longer term, and should support those capabilities that have the best chance to succeed in a competitive global market.
Today's export success of the WESCAM MX-series cameras started from government-industry R and D over 50 years ago. A longer-term commitment within both industry and government is required if Canada is to remain and be competitive.
Canada is a relatively small contributor in terms of military equipment development. Working together with industry to identify those areas in which Canada is really competitive and investing appropriately would better position our country in the global market.
Canada should better develop and sustain its in-country, in-service support capabilities, including engineering support, to ensure sovereign operational readiness. Over the years, for political and operational reasons, in-service support centres of excellence have been developed in Canada. This past investment should continue to be leveraged. Canada should consider longer-term investment to maintain these centres of excellence to ensure operational sovereignty and enhanced engineering capability. Recompeting these capabilities by default rather than by necessity is costly. It causes disruption and degrades support to readiness for several years during this process.
The Canadian Armed Forces have a personnel capacity issue with no short-term solution. Therefore, Canada should integrate industry support services more into its readiness plans to ensure that Canada can meet its defence obligations at home and abroad.
In conclusion, ensuring that Canada's military remains operationally relevant will require a disruption to our current procurement processes and thinking. Industry is ready to engage and help.
Thank you.