Thank you for inviting me to speak to you today about procurement and the Canadian Armed Forces.
Russia's invasion of Ukraine has upset the long-standing security balance and architecture that Canada has invested in and that serves as a cornerstone of our national security. No NATO government, military or defence company was prepared for the event or the grinding conventional ground war that has followed. NATO states, including Canada, will need to supply munitions and defence technologies quickly, likely for years, in quantities not foreseen or planned for since World War II.
At Vilnius, NATO leaders reaffirmed a three-pronged defence investment pledge. It's called the “three Cs”. The famous—or infamous—2% of GDP floor is one. To spend 20% on capital equipment and R and D is another. Canada has failed to meet both targets since their launch in 2014, and has never set out a plan to meet them. NATO also wants and needs its member states and their defence industries to be part of the effort to arm Ukraine and replenish their own stockpiles. A new defence production action plan has been put in place for that purpose.
For the last 18 months, the global demand for defence industrial production has increased significantly. The commitments that I have just mentioned will amplify what we're seeing. The global defence industry will be shaped for years to come. This is a moment, one we have not seen in decades, for Canada to step forward and make generational investments in its own capabilities to share in the collective burden. It's time to step up or step aside.
Failure doesn't look like getting kicked out of NATO or the G7. Failure looks like AUKUS—being ghosted by our closest allies. It looks like not expanding our munitions production capacity in time to help Ukraine. It looks like holding on to old kit instead of donating it, because it takes us too long to replace it.
That brings me to the subject at hand—namely, Canadian defence procurement and how to reform the system. I have appeared in front of parliamentary committees before. I have said that there are no silver bullets. I do not believe that seemingly simple, elegant proposals will reform one of the most difficult and complex functions of public administration. I have said that a single agency is no panacea.
Meaningful reform will require laborious, painstaking, incremental and co-operative work by the departments involved. Canadian industry needs a seat at that table. The work begins with mapping the acquisition process and eliminating bottlenecks. Currently, there is little to no objective process performance data, or at least not in the public domain.
We've consulted and urged officials to move away from a one-size-fits-all model, especially for rapid technology adoption and services. If it's Canadian and a key industrial capability, or a KIC, use a national security exception. I have participated in reforms to identify KICs that were meant to favour and expedite acquisition in these areas.
The hard truth is that our defence procurement produces the outcomes our country wants, not the ones we pretend to collectively want. The rigid, risk-averse gyrations we see are reflections of a lack of priority at the national level. The current approach also undermines the capabilities, effectiveness and readiness of the CAF. Morale and the public image of the forces suffer, affecting recruitment and retention, which is arguably the biggest issue facing the Canadian Armed Forces today.
Defence procurement is an instrument of foreign policy, industrial policy and national security. If we were clear on what we wanted, we would drive the outcomes accordingly. The Prime Minister needs to identify defence procurement reform as a priority and then hold ministers accountable for improvements.
Lastly, we need to start thinking about our defence industry like our allies do—namely, as a fundamental component of national security and a collective tool of deterrence. To this end, procurement system outcomes need to develop and sustain a healthy Canadian industrial base. The neglect faced by the domestic industry must be replaced by a new approach and commitment to industry if we're going to be a meaningful contributor to Ukraine, NATO and our allies, and to ensure that we have a stake in the economic opportunities that present themselves. This was our main point in our submission to the defence policy update.
We've known for decades that Canadian defence procurement is slow. So what has changed? The world has changed. The status quo is now a real risk to Canada's national security and to that of our NATO allies.
Thank you.