National Defence Committee on Oct. 3rd, 2023

[Mike Mueller]

I won't talk about specific procurements ongoing right now.

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

Okay.

With that, would it be an idea to have these key procurements put in the mandate letters of the ministers? Maybe that's what they're waiting to release.

[Mike Mueller]

I would say so. We're eagerly awaiting the defence policy update to get a clear signal from the government on funding, timelines, capacity, capability and also that industrial strategy. It's absolutely key.

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

Mr. Mueller, you were around when we acquired the Chinooks and the C-130s, as well as the Globemasters. We got those in record time. What is it that we didn't do then that we are doing now, or vice versa? How did we get those so quickly when we needed them and yet now, seemingly, it just drags on?

[Mike Mueller]

In terms of what's not happening now, I think we haven't identified the capacity. We haven't identified the capability. We have, in some respects, identified the budget and then the timelines. We need all those ingredients to come together, and then industry can respond in phenomenal ways.

Again, I look at the COVID-19 pandemic. We had aerospace companies that had never made a ventilator before. The government gave those ingredients, and within a few months we had ventilators. Industry can respond if that plan is in place. It doesn't need to take a long time.

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

To both of you, were you or your representatives of industry consulted on NORAD modernization needs? Were either of you consulted before the orders went in?

[Mike Mueller]

Not that I can recall.

[Christyn Cianfarani]

We have had a very top-level briefing on some of the technology planks under NORAD modernization, but at this point, we have not been involved in the actual planning and preparations for the equipment that's going to be purchased for NORAD modernization.

Some of our companies may have been involved in some of the procurements with regard to the North Warning System, but you'd have to speak to them directly. Certainly, we, at the association level, have not been given a big plan for all of the rollout for NORAD modernization.

[Mike Mueller]

However, again, you have $38 billion. There are huge opportunities for Canadian industry, and we need support from the government to identify those opportunities in order to be able to chase them.

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

Ms. Cianfarani, we have four submarines in our navy fleet, one of which we're lucky to have at sea at any given point in time.

Are you aware of any actual procurement in place? Are they even looking for a replacement?

[Christyn Cianfarani]

I can't speak to the operational needs in the Canadian Armed Forces. I have not seen a copy of the defence policy update, but I understand that this asset may be discussed in the defence policy update.

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

So it has to be in a policy paper when it's pretty obvious to most of us that we need a submarine replacement. We've had testimony before at this committee that we already have Chinese in the Arctic, and of course there's the Russian threat, our next-closest neighbour.

Two weeks ago, Major-General Paul Prévost told the committee, “That industry needs to recognize that there's a global market for this here. We're working with that industry now.” Would you be able to comment on what's holding up the process for NORAD replacement?

[Christyn Cianfarani]

Do you mean for NORAD mod?

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

Yes.

[Christyn Cianfarani]

I have no idea what's holding up NORAD mod. Again, I'm not in the conversations. If they are sourcing something from Canadian firms, I'm most certainly not involved in those discussions.

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

Okay.

General Eyre—

[The Chair, Liberal, John McKay]

Thank you, Mrs. Gallant. That's it.

Mr. Fisher, you have five minutes.

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

Thank you, Mr. Chair.

Thank you to both our witnesses for being here.

Mr. Mueller, you're in the aerospace business. As you know, and I know, Dartmouth—Cole Harbour has a pretty strong aerospace sector. It's great to have you here, both of us being huge supporters of that sector.

At this committee, in the conversations generally, very often we talk about interoperability, specifically in the NATO context. Ms. Mathyssen touched on buying off the shelf or buying existing platforms from our allies. I'm wondering if you could specify for us what steps we can take to ensure that the Canadian industrial base is integrated in these supply chains so that interoperability also supports the Canadian industry and its workers.

[Mike Mueller]

Interoperability is obviously a key requirement from the armed forces, which is there. I should say that there are some great aerospace companies outside of Halifax too that are proud members of ours and doing some phenomenal work out there.

Again, it goes back to identification through a strategy with respect to the interoperability piece, the benefits to Canada piece right across the board, and the advance conversations with the industry based in Canada on where the benefits would be on a lot of these procurements. We need to do that more often and we need to do that earlier to identify a lot of these pieces that are out there.

I would say that there's a huge opportunity there. You talk about NORAD modernization and the integration of the supply chain. Again, mapping it out through an industrial strategy, having government be a champion for our industry in Canada to take advantage of the opportunities that are out there, to ensure interoperability and to ensure that the good-paying jobs are coming to Canada, that's absolutely critical.

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

Thank you for that.

In your opening statement, you talked about moving towards a more risk-based approach. I had the opportunity to ask our last panel—I guess it was last Thursday—about a risk-based approach. Does your vision of moving more towards that approach include litigation? Some countries, we've heard, sort of see litigation as a cost of doing business, and they almost factor it into their costs or into their procurement. Canada, I guess, does that to a lesser extent; we're risk-averse.

Were you thinking of litigation, as well, when you talked about moving to a more risk-based approach?

[Mike Mueller]

No, I'm not sure that litigation benefits any of the parties if it's built into the system.

Reducing the risk or identifying the risk in some of the procurements would be to reduce the complexity, say, for certain procurements. Do we need to have the 300-page or 1,000-page application? Are there certain things that we can take out of it to reduce the complexity because the risk isn't there, depending on the procurement?

Really, it's analysis of each procurement as it comes out. What do we need to have? Where is the risk? Can it be managed? This is as opposed to having a one-size-fits-all approach for everything, which takes everything to the greatest common denominator, as opposed to lowering the thresholds and reducing some of the complexity in order to get some of these things through.

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

You used the term “the nature of the acquisition”. Do you think the procurement system should be designed to reflect the nature of the acquisition?

[Mike Mueller]

Absolutely. It depends on—

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

Then a 300-page application form for F-35s or for something major—

[Mike Mueller]

It may be appropriate, absolutely, depending on the nature of the acquisition. However, when it's smaller in nature—a simple maintenance contract as opposed to the overall purchase of a particular product—you would take a look at it and then reduce what would need to be reduced. Again, this would have to be discussed.

Again, it goes back to the need for that overarching industrial strategy: not reducing all the risk but taking a look with an informed approach, working with industry and reducing some of the complexity that's there.