National Defence Committee on Oct. 5th, 2023

[Simon Page]

For me, living this on a daily basis—tomorrow I will chair an ADM-level committee on the EPS and will review a few projects—I actually find it's a strength of the system.

With the way we are structured now and the way we come together through a very structured, rigid governance, including all the departments—the client department, ISED and PSPC—we in PSPC are the glue in this governance. We're bringing together the different trade-offs that have been mentioned at this table. We have really good discussions about what needs to be done.

I remember the days when this governance did not exist and we didn't talk to each other. Now we talk to each other a lot—two or three times a day. The governance is formal and we have central agencies fully integrated—

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

On the governance structure, then, they're reporting upwards. How engaged are your deputy ministers at that level? They're ultimately the next level up.

[Simon Page]

They are. Every month, there's an ADM-level committee on defence procurement, so that's 12 a year. There are DG-level consultations. For me, it works. The synchronization with what we need to do is there. When we need to engage ministers, we're all at the table and we make sure that PCO is there for higher consultation as required.

[The Chair, Liberal, John McKay]

Thank you, Mr. Bezan.

Mrs. Lalonde, you have two minutes.

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

Thank you very much.

I'm going to be very structured, because I really want to hear from you.

There's been a lot of confusion at this committee around the proposed spending reductions. As I read the budget—and I'm sure my colleagues enjoyed it very much—it says clearly that these reductions won't affect the Canadian Armed Forces. It stipulates that specifically. My understanding is that this is looking at executive travel, and I think there was a spark of conversation here on management consultants. Could you help provide some clarity on the decisions, please?

[Samantha Tattersall]

You're correct that the refocusing of spending is looking at professional services and travel. There is a look at operations and transfer payments. I think it's been clear that savings from underutilized spending will be shifted to other priorities, so it is about refocusing.

In terms of the CAF, the following are excluded: Canadian Armed Forces salary expenses, operating expenditures except professional services, and expenditures related to deployments and relocations.

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

That means that, for operations and for what our CAF members are requiring and needing, any decisions being made would not have this impact.

[Samantha Tattersall]

What I would say is that each minister has brought forward proposals. Those proposals just came to Treasury Board Secretariat a couple of days ago. Those proposals are being reviewed, and those decisions are still to be made.

[The Chair, Liberal, John McKay]

Thank you, Mrs. Lalonde.

You have one minute, Ms. Normandin.

[Christine Normandin, Bloc, Saint-Jean, QC]

Thank you.

Mr. Crosby, you mentioned that it would be relevant to include industry players throughout the acquisition lifecycle. However, there are areas where we already have expertise, such as aerospace.

Would it be relevant, for example, to have an aerospace policy to further promote innovation and creativity, and to better involve industry players in certain projects?

[Troy Crosby]

I know that the Aerospace Industries Association of Canada is quite focused on an industrial strategy. What we provide is insight into the investments the Canadian Armed Forces are going to require.

In the case of “Strong, Secure, Engaged”, there was a list of everything for which there would need to be investments over time so that industry would have the foresight to position itself to best pursue that. Beyond that, there would be other elements that might form part of an industrial strategy, but it would be broader than impacting just national defence, in some cases.

[The Chair, Liberal, John McKay]

Thank you, Ms. Normandin.

Ms. Mathyssen, you have a minute.

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

Last week I asked Deputy Minister Matthews about the analysis done for facilities maintenance at bases and where there are inadequate checks and balances when we're outsourcing those contracts. From a PSPC point of view, what types of analyses are done at other departments for small and medium-sized maintenance contracts that DND can learn from?

[Simon Page]

This doesn't fall under defence and marine. The way the bases are supported is more of an infrastructure or real property question, not defence and marine. I don't have the information to answer your question.

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

That's fair enough.

[The Chair, Liberal, John McKay]

Mr. Kelly, you have two minutes.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Mr. Page, during your opening statement you said something interesting that I'm not sure I understood fully. You talked about the need for a less transactional approach with industry.

I'm sorry. It was Mr. Crosby who said that.

Industry has said, “We need firm contracts, we need certainty and we need 20-year deals because of the investment required.” In that example, we were talking about munitions.

What did you mean by that? What would be a less transactional approach that would make procurement work more efficiently and help us to achieve the defence needs of our country more quickly?

[Troy Crosby]

When it comes to acquiring ammunition, for example, ultimately an order needs to be placed. There need to be contracts signed so the materiel can be ordered by the supplier, come together and be assembled into an end product. The less transactional notion is more applicable to ongoing support of an aircraft, an armoured vehicle or a ship than it would be for.... Ammunition is considered by us to be a consumable, not something that we sustain, so that would be delivered through transactional contracts.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

You said in your opening statement that the system works; it does what it's supposed to do and what it is required to do under law, yet we have these problems of extraordinarily long procurement. For example, we're more than 10 years into the shipbuilding strategy and we don't even have a design yet.

Is that acceptable, first of all? Secondly, what changes would have to be made to get things going more quickly?

[Simon Page]

This is probably a question for everyone, because everyone may have a view on this.

Maybe on this one I'll touch on the transactional piece, because I believe the continuous capability sustainment, which we have described to the committee, could actually empower industry in a very meaningful way. The contract itself could be reshaped with a different mindset to be less transactional, empowering industry not only to keep the capability in good shape but to keep it relevant and technology-adequate.

[The Chair, Liberal, John McKay]

We're way out of time, but keep on going. I think this is important. This is the meat of what we were hoping to get out of you.

[Simon Page]

Mr. Chair, could I get a reminder on the second piece?

[The Chair, Liberal, John McKay]

Pat, ask him again.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

My question to you was about shipbuilding, the delay, the 10-plus years for design....

[Simon Page]

Let me answer the easy question. Is where we are with the design okay? Absolutely it is. We're doing the right thing. We're taking our time, because in shipbuilding, design is key. You don't start before you have a good design ready for production.

We talked a bit earlier about Canadianization. There's very little Canadianization on the Canadian surface combatants, but there are approximately 250-plus systems coming together on one of the most complex ships that will be built on this planet. This is what's happening right now for the Canadian surface combatant.

From a process point of view, I'm okay with Irving Shipbuilding, Lockheed and BAE working together, taking their time to give us, with their good accountability, a design that makes sense. We will gain from that in the build process.

What we could do to make sure that we don't have capability gaps.... I'm sorry I'm coming back to this point. It's not so much a PSPC point. It's really how we approach the entirety of the machine. We now know—and we're not the only ones in the world who are seeing this—how long it takes to build a complex warship. One would say that by the time we're building CSC number 10 or 11, we should probably start thinking about the next one, because that's how much time it takes.

Right now, to the question about culture and understanding, that's where we are. Delivering complex systems for the Canadian Armed Forces takes time. There's no store called Complex Systems for the Canadian Forces. We need to work with industry and make sure we prepare and have adequate time to deliver.