National Defence Committee on Nov. 2nd, 2023

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

Has the government awarded you any standing offer for certain items, so that if a soldier needs this piece of webbing or that...? I'm told the government can mix and match on its own, according to its own preferences. Is a standing offer for these pieces something it has tendered for?

[Michael Clark]

Not with us, no.

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

From your expertise, given the quality of the tactical gear our soldiers use, in how many years on average would it need to be replaced? This applies to all gear, not just gear provided by your company.

[Michael Clark]

I really don't know. In some cases, there are some kits that are issued to a soldier that don't get used. They would probably last for a very long time. In other cases, the soldiers get deployed, and the kits get thrown off a truck or thrown off an airplane or out of a helicopter. They may not even last a year, so I don't know.

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

You mentioned that you read a story about the soldiers in Latvia having to find their own equipment. How did your company and your industry, in general, respond to these stories?

[Michael Clark]

I don't think I'm going to be able to speak for industry. I read it and I said, “Yeah, okay, I could see that happening.” If there's something that soldiers absolutely want to have and they can't get it quickly enough, yes, I could see them going to buy it on their own.

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

You wouldn't be proactively saying, “Hey, we have these available. We want to get these to you.”

[Michael Clark]

Yes, absolutely, I'd love to, but if it's a piece of load carriage that we built for DND and it's DND's design or somebody else's IP, we can't help them.

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

The CADPAT or whatever—is that the kind of pattern you're referring to?

[Michael Clark]

It's not so much the pattern, but let's say, for example, that a vest is integral to something else. The integrated soldier system project uses a particular vest, and the design of that vest is owned by a company that created that system. Could we make it? Yes, but we don't have the authority to build it and sell it.

[The Chair, Liberal, John McKay]

Thank you, Mrs. Gallant.

We will go to Ms. Lambropoulos for four minutes.

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

Thank you, Chair.

I'd like to begin by thanking our witness for being here with us today.

It's definitely a different perspective...not perspective, but you're bringing a different sector of the economy, I guess, or a different type of business than what we're used to.

You spoke about a lot of the benefits that choosing a Canadian company would have for all Canadians and for society at large, whether it's newcomers to Canada who get to work in these companies or just generally in terms of providing jobs to Canadians.

Because we're not used to hearing from small and medium-sized business, I guess I'll ask you this one question: Do you believe that Canadian companies have pretty much all that it takes or all that would be necessary or needed by the CAF? I know that when it comes to bigger companies and when it comes to larger procurement deals that require equipment that is going to be used by the military, it may be a little bit more difficult, but in terms of the small and medium-sized businesses, do you think that you can pretty much cover it? By “you” I mean the companies in Canada.

[Michael Clark]

That's a tough one to answer, because when you look at all of the kit the CAF buys, there's a lot of product there. You're not talking just ships and everything that goes on the ships. You're talking about everything about the airplane and everything that goes in the airplane, the truck, the vehicle or the tank. I don't know if there's a really easy answer to that question. The ITB policy is there because when Canada goes to buy a large system like a ship or an aircraft, no, we don't make certain parts of that system, so they will institute the ITB policy so that a representative amount of business has to be put back into Canada as an economic benefit to Canada. That's how you get your direct and indirect offsets.

I don't know if I can properly answer whether the resources are in Canada to, for lack of a better term, meet all the needs of the CAF. I don't know the answer to the question.

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

I don't think the answer is yes, but I appreciate your response. Definitely, though, your point is that whenever they are able to, they should choose Canadian companies.

Maybe you can walk us through one of the better experiences you've had, one in which the procurement process was simple and you dealt with it in an easy way and there were no slowdowns. Can you walk us through what is necessary to make that happen, and do you have any good examples?

[Michael Clark]

Okay.

I can think of a couple instances this year in which somebody has called up from a base or a detachment and said, “You make this product. Can we get some of that?” and we've said, “Yes. How many do you need?” They said, “I need this many.” We said, “Okay, great.” They said, “Here's a credit card” and they purchased it.

In another instance, when we were contacted, they said, “Okay, we're looking for a piece of equipment to go on a vehicle. We're looking for it to do this, this and this. Can you help us?”, so basically we helped them. We came up with a little bit of a design and a pattern and they gave us a purchase order and we built one for them—or, actually, we're building one now—and they'll trial it and see how it goes, so sometimes it can be fairly straightforward.

Where that one is going to get complicated is if they want to buy a whole bunch. What happens then? If they want to buy thousands of these, then we'll be back to this whole thing of how they buy this. It's over their delegation level, so how do they process a purchase order? How do they use the defence procurement policy so that they can now get the product they really want to get?

When you want to talk about defence procurement, that's a good example: Now that they know what they want, how do they get it?

[The Chair, Liberal, John McKay]

Thank you, Madame Lambropoulos.

We now go to Madame Normandin for a minute and a half.

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

Thank you very much.

I would like to come back to the issue of industrial and technological benefits.

I often hear that large companies find procurement processes complicated, that the government adds criteria along the way that get in the way.

For their part, small businesses say that they are advantageous for them, that large businesses have an interest in doing business with them and that this allows them more opportunities.

Am I oversimplifying this? Can industrial and technological benefits sometimes be a barrier for small businesses?

[Michael Clark]

That's an excellent question, because at some of these events where they have the large defence prime contractors—they're present and they're at a table and they're ready to meet small companies—sometimes what I hear from the primes is that the small companies come but are not prepared. They have not done their homework as to what it is we're going to be looking for and what it is that we could use from these companies. That's basically leveraging the ITB policy.

The ITB policy is not—and I've said this to a number of people—a guarantee that you get business. You're right that a major defence contractor now doesn't have to buy product from you. It's a ticket to the dance. If you want to go to a Boeing or to a General Dynamics, these are huge corporations. The offset policy gets you in contact with their people who want to find Canadian companies. It is a means for you to get an introduction to these large defence prime contractors, but you still have to show that you build good product and you still have to have certain qualifications. However, it's an entry point.

Yes, the offset policy does work. I would suggest that any small and medium-sized company read up on it and understand it and get involved with government agencies, such as the RDAs, that can help educate you on how to leverage this to your success.

[The Chair, Liberal, John McKay]

Thank you, Madame Normandin.

Ms. Mathyssen, you have a minute and a half.

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

Oftentimes, the New Democrats have talked about an overall larger, long-term Canadian manufacturing strategy to have that bigger picture. Would that fall into play in terms of the defence strategy? Could that be used for both larger and small to medium-sized enterprises for that larger strategy within Canadian manufacturing?

[Michael Clark]

I'm trying to think of a decent answer to the question because....

When we engage with defence programs, maybe in my own head I divide it up. If it's a large program—a ship, a plane, a tank, a vehicle—we're going to be going to a tier one, tier two, tier three. What are they going to be looking for from us as product, as capability, perhaps also as offsets?

If it's a situation in which we're selling our capability directly to DND, that's almost a different process. It's a little bit of a different mindset, because now we're the, for lack of a better term, prime contractor.

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

By switching it around, though, and having that longer term, would that provide companies like yours with the ability to plan better?

[Michael Clark]

When you say “longer term”...?

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

I mean a 30-year or a 50-year strategy. Would that help or not?

[Michael Clark]

I don't know, because smaller businesses.... We're probably a little bit different because we have been around for so many years, but typically your small and medium-sized businesses are looking five or six years out.