National Defence Committee on Nov. 7th, 2023

[Troy Crosby]

During the pandemic, we were able to exercise flexibilities in the government contract regulations that dealt with emergencies. Those don't normally apply in the case of defence procurement. Nevertheless, we can work with our colleagues to accelerate the processes with a concentrated effort and by being very disciplined around the requirements and the process itself.

[The Chair, Liberal, John McKay]

Thank you, Mrs. Lalonde.

Mr. Savard-Tremblay, welcome to the Committee.

You have the floor for two and half minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

Hello everyone. I don’t normally sit on this committee. Thank you for having me here today. I’d also like to thank the witnesses.

Mr. Page, the RFI submitted in February 2022 stated verbatim that participation was encouraged, but not mandatory, and that respondents should be aware that the RFI was not a prequalification process, that it would not lead to the establishment of a short list, and that potential suppliers were not being identified. In other words, it was not a condition and would not determine who would be eligible. So it implied that there would be a bidding process.

Some companies submitted information in good faith and were never subsequently contacted. Can you explain that?

[Simon Page]

Mr. Chair, I thank the member for his question.

We did indeed issue a request for information in February 2022. This provided us with substantial information. But there was no requirement for us to go down a certain path for the next steps.

The information obtained through this request, along with the data we received from Avascent and discussions with our allies, enabled us, following an analysis within the government, to determine that Boeing’s P-8 Poseidon was the only aircraft that met all of Canada’s high-level operational requirements as described in the request for information.

The main point I want to make is that the need was immediate, and this aircraft was the only one that met all the criteria. Subsequently, the only way for the government to gather further information—this should answer the question Ms. Normandin asked before she left—was to send a letter of request to the U.S. government for more information on the P-8 Poseidon aircraft in question.

[The Chair, Liberal, John McKay]

Thank you, Mr. Savard-Tremblay.

Ms. Mathyssen, you have two and a half minutes, please.

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

When the procurement ombudsman appeared before this committee, he walked us through the review of the Department of National Defence procurement system. He stated that there were 10 instances where he “did not have sufficient evaluation information to determine whether...the contract had been rightfully awarded.” He found that there was a chronic, systemic issue of missing paper trails for procurement contracts.

Can you speak about whether this issue is unique to the Department of National Defence? More importantly, can you explain why these transparency mechanisms were not followed?

[Troy Crosby]

I can't speak about the experiences in other departments. At National Defence, we welcome the review from the OPO, the Office of the Procurement Ombudsman, because it takes an external look at our practices.

We were a bit challenged in responding to the OPO at the time because we were coming out of the pandemic. People weren't able to get into the offices to access the paper files in certain cases. The OPO was very accommodating to allow us to substitute files. However, it is true that there were occasions where we weren't able to locate all of the records. In response to the OPO's recommendations, we are going back to ensure that we have records as complete as we can, and we are leveraging electronic means, as well, going forward.

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

The procurement ombudsman was also concerned about the overuse of the national security exemption—again, that loss of transparency within the procurement system when it's invoked. He stated that, in the United States, the national security exemption actually triggers “additional oversight” by the Government Accountability Office, which I referenced before.

Can you tell the committee if any additional oversight is triggered in Canada when the national security exemption is invoked?

[Simon Page]

Yes, certainly.

Thank you very much for that question.

I think the first statement I would make is that, for the defence and marine portfolio, I see all the national security exception requests. They are not numerous. There's a very good ratio of NSE, a ratio that I would expect for a country of our calibre trying to contribute on a very large spectrum of capabilities. The oversight remains the same. The transparency, the fairness, the openness—the oversight remains the same once the NSE has been invoked.

[The Chair, Liberal, John McKay]

Thank you, Ms. Mathyssen.

Ms. Gallant, you have five minutes, please.

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

What's the status of the upgrade for the Mk8 ejection seat for the CT-114?

[Troy Crosby]

At this point, there has been a study under way to look at the possibilities of a seat replacement for the Tutor aircraft. No decision has been made at this point to actually go ahead with that.

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

Our understanding is that the RCAF wanted to procure these ejector seats, but DND said no. Why?

[Troy Crosby]

I think that's still under consideration. I don't think anybody has said no yet. There is a recognition that there are more modern, capable ejection seats available, but it has to be an investment that's made in light of the future plans for the fleet.

We are upgrading the cockpits of the aircraft right now. That work is under way. The flight testing is ongoing. The seat is still under consideration.

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

Okay.

How often do the departments that each of you represent today actually meet with defence procurement industries and academia to discuss and update what the developments are and what the capabilities are in defence and technology in general with respect to defence, and to review the threat analysis on the horizon?

[Troy Crosby]

We have various opportunities to engage with industry. We have the good fortune of having the Canadian Association of Defence and Security Industries here in Canada, which arranges the CANSEC defence show every spring. That's an excellent opportunity to bring everybody together.

On a case-by-case basis, on a fleet-by-fleet basis, the industry involved can engage directly with our subject matter experts to talk about future investments. As we spoke about at our last appearance, this concept of continuous capability sustainment, involving industry and laying out a capability road map further into the future, is something that we're working toward now. We're in consultation.

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

The reason I asked is that successful countries work in collaboration all the time with industry and academia. It's ongoing. This seems to be a missing piece, something that just doesn't happen the same way in Canada. We'd like to see some improvements in that area.

What steps are you taking now so that future projects can be managed by an individual who will oversee and be responsible for major procurements from start to finish? We're told that you simply don't have the people who can do the procurement process.

What's being done now to ensure that we have a smooth process in the future?

[Troy Crosby]

For each project that's approved and is in either the definition or the implementation phase at National Defence, there is a project manager named. Through the assignment of responsibilities, that individual is often reporting to me, directly or indirectly, to advance the project in consideration of costs, capability and schedule.

There are times, depending on the length of the project, when people will of course make career decisions and move, but we do have enough depth in the organization to transfer the knowledge through these changes.

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

You don't have someone in place for a full procurement for the length of time it takes.

For Treasury Board, with respect to the directive on terms and conditions of employment for students, did you determine the impact on the future ability to fill necessary jobs for the workforce and the ability to have the people ready for the jobs of the future?

[Samantha Tattersall]

Thank you for the question.

In terms of that directive, it falls under another area of the Treasury Board, but maybe what I can answer is that, in the context of procurement under my sector, we have a community development office. One of the things we're really stepping up and doing within this space is running collective staffing for procurement officers across the Government of Canada. We've been partnering to bring more students in so we can create that pipeline of procurement officers within the Government of Canada.

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

Specifically I received the concern from the Union of National Defence Employees. They regularly brought in high school students for the pre-apprenticeship to decide whether or not these different Red Seal trades were for them. To a great extent, they have been able to fill the availabilities, the holes in their workforce, with these students who had been in the system years ago, got their actual papers and are working. Had it not been for that student program, we'd be missing a lot more people from those positions today.

[The Chair, Liberal, John McKay]

We're going to have to leave that question there.

Mr. Fisher, you have five minutes.

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

Thank you very much, Mr. Chair.

Thank you, folks, for being here today.

I represent the communities of Dartmouth and Cole Harbour, and we have an amazing group of defence contractors—some smaller groups, some small start-ups. They're mostly small defence-related companies.

During testimony on this study, we've heard from industry and we've also heard from the ombudsman about these smaller companies and how they feel that they're at a bit of a disadvantage when it comes to taking part in government defence procurement.

With so much innovation in Canada in the defence sector by smaller companies and start-ups, I'm interested in knowing whether —and, again, I'm focusing on the smaller companies—other than from the testimony for this committee, you folks are aware of those concerns.

[Mary Gregory]

Thank you for the question.

I'll start, and maybe Mr. Page will want to add something in.

Our department does work a lot with small businesses across the country. Obviously doing that is in the portfolio of the Minister of Small Business. Specifically around the industrial and technological benefits policy, we do participate in outreach with small businesses.

We also rely on the regional development agencies, which are in our portfolio as well. They're a great source of information and connection to the small businesses across the country. More than 99% of businesses in this country are small, so that's an important element.

I understand the concerns you've mentioned. Lots of small businesses say it is hard to enter global value chains for large companies. Companies want to share risk with bigger suppliers, usually, especially with respect to defence procurement, so we do undertake outreach. My colleague mentioned the Canadian Association of Defence and Security Industries. They're a good outreach tool as well.

We try to make sure we are open to small businesses and that they have some outreach with us when specific procurements get under way. The policy generally targets contractors with the obligation to provide 15% of the contract value in engagement with small businesses, so that's usually business activities with small companies. We also have a challenge program, which is designed around procurement undertaken today across all departments—and it would apply in the defence space as well—whereby if a small company has something innovative, as you've described, the government could act as a first buyer, for example.

I believe there are probably other small business elements in, say, IDEaS at the Department of National Defence, but certainly we try to ensure that we are well informed on the issues confronting small businesses across the country.

I don't know if you want to add anything, Simon.

[Simon Page]

Thank you for the question. I think that was really well explained.

The only thing I would add is that we do have specific vehicles also under the leadership of PSPC, such as the marine industry advisory committee. This committee links with small and medium-sized businesses across the nation in support of the marine industry here. We do business and have contacts with them. Also PSPC runs an organization called “Procurement Assistance Canada” to help all the small and medium-sized businesses integrate into projects in the defence and marine portfolio.

Thank you.