National Defence Committee on Nov. 7th, 2023

[The Chair, Liberal, John McKay]

I bring this meeting to order.

Colleagues—

[An hon. member]

I have a point of order.

[The Chair, Liberal, John McKay]

Could I finish what I have to say before we have a point of order?

Thank you.

I see that we've already lost 20 minutes off the clock. We have a hard stop at six o'clock. I propose to divide the lost time equally between the panels so that we have 50 minutes available for each panel. We will try to make up some of the time on the second panel with respect to the amount of time allocated both to witnesses and to members.

With that, we have a point of order from Mr. Bezan.

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

Thank you, Mr. Chair.

At Thursday's meeting, you abruptly adjourned the meeting.

I just want to draw your attention to the fact that in our procedure and House affairs book by Bosc and Gagnon, it reads, on page 1099 in chapter 20, that:

A committee meeting may be adjourned by the adoption of a motion to that effect. However, most meetings are adjourned more informally, when the Chair receives the implied consent of members to adjourn. The committee Chair cannot adjourn the meeting without consent of a majority of the members, unless the Chair decides that a case of disorder or misconduct is so serious as to prevent the committee from continuing its work.

I have a copy of the blues here, and you even say, Mr. Chair, “I apologize for interrupting this vigorous debate, but it's 5:30.” You dropped the gavel without giving a chance for those who were still on the speaking list to talk, and it was in the middle of Ms. Mathyssen's time of speaking to the motion.

I just would ask that, in future considerations, you do look for consent from members before adjourning a meeting.

[The Chair, Liberal, John McKay]

Thank you for that point of order.

I take note that it is not a point of order. It pertains to another meeting. It's not a point of order with respect to today's meeting.

With that, I'm going to call upon the witnesses, and we can recommence what I thought was a really interesting and vigorous debate of a few weeks ago.

I'm assuming that we have no further statements on the part of the witnesses, so with that, Mr. Kelly, you have.... I think we can do six minutes on the first round.

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

Okay.

I'm going to start, then, with Mr. Crosby. We had testimony in another panel from Christyn Cianfarani, who said this with respect to urgent procurement and the ability to procure on a war footing or urgently:

If [you] want it to happen, it can happen. It will take time for the companies to ramp up to production volume, but if we want it to happen, we need to provide firm contracts for production ramp-up.

We were talking about—among other things—the ability to procure kit that was badly needed in Afghanistan. It was procured quickly and we got the equipment that was necessary because there was a will.

The frustration that many have is an absence of will from the government right now with respect to things like the 155-millimetre shells and the long delay in, for example, the design of ships. When we had this panel assembled before, there was a fairly strong defence of taking 10 years to design a ship.

In light of the change in world events that has taken place since then, of course, we have the United States diverting 155-millimetre shells to Israel that might have otherwise gone to Ukraine amid a worldwide shortage of this kit.

Can you comment on urgency and assure this committee that there actually exists urgency...? That's for perhaps both Mr. Crosby and Mr. Page.

[Troy Crosby, Assistant Deputy Minister, Materiel Group, Department of National Defence]

Thank you, Mr. Chair, for the question, and good afternoon. Thanks for the opportunity to appear again here with you this afternoon.

In the case of urgent operational requirements, there are a number of specific examples.

Since the start of the war in Ukraine in 2022, the Canadian Armed Forces identified an emergent need—more than one—that needed to be rapidly addressed and focused their efforts on determining the requirements for an appropriate solution for systems like counter uncrewed aircraft systems and air defence systems, those being two specific examples. Those procurements have already moved through and into the competitive procurement space. We have the bids in hand. They're under evaluation right now, and we would see the delivery of those capabilities and initial operating capabilities by mid-2024.

I would say that, where the Canadian Armed Forces have identified an urgent need, we apply ourselves to that requirement, and I think we can demonstrate that we are able to deliver on that need quite quickly.

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

Before we go to Mr. Page, what about 155 shells, then? General Eyre told us that it's urgent. His testimony was quite assertive here, that it's an urgent need. Has anything changed in the last month since you were here? Are contracts now under negotiation, or are contracts signed?

[Troy Crosby]

Specifically for the M795 variant of the artillery ammunition that I think the committee is now familiar with, we have put in place a contract to do the detailed design work required for the companies to be able to establish that manufacturing capacity in Canada. That work is under way right now.

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

Great. Thank you.

Mr. Page, do you want to add to that?

[Simon Page, Assistant Deputy Minister, Defence and Marine Procurement, Department of Public Works and Government Services]

Thank you for the question.

The only thing I would add is that we do have a process for urgent operational requirements, but it's very much commodity-dependent. There's a huge difference between being asked to purchase ammunition in an expedited fashion and doing ship design, for instance. Ship design should be taken with a very different eye. Most of the time, from your RFP release to when you want to cut steel, you should plan six or seven years. Those are known entities now. We can plan around that.

For process, is there a sense of urgency? I think that was your question. There is a sense of urgency, but if the commodity is not on the shelf, as Mr. Crosby was explaining in the case of ammunition, then the process is not as simple as a basic procurement process.

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

Okay.

To go back to Mr. Crosby, there is a contract signed. When will the facility upgrades and the retooling be complete? When will we see a significant increase in production?

[Troy Crosby]

Given the initial information that we were provided by industry, from the time the contracts are in place to establishing the production capacity, they're estimating in the order of three years.

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

Is that what has been signed? I'm not sure I fully understand what the current contract actually accomplishes.

[Troy Crosby]

I'll clarify. It's a bit of an iterative process.

In the beginning, we go to industry and we ask for a general concept of what will be required. Once we have a sense of what that looks like, we put in place a contract for them to do the detailed engineering work. That's the contract I referenced a moment ago. That detailed engineering work is under way right now, where they can provide us substantive cost estimates and schedules.

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

Industry says all they need is a long-term contract. Then they can produce and get production, or at least the process to increase, under way. It sounds like we're halfway there, at best.

Is there a firm contract for shell production?

[Troy Crosby]

We have contracts in place right now for an older variant of artillery ammunition, referred to as the M107. We've done work to put in place incremental or additional production capacity at one of the associated companies.

In the case of the M795, there was no domestic capacity for that specific variant, which has emerged over the past couple of years as being the one that's required. That capacity didn't exist.

[The Chair, Liberal, John McKay]

Thank you, Mr. Kelly.

Before I go to Ms. Lambropoulos for her six minutes, I've just received a note saying that we can go to 6:30 p.m. We can go two full hours now.

I hope that doesn't inconvenience any of the other witnesses. We have traded on your patience, and we appreciate it.

With that, Ms. Lambropoulos, you have six minutes, please.

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

Thank you, Mr. Chair.

Thank you to all of the witnesses who are here to answer some of our questions today.

Have you had a chance to study how procurement processes in other countries, especially our NATO allies, have an impact on the way in which capabilities are provided to armed forces around the world?

[Simon Page]

Thank you for the question.

Actually, we do that on a fairly continuous basis. I think at the last committee we mentioned that we are now working on a very specific initiative that will look at optimizing the defence procurement “machinery”—I'll call it that for now—or enterprise. This specific look at different pieces of the procurement system will actually include a detailed look at what other countries are doing.

We're very much in continuous conversation with partners in the United States, the U.K. and Australia for such things as shipbuilding, for instance. The U.K. and Australia are key partners. We're all building a similar ship based on the Type 26 design. There is commonality of intent on that, which really helps the conversation.

Mr. Crosby and I were in the United States last week, in Washington, talking to our counterparts about various topics, from actual procurement policies and cyber certification to such specific projects as ammunition and others. That dialogue with allies for defence procurement matters is alive and continues.

Thank you.

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

Thank you.

On that note, of course it's important to work with our allies and to make sure we're all on the same page and working towards a common effort and goal. However, oftentimes, perhaps, contracts may be prioritized in other countries, because countries are trying to work together in order to ensure they are working with similar equipment.

Can you see there being, in these conversations you have with your counterparts, opportunities to raise some of the strengths that Canadian companies have in order to ensure they're being included in the discussions as well, if there is something that Canada is really strong in on the industry side?

[Troy Crosby]

There are opportunities to have timely conversations with our allies about future requirements that will enable Canadian industry to participate. An example right now would be the participation of Canadian industry in F-35 production, which has been going on now for quite some time. I think the total is about 3.5 billion dollars' worth of economic activity already realized, in advance of our taking delivery of our first aircraft, of course.

There are other opportunities like that, and we do, through our engagement at NATO or in the U.S., look at those and try to make sure Canadian industry is aware of them and able to participate.

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

Thank you very much.

Another question I'll ask, if you're willing to share, is this: Is there any work under way to improve the current procurement process and make it more effective, anything that is being worked on to perhaps simplify the process?

[Simon Page]

Thank you for the question.

The short answer is absolutely. We actually have a very focused effort at the moment. It's a whole-of-government effort, including all the departments and agencies that you see at the table here this evening and more. We're looking at the entire spectrum of the defence procurement.

I characterize it as a system. We're looking at pre-procurement activities. We're looking at what I call the “pure procurement activities”, which are more focused on the request for information, the request for proposals and bid evaluations leading to a contract award. We're also looking at post-procurement, post-contract-award activities. Those would include not only the implementation—i.e., building ships after the contract has been awarded—but also the sustainment of these assets.

One of the key initiatives we have under way now focuses on continuous capability sustainment. That would enable the enterprise to actually work with the supplier long term to maintain the capability and make it relevant with good contracting and equipment upgrade solutions for life. That's one of the initiatives we have. We're looking at many other things.

You mentioned partnerships and, maybe, collaborative projects. We're looking at those too.

On the pre-procurement side, we're focusing on really gaining a good understanding of what we need to do from a capability planning point of view. If we want to build ships, if we want to buy aircraft or if we want to buy ammunition, the earlier we get the signal and the earlier we plan for these, the easier the procurement strategy and the actual procurement thereafter will be.

Thank you.

[The Chair, Liberal, John McKay]

You have about 30 seconds.