Evidence of meeting #39 for National Defence in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was companies.
A video is available from Parliament.
Liberal
Stephen Fuhr Liberal Kelowna, BC
I'm saying that because there were some people who said that we just self-declared at 2%. I've seen it, but that's not true. We met our 2% obligation. NATO agrees with our accounting and what we've done.
As for your question, going from 2% to 5%, I would have to turn to the official to find out exactly what's going on.
Conservative
Cheryl Gallant Conservative Algonquin—Renfrew—Pembroke, ON
Okay. You don't have the timeline with you at the moment.
How is your agency addressing the urgent need for robotics in cyber-weaponry?
Liberal
Stephen Fuhr Liberal Kelowna, BC
We're engaging with the industry to find out what capability exists in Canada, first and foremost, and there's a lot of it—AI, robotics and quantum. Canada's a leader in all of those spaces—
Conservative
Cheryl Gallant Conservative Algonquin—Renfrew—Pembroke, ON
Okay, that's finding out about it, but how are you actually turning that into action so that our soldiers have what they need in theatre?
Liberal
Stephen Fuhr Liberal Kelowna, BC
It's the Department of National Defence that writes the requirements—
Conservative
Liberal
Stephen Fuhr Liberal Kelowna, BC
We work with them. They identify what they need. We go through something called options analysis, which we'll be involved in to make sure that the build-partner-buy strategy is applied. At the end of the day, the requirements exist at the Department of National Defence, so what you're describing is exactly what they're up to.
Liberal
The Chair Liberal Charles Sousa
Thank you, Mr. Fuhr and Mrs. Gallant. I appreciate that.
Mr. Malette, we'll go over to you for five minutes.
Liberal
Chris Malette Liberal Bay of Quinte, ON
Thank you, Mr. Chair, and thank you for being here, Secretary Fuhr.
In my riding in the Bay of Quinte, we've been quite proud recently of examples of small SMEs that have been getting contracts that they thought they may have been unable to do. A small but innovative company by the name of Kool Koatings was able to secure business with General Dynamics, providing a niche application for its MIL-SPEC certified powder coating for one of General Dynamics product lines in a defence application. For a company of this size, it's quite inspirational to see. This company believes that this is an opportunity that could lead to additional contracts in the future with GD or others.
My questions are for you, Mr. Fuhr.
In your estimation, does this type of success story reflect the goals of the DIS? What steps is the government taking to ensure that more Canadian SMEs like Kool Koatings can connect with major defence contractors and participate in defence supply chains? I think it's a great example of how integrated we can be in providing our Canadian SMEs with a chance to access larger companies like General Dynamics.
Liberal
Stephen Fuhr Liberal Kelowna, BC
Yes. Thank you for the question.
As I said earlier, it's critical for us to do this, not only for our economy but for our resilience. If we want supply chain resilience in Canada to support our Canadian Armed Forces, we need to make sure all these small companies, especially like the ones you described, are known about and can participate.
If I were to go through this document, I would point out a couple of things. It removes a lot of barriers, and I speak from experience, because I used to operate in this space. One of the barriers was communication with the government. These SMEs have no chance or the resources to figure out who to talk to. Big primes even struggle with this.
The communication with the government is at an all-time high. I know this because I deal with them all the time, and there was some pretty positive feedback from the group of folks you had here on Monday. I watched the committee meeting, and they were pretty happy with the way things were. Therefore, communication is key, and that happens right at the beginning.
Fiscal supports for SMEs in particular are challenging. You just couldn't get money from anywhere, unless you were going to a venture capital place and are prepared to pay 12%, 13% or 15%. They can't do that all the time. There are a whole bunch of initiatives in financing that have come about. They're identified in there. I think BDC got a total of about $6 billion. The regional development agencies got about $350 million. The NRC got some money. Financing for these small to medium-sized companies is a lot more prevalent than it was before.
Regarding security clearances, I'm not sure if powder coating would necessarily be in that space, but it is an issue. These small businesses that want to work in this space need to have security clearances, and then they need to have a place to work, because you can't have these conversations at the local Starbucks.
All of these things have been addressed. Moreover, another thing we've just taken on, or have done since we've been running, is introducing small companies to big primes. I took 25 companies with me to South Korea. I took 15 to Germany and Norway when I went—there were fewer on that trip because it was just before Christmas. These companies that are working on submarines, or even AEWC, will have billions of dollars in ITB obligations to Canada. They could buy 100 million dollars' worth of rubber boots, but we don't necessarily want that. We want to direct this fiscal resource to where Canada wants the money to go, and we can incentivize this through a points system to make sure that the money coming back is going to the places that actually matter to our supply chain—and we'll certainly do that.
One other thing, really quickly—because not a lot of people are talking about this, but it's going to happen—is that all the ISED stuff, all the ITB policy, will be transferred to the DIA when this agency is stood up as a department.
Now, what does that do? You will truly have one-stop shopping for defence procurement. The DIA—Doug Guzman and his team—will do the negotiation and the total business case for the procurement. All the SMEs will have essentially one phone number to call, and we can do what we can to help. If we have the authority to help, great. If it's something we don't have the authority to do or we can't help them with, we can help find out what to do. I'll give you one quick example.
We will never have the authority or the ability to grant export permits. That's a Global Affairs function, but it's important and matters to us because I have a KPI to increase defence exports by 50%. Small businesses go through the process. They go to GAC, but guess what. We can also help advocate for them from inside to make sure nothing gets lost in the process—because there are tons of files and lots of things are happening—and we can get these companies export permits, as an example.
One-stop shopping is what everybody in this room who was on that committee in 2024 wanted. They also wanted a single point of accountability. That was a supplementary opinion or position of the Conservatives on top of the number of recommendations the committee had, which everybody agreed to, and this is exactly what we're building.
I'm quite excited about it. You've got great feedback from the companies that were here. That's not our talking about it or tapping our own backs. The companies are quite happy with this. Can we do more? Can we go faster? I think we can, and we'll be able to do more when we build ourselves up in our final form.
Liberal
The Chair Liberal Charles Sousa
Thank you Mr. Fuhr.
Monsieur Simard, we go back to you for two and a half minutes.
Bloc
Mario Simard Bloc Jonquière, QC
Thank you very much, Mr. Chair.
I'll quickly come back to the aluminum example I was talking about earlier. Back home in Saguenay—Lac‑Saint‑Jean, we just finished refurbishing an aluminum smelter that cost $2 billion to switch from one technology to another. Hydroelectricity provides a huge competitive advantage for aluminum smelters such as Rio Tinto.
So we wanted to make sure, collectively, that we would get the maximum benefit possible for our region. A maximization committee was set up so we could ask equipment manufacturers to prepare for what was going to happen in order to meet Rio Tinto's needs. We didn't want the company to use equipment manufacturers from outside the region. Similarly, the Bagotville base is located in our region. It will be receiving fighter jets, probably F‑35s, and it will have to upgrade its facilities.
Within your agency, will you take the same approach of setting up a maximization committee so that people in the community, which is close to the Bagotville base, can benefit as much as possible from the investments that will be made?
If they are not able to provide the services, it should at least be people from Quebec or the rest of Canada who provide those services.
I would like to hear more about how your agency will operate. I hope you will have that sensitivity and that there will be better communication with people in the community to see what they can offer for equipment manufacturers, service providers and supply chains.
Will there be something like that?
Liberal
Stephen Fuhr Liberal Kelowna, BC
To close the loop on your aluminum, I'm very sensitive to that. I totally understand what you're saying, and I'll be pleased when we have the official from ISED here to see if there is some path to helping rejig the aluminum situation so that it's more viable, given our current situation with the tariffs.
With regard to the broader picture, there is literally billions of dollars going into bases, and Bagotville is one of those bases. A lot of new infrastructure is being built and provided for new aircraft. There's new housing, and there's water and sewer. There's billions of dollars' worth of construction. My assumption—I don't know this right now—is that much of the labour will come from that region, which is going to be very helpful to the people who live there.
Bloc
Mario Simard Bloc Jonquière, QC
What I would like to know—I would like to have a guarantee and assurances—is whether the agency will have that sensitivity to give preference to local service providers, or, at the very least, service providers in Quebec or the rest of Canada.
Will there be that kind of mechanism or will it be according to the lowest bidder?
Liberal
Stephen Fuhr Liberal Kelowna, BC
Very quickly, the answer is yes. It's called the buy Canadian policy, and it's going to be enforced. It's already being enforced, and this is for the exact reason we just talked about. We will be looking for materials and labour, and it's going to be enforced for the reasons you cited.
Liberal
The Chair Liberal Charles Sousa
Thank you, Mr. Fuhr.
Mr. Anderson, it's over to you for five minutes.
Conservative
Scott Anderson Conservative Vernon—Lake Country—Monashee, BC
Thank you very much. All the questions will be through you, Mr. Chair.
Mr. Fuhr, you have mentioned several times, and I've heard this repeatedly, that the DIA is going to be a one-stop shop. I wonder if you can supply us with a phone number for that.
Liberal
Conservative
Scott Anderson Conservative Vernon—Lake Country—Monashee, BC
No, it's not your phone number, but the phone number for the DIA.
Liberal
Conservative
Scott Anderson Conservative Vernon—Lake Country—Monashee, BC
Okay, that's good.
How many contracts have been signed with Canadian companies so far?
Conservative
Liberal
Stephen Fuhr Liberal Kelowna, BC
I have to list them. There's Telesat and MDA, Colt Canada, Bombardier—