Evidence of meeting #9 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 procurement.
A recording is available from Parliament.
Liberal
Stephen Fuhr Liberal Kelowna, BC
I'm not aware that the Ethics Commissioner is looking into it. The Ethics Commissioner is free to look into whatever he wants.
Conservative
Cheryl Gallant Conservative Algonquin—Renfrew—Pembroke, ON
Do you know if he's going to find a problem with that?
Liberal
Stephen Fuhr Liberal Kelowna, BC
Like I said, I've explained the process as I understand it. The compensation tables have been in place since 2000. There's the CEO group from CEO1 through CEO8. Your previous government appointed someone at that level and paid him about the same amount of money.
Liberal
The Chair Liberal Charles Sousa
I'm sorry, Ms. Gallant. You were on a roll, but I have to give it over to Mr. Watchorn at this point.
Mr. Watchorn, you have five minutes.
Liberal
Tim Watchorn Liberal Les Pays-d'en-Haut, QC
Thank you, Mr. Chair.
We'll turn to another topic, if you don't mind, Mr. Fuhr.
On Tuesday, we heard from witnesses who expressed their enthusiasm for the creation of the new Defence Investment Agency. I would like you to provide an example of a project. I would also like you to explain the difference between the new and old systems, in order to show us how things will improve.
The people accompanying you can also answer my question, if you wish.
Liberal
Stephen Fuhr Liberal Kelowna, BC
I can actually point to one that was announced fairly recently. That was the submarine project we're undertaking. It is a massive procurement. It may be the biggest procurement this country has ever done if we take all 12 submarines, and we factor in the infrastructure on the coasts. I believe there were 25 responses to an RFI. We downselected to two that met the high-level mandatory requirements of the Canadian navy.
Those two companies will square off to see which one can demonstrate the best value for Canada. This is exactly what we want. We literally shaved years off the process. The public timeline for awarding this contract is 2028 with subs in the water by 2035. I think we can do it faster. We're going to push this as quickly as we can.
My big concern here is to make a decision and get infrastructure under way, find the correct locations and begin to build the infrastructure. Oftentimes, and I can think of a couple of projects, the projects gets out in front of the infrastructure. We then have a problem when the thing arrives, and we don't the correct infrastructure to look after it, maintain it or house it.
My hope is that we can get this moving quicker, and I think we can.
Liberal
Tim Watchorn Liberal Les Pays-d'en-Haut, QC
I would like an example of a process that will be improved by the creation of the agency.
Perhaps Ms. Folkes could provide an example.
Paula Folkes Associate Assistant Deputy Minister , Public Services and Procurement Canada
Thank you for this question.
The Defence Investment Agency will give us the chance to work more closely with Canadian and allied industries to develop faster procurement processes. For example, we'll prioritize the acquisition of equipment already in use. In doing so, we can work with our allies to better understand their requirements. Our clients won't necessarily need to write a document over 1,000 pages long to explain their requirements, because our allies will have already done so. Our principle will be that, if the equipment works well enough for our allies, we'll check whether it works for Canada and whether any modifications or improvements are needed to adapt it to Canada's unique situation.
Basically, without a detailed statement of work, we could save over a year at the start of the procurement process. Normally, it can take a year or more for the client department to clarify its requirements.
Here's another example. The agency will give us the chance to work more closely with the industry and the capital markets to secure a better investment.
We will be financing investment to support Canadian supply chains, as Minister Fuhr mentioned, not only to meet Canadians' needs, but to be able to export.
The agency will work closely with the industry to develop export strategies in line with the defence industrial strategy. This is a new approach. We didn't have much long‑term investment before. Our 5% target sends a message to the industry that we're aiming for long‑term investments, which will attract private sector investment.
Liberal
Tim Watchorn Liberal Les Pays-d'en-Haut, QC
Thank you.
I have one more question for you, if you don't mind.
This week, we had the opportunity to meet with senior officials from Norway and Germany to discuss the potential acquisition of submarines. These senior officials spoke about the economic benefits for Canadian companies.
I'm sure that, regardless of the submarine model selected, the acquisition will have quite significant economic benefits for Canada and Quebec. I'm thinking in particular of Marmen, a company that works in this field, and Davie, a shipbuilder, which could participate in the project.
How do you see the future of long‑term investments in this area?
You spoke about the acquisition, but the subsequent necessary investments are even greater.
Can you elaborate on how the project could be implemented?
Liberal
Stephen Fuhr Liberal Kelowna, BC
I think we meant Norway and Germany. They are the partners on the TKMS sub. Whether we're talking about that sub or the South Korean sub, it's important to gain, again, the maximum fiscal benefit we can for the country.
I have been to Marmen. It is an unbelievable company. It builds its own tools. You walk into the building and there are these tools as big as a single-storey house. The company works with pretty cool projects in the U.S. that I probably can't talk about on this microphone.
There is capability and capacity here, either as Hanwha Ocean or TKMS. I have said very clearly to them, “Here's what we have to offer, so you guys go and figure out how you can bring in Canadian companies.” Again, we want to buy the sub as it is, but machine manufacturing, which is Marmen, and simulators, which are CAE, are great examples of maybe not messing with the submarine itself, because you start to Canadianize it or run down the road and you end up with an octopus with many arms. That will slow us down. We don't necessarily want to do it. As it is, the navy says that it meets its requirements.
How can we bring in Canadian industry without upsetting the timeline, number one? Because this spend is going to be so big, when you talk about not B2B or going “G2G”—government to government—how else can Canada work with these other countries in other ways?
We sell aircraft. Can we sell them aircraft? Davie builds icebreakers. Seaspan builds icebreakers. Everyone is looking for icebreakers. The U.S. just bought some icebreakers from the ICE pact. Canada is a member of the ICE pact.
All of these things are happening. People are spending money, and everybody wants to work with Canada. How do we harness that and build out our economy in a way that matters? That's what we're looking at.
Liberal
The Chair Liberal Charles Sousa
Thank you, Secretary.
Mr. Savard-Tremblay, you have two and a half minutes.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot—Acton, QC
Great.
On Tuesday, Minister David McGuinty appeared before the committee. He couldn't tell us the timing for the release of the findings regarding his review of the F‑35s, which were promised for this summer. He also couldn't answer a question about the potential impact on jobs or costs if the government decides not to proceed with the acquisition.
Can you elaborate on this matter?
Liberal
Stephen Fuhr Liberal Kelowna, BC
Again, I have to keep going back to the fact that there's still a review happening. Nothing has slowed down; nothing has stopped moving forward.
Any path we take needs to bring financial benefits to the Government of Canada and, by extension, taxpayers. We have to make sure our businesses are involved. We have to make sure our companies get work. We have to make sure our economy grows. This is very important.
We're applying that to submarines. We're applying that to planes. We're applying that to.... Everything we buy has a couple of lenses on it: Can we make sure that Canadian companies are fully involved or partially involved, and who do we partner with going forward?
You may have heard me and others say we will be diversifying our defence spend amongst many allies, not just the one to the south of us. They're an important partner, but we need to make sure that we diversify our spend and grow our own economy while we equip the Canadian Armed Forces at speed to meet the moment.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot—Acton, QC
Do you know when we'll have the findings of this review? They were due last summer. The announcement of a summer deadline came from an educated assessment, based on the information available at the time, that this was a reasonable timeline.
Do you have a new objective?
Liberal
Stephen Fuhr Liberal Kelowna, BC
The objective is the same: to get the military the machine it needs to meet the threats that it faces and to get the Canadian people the best economic deal that they can possibly get.
I can't give you a timeline. We're going to make sure we make the right decision for the right reasons. That is the most important objective of this review.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot—Acton, QC
Why was it possible to have a deadline before, even though it ultimately wasn't met? First, we were told that we would have the findings last summer. Now you're telling us that you don't have a timeline and that it will take as long as it takes. Why was there a target date before?
Liberal
Stephen Fuhr Liberal Kelowna, BC
You're right. there are always objectives.
I would say we can all agree that we live in a very different place than we did a year ago. We have different things we need to consider, and, as we review everything we're doing, we need to apply different lenses to what we're doing to make sure that we maximize the world that we live in right now.
Liberal
The Chair Liberal Charles Sousa
Thank you.
It's over to you, Mr. Kibble.
I believe you and Mr. Anderson will be splitting your time.
Conservative
Jeff Kibble Conservative Cowichan—Malahat—Langford, BC
Yes, Mr. Chair.
Thank you, Secretary.
Mr. Guzman is a wealthy banker friend of the Prime Minister's.
Has he disclosed his investments? I'm presuming he will disclose his investments.
As secretary, are you aware of any conflicts with his investments versus defence contractors, etc.?
Liberal
Stephen Fuhr Liberal Kelowna, BC
Thank you for the question, and thank you for your service.
I assume...like everybody else, we make our disclosures, and like everyone here who has to, Mr. Guzman has done his due diligence. I'm not aware of any conflicts.
Conservative
Jeff Kibble Conservative Cowichan—Malahat—Langford, BC
I'm certain both you and I will look into that.
Who will Mr. Guzman report to?
Liberal
Conservative
Jeff Kibble Conservative Cowichan—Malahat—Langford, BC
Okay, so the Defence Investment Agency bureaucracy will be doing procurement but reporting to the people who do procurement.
Liberal
Stephen Fuhr Liberal Kelowna, BC
No, let me rephrase it.
He will be reporting essentially to me, the secretary of state of the Defence Investment Agency, to be clear.