Public Accounts Committee on Dec. 3rd, 2018

[Stephen Fuhr, Liberal, Kelowna—Lake Country, BC]

I wanted to talk briefly about the procurement cycle that we're in right now and the time limit that we touched on earlier.

When I got to the air division in 2003, the highest priority acquisition for the military at the time was the replacement for the Buffalo. That was in 2003, and we obviously have an answer for that in 2016. I appreciate that not all of the work was done properly on the first go when the previous government tried to sole-source this. I was working in the air division, so I know what was done and what was not done.

We're not starting from scratch as if there's a lot of work to do. We're somewhere in between nothing being done and something being done, but it certainly wasn't all done. The defence critic has said a number of times that we could do this in just a year, yet the previous government couldn't do anything in a year.

I have a hard time, seeing that it's 2018 and that anything we get, as was mentioned earlier in this meeting, would take three years to deliver once we made a decision on something.... That still gives us a number of years. What is going to be the holdup here in getting this done? It's certainly not the manufacturers. This is what they do. They're ready to go.

I understand that there's a process. I was in civilian life for a while and managed RFPs and RFIs and all that kind of stuff, but I still can't account for the timeline here given the urgency of getting a new airplane for our military.

[Patrick Finn]

Thank you very much for the question, sir.

Of course, bringing an aircraft into service is not just about the aircraft itself, and particularly in the Canadian context of the policies that we have and use effectively, such as our industrial technological benefits and other things, there are some security aspects.... There are a number of things that the governments and the suppliers need to contend with, and we're actually running a request for proposals that could result in a number of scenarios at the outcome.

Depending on the successful bidder, we could have a direct commercial sales contract, a foreign military sales application or an acquisition under a memorandum of understanding. In each case, we would expect the winning bidder, likely combined with their country, to be very forthcoming in a draft RFP. We've said 100% offsets against the industrial technological benefits.

There are security aspects to what they need to transfer to us. I would say that in the context of an assembly line on the plant floor, it may be three years from the time we award you a contract, but my experience has been that negotiating those contracts and getting agreements just on things like intellectual property is an area of complexity in this day and age where original equipment manufacturers guard this like the Crown jewels. We want to make sure that we have access to what we need for decades to come to upgrade and maintain these aircraft.

As we look at our allies, we may hear about rapid cycles, but we talk to them about the work that happens beforehand and happens after, and about how they may have a process that's not open to legal challenge quite as it is in Canada. That allows them to quickly select, but it could be multiple years before they sign a contract.

We are fairly aligned. We've talked about defence procurement, as a few people here have mentioned, whether it's schedule or budget, and we know and have learned that we have been historically overly optimistic about things, so we're very, very careful. There's a lot of risk at play here. We would rather be judicious about the schedule and timelines that we establish. If they can be accelerated, all the better, but to say that we're going to pull off a miracle is just dangerous in what we achieve and where we—

[Stephen Fuhr, Liberal, Kelowna—Lake Country, BC]

I totally appreciate that and I appreciate that there will be time, but what we have now is a technology cycle that's shrinking and a procurement cycle that's growing, and that's a really bad place to be. To put things in perspective, these security concerns and 100% offset and 20 years of in-service and support have been there forever. The CF-18 that we have now first flew in 1978, and we took it first in test. We took delivery in 1982, from 1982 to 1989. That's not a long time. We're looking at some airplanes that have been flying for years. I appreciate what you're saying. We have four departments that have their fingers in the bubble here. We have Treasury Board, DND, PSPC and ISED. All of them have significant influence on this process, yet none of them are ultimately accountable. To me that's a bit of a problem.

A number of our allies do things differently. I know the Australians have a single point of accountability. The Brits have a single point of accountability. I would love to ask your opinion on that, but I'm pretty sure nobody at that table is going to give me their rendition of whether they think that's a good idea. But certainly there's something we can do better than we're doing now. If we remain in this space, where the technology cycle gets smaller and smaller and the procurement cycle gets larger and larger, we are not going to deliver what we need to our people in a timely fashion, and that's going to hurt us all.

[Patrick Finn]

Just briefly, sir, one of the things we're trying to do...because that technology cycle is not just acquisition. That's in-service and through life. We've just closed off the project for C-130J and we're already opening up for block eight. Part of the complexity we're trying to tackle up front is how we structure this so that we can be inside the technological cycle, as you're indicating—what the partnerships are, the reprogramming labs, the things we need to establish—so as we get the aircraft we're actually in the cycle of upgrade, which is far different, whether it's technology or intellectual property, from what we saw when we acquired the CF-18s or what I saw in the Halifax-class or otherwise. Today that software cycle development is completely different and we actually have to take the time to get it right so that we can live inside the cycle through life.

[The Chair, Conservative, Kevin Sorenson]

Your time is up.

Mr. Kelly.

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

Actually, I want to follow up with some of the answers I heard to Mr. Fuhr's question.

I believe, Mr. Finn, it was you who said the assembly timeline is expected to be three years. If I remember correctly, your answer to my question in the earlier round was that you expect to sign a contract in 2022, so you have no time within that for anything to go wrong from the time the contract is signed. Do I understand correctly?

[Patrick Finn]

Again, what we've heard from everybody is that three years is a reasonable time to do it. There are active assembly lines, but you are correct that we are banking on that three-year cycle. These are all people who have other customers, so they're actively building. It's not because we signed a contract that we jump the queue, but they're all telling us quite comfortably, as we've recently seen with our fixed-wing search and rescue aircraft, and other aircraft, that three years on an active assembly line, with an existing design, is an appropriate risk-mitigated schedule.

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

Of course, everything would have to go right to even be able to sign that contract in 2022. You have your final commercial RFP scheduled for the spring. Walk me through, again, if you have time now for a little more detail, what you expect to happen between the spring of 2019 and the expectation of signing a contract in 2022.

[Patrick Finn]

In spring of 2019, the commercial—or in this case it's a government.... Nevertheless, the formal request for proposals goes out. In 2020, we receive the proposals early on and we go through the bid evaluation process, which will be a major chunk of 2020. We will down-select to a couple of bidders for what we call competitive dialogue. The nature of this contract that happens adds some complexity to this particular request for proposal.

Then the idea is that through 2021 we're completing the negotiations, getting the approvals to award the contract in 2022. We have tried to be very judicious and not have too risky a schedule to try to achieve some of that, but from the bids until the signing of the contract is where we've given ourselves two years for the competitive dialogue, the final negotiations, the various approvals we need to get and the signing of the contract in 2022, with the idea of first delivery in 2025. We've shared this with all the potential bidders, and they're comfortable with that approach, sir.

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

That really doesn't leave any margins that I can see anywhere, other than perhaps the time interval from receiving, depending on the timing of when you receive bids, and following up and working with the bidders to finalize details for a contract. Unless you make up some time in there, you have no extra time. You've just said that it's three years, that assembly is expected to take three years. If we're late on this, we don't have the ability to defend and to meet our defence obligations with our allies or our own sovereignty. All I can say is that, from here on, everything needs to go like clockwork, on schedule. We just don't have time in this for the kinds of delays and the kinds of failures of procurement that we have seen in other programs.

I shudder to think of what many Canadians listening to this hearing might think has the potential to go wrong to get to 2025. I'm going to leave it at that.

[The Chair, Conservative, Kevin Sorenson]

Thank you. Ms. Alleslev, you have some time.

Just before Ms. Alleslev comes in on this, I'll just say that we try at the table here to keep track of questions and then get the answers. She did pose a question earlier. It was in regard to how 22% of technician positions in CF-18 squadrons were vacant. Her question earlier was, because you keep these records, what was it three years ago? What do you expect it to be two or three years down the road? You've gone from 22%. Do you hope that next year it would be down to 18%?

We didn't get an answer to that one, so could we have the answer on that, please?

[LGen A. D. Meinzinger]

I don't have the historical data in front of me. We could certainly provide that to you.

In looking forward, regarding some of the things we've done to optimize the production of technicians within the Canadian Armed Forces, specific to the fighter force I would draw your attention to the maintenance initiative. We have 49 trainers now, through the maintenance contract I cited earlier. These individuals are helping to deliver a curriculum in 10 FTTS, which is the schoolhouse for our fighter force technicians. What we're seeing is that we're able to produce more technicians now through that training mill.

Further, if you go back into the enterprise, into the school in Borden, we were able to outsource some of our ACS, or aircraft structures technician training, to École nationale d'aérotechnique in St-Hubert. We've been able to run courses of a dozen, three times a year.

Consequently, we had a significant backlog of technicians two years ago. Through a couple of initiatives we've been able to push more of these technicians through the training mill, which means we'll have more on the flight line. At the end of the day, though, we still need to ensure that they get trained and experienced. As the Auditor General pointed out in the report, a portion of the technicians we currently have in 3 Wing and 4 Wing are obviously not experienced. They're going to have to get that in the years ahead.

[The Chair, Conservative, Kevin Sorenson]

Ms. Alleslev, I want Monsieur Massé to get in first, and then we'll come back to you. My question took away from you.

Mr. Massé.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

My questions will be at 50,000 feet of altitude. Obviously, I'm not a defence expert. A few years ago, a few decades in fact, I wanted to pilot a plane, but my experience was limited to piloting a Cessna 152 for a few hours.

That said, in the course of the last weeks, I held consultations in my riding concerning the labour shortage. This shortage is present not only in Quebec but everywhere in Canada. It affects our entrepreneurs and businesses quite seriously.

I'd like to understand what is going on. Are there particular challenges with repairing and maintaining fighter aircraft that aggravate the shortage of workers or qualified technicians in this area?

[Patrick Finn]

Thank you very much for the question.

As you said, I will begin at 50,000 feet and then my colleague can complete my reply.

You have to understand that a fighter jet is extraordinarily complex. You have to take into account everything that is in a fighter aircraft, like the software, the number of systems and the weaponry, as well as factors like air density and the role to be played by the aircraft.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Excuse me, I'll be more specific. Everyone understands that a fighter airplane is very complex. I should have been more precise.

I'd like to know what the situation is as compared to other trades in the armed forces. You have tanks and all kinds of very sophisticated equipment, some of them perhaps more complex than the CF-18s, which do go back a few years. Compared to the equipment used in other fields in the Canadian Armed Forces, are the fighter jets even more unique?

[Patrick Finn]

Thank you, once again, for the question. I'll begin the answer and my colleague may complete it.

There is a certain hierarchy among the trades when it comes to the maintenance of all of our equipment. There are responsible engineers and technologists, that is to say those who do more advanced maintenance; there are also technicians. This is quite complex work, whether we are talking about fighter aircraft, submarines or combat ships. It's really quite complex.

There is also the fact that we compete with the private sector to recruit personnel. People need specialized training, and it takes years. This makes it difficult to hire people. For some trades, the basic training can be done quite quickly, in a few months. However, when it comes to technicians, it often takes several years before they can work on their own.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

And is the scarcity of expert personnel greater in this area, or is this a generalized phenomenon in skilled trades and occupations in the Canadian Forces?

[Patrick Finn]

There is a shortage of maintenance technicians just about everywhere. I am responsible for all of the armed forces equipment, and I can tell you that the problem is the same in the navy and the army. The private sector also needs these technicians, but the biggest problem for us is the long training period needed before newly recruited technicians can work on their own.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Are there any elements that have not been mentioned that act as disincentives for fighter pilots, expert pilots, to continue to pilot CF-18s or other fighter jets in the armed forces? We have talked about salaries, bonuses and all kinds of measures to try to keep them in the Canadian Air Force.

In the eyes of ordinary Canadians, piloting a CF-18 represents a top job. Aside from the fact that some of these planes are getting old, are there other factors that may discourage pilots from developing their skills with the ultimate goal of piloting CF-18s?

[LGen A. D. Meinzinger]

What we find when we interview those who choose to leave is that, at the decision point for that particular individual, it's often a family issue. We often say in the air force, “We recruit the individual, but we must retain the family.”

We find that, unless there's a degree of predictability and positive career management for that individual, we often find individuals who are vexed. They come to a point where they may not have anticipated they were going to move, or we're asking them to move their family to a location where perhaps their spouse cannot find employment.

We need to treat individuals individually at the margin to ensure that individuals have a clear understanding of expectation and what is coming in a couple of years. On our part, we need to be clearer about expectations, telling pilots, “You're going to fly for eight years”, as opposed to six years, and their not knowing if they're going to be posted to a staff job.

We find a lot of individuals often don't wish to move to headquarters and work in an office versus work in an aircraft. We recognize and respect that, but that dialogue, which must happen at the margin before we force an individual to move, is very important. We're working on that. We're trying to put in measures that will increase the communication, and increase the expectation and understanding with our individuals and their families.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you.

Mr. Chair, if I have any time left, I will yield it to Mr. Fuhr.

[The Chair, Conservative, Kevin Sorenson]

We'll have time to come back to Mr. Fuhr.

We're going to Ms. Alleslev.

[Leona Alleslev, Conservative, Aurora—Oak Ridges—Richmond Hill, ON]

I'd like to continue with the training aspect that was brought up earlier, around the trend in the past. You have, I note, fighter capability maintenance renewal. I'm assuming that is going to achieve a plan to show how you are going to achieve the necessary technicians by a certain date. I'm looking forward to seeing that document, as well. Can you provide us with the data of the trend up until this point, from, say, the mid-1990s until now, and tell us whether or not it's moving in the right direction? Does that plan include cost?

[LGen A. D. Meinzinger]

Absolutely, we can provide that to you.

I would make perhaps one point that I haven't had a chance to make in the context of technicians. We have in our defence policy a growth of 200 positions to support the transition to the advanced fighter. Within those 200, approximately 108 are going to be apportioned to grow our technician capacity. We obviously need human beings, we need to train additional technicians to fill those positions, but it gives you a sense of the growth we anticipate in the bench as we move to the advanced fighter.