Mr. Speaker, I am pleased to take the floor today to discuss this motion by my colleagues.
The motion before us calls on the government to provide fair regional distribution of economic spinoffs for all future contracts.
I am pleased to give the House the assurance that the government intends to provide fair regional economic spinoffs for future contracts, just as it has been doing up to now. And I can say that with confidence because of the rigorous process through which all Canadian industrial spinoffs are developed and approved.
As you know, the government is deeply committed to asserting Canada’s place in the international community. In order to do so, it needs to purchase important defence equipment. In the next few years, we will spend billions of dollars buying helicopters, ships, trucks as well as strategic and tactical aircraft.
These capital expenditures have to follow a very specific procedure. First, the national defence department identifies military needs. When that is done, it informs Industry Canada and Public Works and Government Services Canada that it intends to purchase new equipment.
Industry Canada’s role, after that, is to establish the requirements that are necessary for Canada to benefit from industrial spinoffs under the industrial and regional benefits policy.
This policy provides the framework through which the government levers large defence procurements to generate sound domestic economic activity. We demand that, for each dollar the Government of Canada spends for defence procurements, one dollar be invested in Canadian economic activity. We cooperate with potential suppliers so that Canadians can benefit from sustainable spinoffs based on high quality technology.
The investments do not have to be directly related to the equipment being bought, but we expect they will be linked to a line of products of similar technology or research and development that will improve Canada’s innovative capacity. The government’s role is to make sure all regions in Canada can derive some benefits from these procurements.
Industry Canada works with regional development groups, among others, in order to get advice on expertise and participation in outreach activities in the regions with the industry. We encourage the main contractors to engage in such activities in Canada as a whole, by travelling throughout the country to meet with potential Canadian partners and suppliers.
The final acquisition documents that Public Works and Government Services Canada will make public contain directives intended for potential bidders on the industrial benefit requirements.
When it gets the bids, the government does a three-part evaluation: a technical evaluation done by DND; a financial evaluation done by PWGSC; and an evaluation of industrial benefits done by Industry Canada in collaboration with regional development agencies.
Once the evaluation is completed, the government announces the name of the supplier that was chosen and starts negotiating the final general conditions of the contract. Industry Canada takes part in the negotiations and focuses on the main contractor's industrial benefits plan.
Furthermore, as I have already indicated, Industry Canada officials work closely with regional development agencies. They work directly with Canadian businesses across the country in order to point out existing opportunities and help businesses seeking contracts, in order to emphasize the importance of Canada-wide involvement and highlight the capabilities of these businesses.
The government encourages contractors to establish partnerships that make good market sense because that is how we can help create business relationships which will last long after the benefit requirements have been met. We also evaluate carefully the transactions being considered as benefits. These transactions must meet three criteria for Industry Canada to judge them satisfactory.
First, the work must be associated with the procurement program. Second, the work must be done during the period specified in the contract. Third, the work can be based on existing business relations but only the new work counts towards meeting the conditions.
Our government has tried to improve the spinoff process to integrate it more harmoniously into all procurement programs. In the case of aerospace projects, we now insist not only that the Canadian spinoffs have high value and be in high technology, but we require that at least 30% be in the nine key technologies. That ensures that our industry is getting the maximum benefits from our procurements, now and in the future.
Canadian benefits are a serious contract obligation and Industry Canada requires annual reports, audits and performance guarantees. Every year, contractors must report on what they have done in that regard. Financial penalties can even be imposed in case of non-compliance, but we have never so far had to impose such penalties.
In general, the procurement process is the result of the collective efforts of a number of departments. Industry Canada takes an active part in the process to ensure that aerospace and defence industries are getting the best possible benefits from the procurements.
Our position on defence procurements is clear. All regions of Canada can benefit from the spinoffs. All Canadian aerospace and defence companies have the necessary skills, expertise and capability to act.
We have been working with contractors from the aerospace industry to get the maximum benefits from opportunities in the area. And we will continue to do so.
Our wise strategic approach will allow us to establish lasting long-term trade partnerships that will benefit Canadian businesses and the contractors with which they work.
As can be seen, our government's approach to spinoffs is based on the firm confidence we have in the strengths and the capacity of our aerospace and defence industries. Our approach is fair for all regions of Canada. We will use the same approach in future procurement programs.
